Understanding Mid-Year Bonus: Eligibility, Exclusions, and Taxation for Government Employees
The Mid-Year Bonus is a financial incentive granted to eligible government employees in the Philippines. Understanding the eligibility criteria, exclusions, conditions for granting the bonus, taxation rules, and other important aspects of the Mid-Year Bonus will help government employees determine if they qualify for this benefit and provide clarity on the requirements and calculations involved. In this blog post, we will explore these guidelines in detail.
I. Who is entitled to the Mid-Year Bonus?
The following government employees are entitled to the grant of Mid-Year Bonus, provided they comply with all the conditions set for the grant of the bonus:
- All positions for civilian personnel, whether regular, casual, or contractual in nature, appointive or elective, full-time or part-time, now existing or hereafter created in the Executive, Legislative and Judicial Branches, the Constitutional Commissions and other Constitutional Offices, SUCs, and GOCCs covered by the Compensation and Position Classification System (CPCS) under RA No. 6758, as amended by Congress Joint Resolution No. 1, series of 1994, and No. 4, series of 2009, and in LGUs; and,
- Military personnel of the Armed Forces of the Philippines under the Department of National Defense and uniformed personnel of the Philippine National Police, Philippine Public Safety College, Bureau of Fire Protection, and Bureau of Jail Management and Penology of the Department of the Interior and Local Government; Philippine Coast Guard of the Department of Transportation; and National Mapping and Resource Information Authority of the Department of Environment and Natural Resources.
II. Who is not entitled to the Mid-Year Bonus?
Individuals and groups of people whose services are engaged through job orders, contracts of service, or others similarly situated are not entitled to the grant of Mid-Year Bonus. Moreover, the following individuals or groups are likewise not entitled to the Mid-Year Bonus:
- Government personnel from agencies, including GOCCs, that are exempted from RA No. 6758, as amended, as expressly provided in their respective enabling law or charter, and are actually implementing their respective CPCS approved by the President of the Philippines;
- Government personnel from GOCCs covered by the CPCS established by the Governance Commission for GOCCs and approved by the President of the Philippines pursuant to RA No. 10149; and
- Those hired without employee-employer relationships and funded from non-Personnel Services appropriations/budgets, such as consultants and experts hired for a limited period to perform specific activities or services with expected outputs, laborers hired through job contracts (pakyaw) and those paid on piecework basis, and student workers and apprentices.
III. Conditions for granting the Mid-Year Bonus
Pursuant to Budget Circular No. 2017-2, the Mid-Year Bonus equivalent to one (1) month basic pay as of May 15 shall be given to entitled personnel not earlier than May 15 of the current year, subject to the following conditions:
- Personnel has rendered at least a total or an aggregate of four (4) months of service from July 1 of the immediately preceding year to May 15 of the current year;
- Personnel remains to be in the government service as of May 15 of the current year; and
- Personnel has obtained at least a satisfactory performance rating in the immediately preceding rating period, or the applicable performance appraisal period. If there is a need for a shorter period, it shall be at least ninety (90) calendar days or three (3) months, provided that the total or aggregate service under Item 5.1.1 in the Circular is complied with.
IV. What does it mean by “total or aggregate service”?
The total or aggregate service required from government personnel for purposes of the grant of the Mid-Year Bonus shall include all actual services rendered, whether continuous or intermittent, while occupying a regular, contractual, or casual position in the national and/or local government, including leaves of absence with pay. This is important in computing the 4-month service requirement.
V. Pro-rata basis and eligibility for those who have not complied with the 4-month service requirement
Those who have rendered a total or an aggregate of less than four (4) months of service from July 1 of the preceding year to May 15 of the current year shall not be entitled to the Mid-Year Bonus. The Mid-Year Bonus cannot be given on a pro-rata basis for those who have not met the 4-month service requirements.
VI. Mid-Year Bonus for employees who have resigned or retired before May 15 of the current year
Employees who are no longer in government service before May 15 of the current year are not entitled to the Mid-Year Bonus. However, a compulsory retiree whose services have been extended may be granted the Mid-Year Bonus, subject to the pertinent provisions of the covering Circular.
VII. Calculating the amount of the Mid-Year Bonus
The Mid-Year Bonus granted to each government employee is equivalent to their one (1) month basic salary as of May 15 of the current year. This includes:
- Regular and contractual employees: The Mid-Year Bonus is equivalent to their monthly salary as of May 15 of the current year.
- Casual personnel: The Mid-Year Bonus is equal to their total monthly wages computed as daily rate multiplied by 22 or equal to the monthly salary of a regular personnel with an equivalent position.
- Military and uniformed personnel: The MidYear Bonus is equivalent to their monthly base pay.
- Non-salaried barangay officials and employees: The Mid-Year Bonus is equivalent to their monthly honoraria.
VIII. Taxation of the Mid-Year Bonus
As a general rule, all income received by an employee is taxable, except when expressly exempted by law. Pursuant to Revenue Regulation No. 11-2018, certain income payments are exempted from the requirement of withholding tax on compensation but may be subject to income tax depending on the nature/sources of income earned by the individual recipient.
The Mid-Year Bonus falls under the category of “Thirteenth month pay and other benefits” and is exempted from withholding tax, provided that the total amount does not exceed ₱90,000. However, employees who receive additional compensation, such as commissions or benefits in excess of the allowable statutory amount of ₱90,000, will be taxable only on the additional compensation received.
Understanding the guidelines surrounding the MidYear Bonus is crucial for government employees in the Philippines. By being well-informed about eligibility, exclusions, conditions for granting the bonus, and taxation rules, employees can better assess their entitlement and take necessary actions to ensure they receive the financial incentive they deserve.
Essential regulations and rules for granting Mid-Year Bonus to government employees
The prevailing guidelines for awarding Mid-Year Bonus to government employees include the following, listed in reverse chronological order:
- DBM Budget Circular No. 2019-4 dated July 5, 2019 – Clarification on the grant of MidYear Bonus to government employees on scholarship
- DBM Budget Circular No. 2017-2 dated May 8, 2017 – Rules and Regulations on the grant of the MidYear Bonus for FY 2017 and Years Thereafter
List of divisions with mid-year bonuses released.
- Naga City
- SDO Sorsogon