[FULL GUIDE] Latest Guidelines on the Grant of Mid-Year Bonus to Government Employees

[FULL GUIDE] Latest Guidelines on the Grant of Mid-Year Bonus to Government Employees

What is Mid Year Bonus?

The mid year bonus is one of the Standard Allowances and Benefits of government employees under the Total Compensation Framework as provided for in Section 4 of Executive Order No. 201, s. 2016 which states that:

SECTION 4. Mid-Year Bonus. Beginning FY 2016, a Mid-Year Bonus equivalent to one (1) month basic salary as of May 15, shall be granted to those who have rendered at least four (4) months of satisfactory service and are still in the service as of same date, to be given not earlier than May 15 of every year. This shall be in addition to the Standard Allowances and Benefits under the Total Compensation Framework embodied in the Congress Joint Resolution No. 4 (s. 2009). The existing Year-End Bonus equivalent to one (1) month basic salary and Cash Gift at prescribed rates shall be given in November of every year.

Legal Bases on the Grant of Mid-Year Bonus

To be considered legal and will not be disallowed by the Commission on Audit for lack of legal basis, any compensation given to government employees should have legal basis.

Below are relevant legal bases on the grant of mid year bonus to government employees, viz:

  • Executive Order No. 201, s. 2016 – Modifying the Salary Schedule for Civilian Government Personnel and Authorizing the Grant of Additional Benefits for both Civilian and Military and Uniformed Personnel, February 19, 2016
  • Guidelines issued by the Department of Budget and Management (DBM) pertaining to the grant of Mid Year Bonus to Government Employees (as discussed below)
  • Pertinent General Provision of the General Appropriations Act (GAA)
  • Appropriation Ordinance for the Local Government Units (LGUs)
  • Corporate Operating Budget for covered Government-owned and Controlled Corporations (GOCCs)

Is the Mid Year Bonus mandatory?

In government, for as long as there is legal basis in granting certain compensation, then this shall be granted to employees covered by the law. As provided above, there are legal bases in granting the mid year bonus; hence, this shall be given to the employee entitled to it.

Mid Year Bonus Guidelines for FY 2025

The DBM is the government office tasked to issue guidelines on the compensation of government employees.

Since the DBM has not issued new guidelines for the Mid Year Bonus, the guidelines stated below shall be used as guide by government agencies concerned on the grant of mid year bonus to their respective employees for FY 2025.

Who are entitled to the Mid-Year Bonus?

Based on the guidelines stated above, the following government employees may be entitled to the grant of Mid-Year Bonus, provided, they comply with all the conditions set for the grant of the bonus, viz:

✅ 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.

Mid Year Bonus of Barangay Officials

According to Item 7.0 of Budget Circular No. 2017-2, the grant of mid year bonus to personnel of provinces, cities, municipalities and barangays shall be determined by their respective sanggunian, subject to these conditions:

  • The entitlement/non-entitlement of LGU personnel to the Mid Year Bonus shall be subject to Item 5.0 of Budget Circular No. 2017-2.
  • The Personnel Services limitation in LGU budgets under Sections 325(a) and 331(b) of RA No. 7160 or the Local Government Code of 1991, shall be complied with.
  • If funds are not sufficient, the Mid Year Bonus may be granted at lower rates at a uniform percentage of the monthly basic pay as of May 15 of the current year.

Mid Year Bonus of covered GOCC Personnel

The grant of Mid Year Bonus to personnel of covered GOCCs shall be determined by their respective governing boards, subject to the following considerations:

  • The provisions on the entitlement/non-entitlement of personnel to the Mid Year Bonus shall be subject to Item 5.0 of Budget Circular No. 2017-2.
  • If funds are not sufficient, the Mid Year Bonus may be granted at lower rates but at a uniform percentage of the monthly basic pay as of May 15 of the current year.

Who are 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, viz:

  • 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 Compensation and Position Classification System (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, as follows:
    • 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.

How to Compute the Mid Year Bonus

How much is the mid year bonus of government employees?

The mid year bonus of government employees is very easy to compute as it is simply equivalent to one (1) month basic pay of the government employee concerned as of May 15 of the current year. This means that whatever is the adjusted basic pay of the government employee as of May 15, that is his mid year bonus.

Thus, for regular and contractual employees, the mid-year bonus is equivalent to their monthly salary as of May 15 of the current year.

For 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 equivalent position.

On the other hand, the mid-year bonus for military and uniformed personnel is equivalent to their monthly base pay while the mid-year bonus of non-salaried barangay officials and employees is equivalent to their monthly honoraria.

Conditions on the grant of 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:

  1. 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;
  2. Personnel remains to be in the government service as of May 15 of the current year; and
  3. 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.

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.

Mid Year Bonus of Employees with less than four (4) months of government service

Can the Mid Year Bonus be given on a pro-rata basis for those who have not complied the 4-month service requirements?

No. 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.

Mid Year Bonus of Resigned Employee

Can employees who have resigned or retired (i.e., separated from government service) before May 15 of the current year claim Mid Year Bonus?

No. Those who are no longer in government service before May 15 of the current year shall not be entitled to the Mid Year Bonus.

However, a compulsory retiree, whose services have been extended, may be granted Mid-Year Bonus, subject to the pertinent provisions of the covering Circular.

Is the Mid-Year Bonus taxable?

As a general rule, all income received by an employee are taxable except when they are expressly exempted by law.

Pursuant to Revenue Regulation No. 11-2018 dated January 31, 2018, the following 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.

Thirteenth month pay and other benefits. –

(a) Thirteenth month pay equivalent to the mandatory one (1) month basic salary of official and employees of the government (whether national or local), including government-owned or controlled corporations, and/or private offices received after the twelfth month pay; and

(b) Other benefits such as Christmas bonus, productivity incentives, loyalty award, gift in cash or in kind, and other benefits of similar nature actually received by officials and employees of both government and private offices, including the Additional Compensation Allowance (ACA) granted and paid to all officials and employees of the National Government Agencies (NGAs) including State Universities and Colleges (SUCs), Government-Owned and/or Controlled Corporations (GOCCs), Government Financial Institutions (GFIs) and Local Government Units (LGUs).

The above stated exclusions under (a) and (b) shall cover benefits paid or accrued during the year, provided that the total amount shall not exceed ninety thousand pesos (₱ 90,000), which may be increased through rules and regulations issued by the Secretary of Finance, upon recommendation of the Commissioner, after considering among others, the effect on the same of the inflation rate at the end of the taxable year.

An employee who receives additional compensation such as commissions, honoraria, fringe benefits, benefits in excess of the allowable statutory amount of ₱90,000.00, taxable allowances and other taxable income other than the SMW, holiday pay, overtime pay, hazard pay, and night shift differential pay, shall be taxable only on such additional compensation received.

Mid Year Bonus of Part-Time Government Employees

The Mid-Year Bonus of personnel hired on part-time service in one or more agencies shall be in direct proportion to the number of hours/days of part-time services rendered.

Mid Year Bonus of Government Employees who are on Detail to another government agency

The Mid-Year Bonus of those on detail to another government agency shall be paid by the parent agency, while those on secondment shall be paid by the recipient agency.

Mid Year Bonus of Government Employees who Transferred to another Government Agency

The Mid Year Bonus of personnel who transferred from one agency to another shall be paid by the new agency.

Mid Year Bonus of Government Employees who have Pending Administrative and/or Criminal Cases

Government employees who are formally charged administrative and/or criminal cases which are still pending for resolution, shall be entitled to Mid-Year Bonus until found guilty by final and executory judgment: Provided, that:

  • Those found guilty shall not be entitled to Mid-Year Bonus in the year of finality of the decision. The personnel shall refund the Mid-Year Bonus received for that year.
  • If the penalty imposed is only a reprimand, the personnel concerned shall be entitled to the Mid-Year Bonus.

Funding Source for the payment of Mid Year Bonus

For National Government Agencies, the amounts required for the grant of Mid-Year Bonus to personnel are charged against the agency-specific allocation/budget for the payment of Mid-Year Bonus under the General Appropriations Act (GAA).

For covered GOCCs, the Mid Year Bonus shall be sourced from their respective corporate budget as determined by their respective governing boards.

For LGUs, the grant of the Mid-Year Bonus to personnel of provinces, cities, municipalities and barangays shall be charged against their respective local budget as determined by their respective sanggunian.

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