Updated Rules and Regulations on the Grant of the Year- End Bonus and Cash Gift

This Guideline is addressed to:

All Heads of Departments, Agencies, State Universities and Colleges (SUCs) and other Offices of the National Government, Including Commissions/Offices under the Constitutional Fiscal Autonomy Group (CFAG), Government-Owned or -Controlled Corporations (GOCCs); Heads of Local Government Units (LGUs); and All Others Concerned

Background

Executive Order (EO) No. 201, s. 2016, entitled “Modifying the Salary Schedule for Civilian Government Personnel and Authorizing the Grant of Additional Benefits for Both Civilian and Military and Uniformed Personnel,” provided for the adoption of a compensation adjustment strategy that will ensure that the government compensation structure is comparable with the prevailing rates in the private sector, thereby attracting and retaining competent and committed civil servants.

The compensation adjustment strategy includes the following:

Increase in the basic salary of civilian personnel;

Grant of new and increased rates of certain allowances for the military and uniformed personnel;

Grant of a Mid-Year Bonus equivalent to one-month basic salary not earlier than May 15 of every year, as an additional benefit; and

Enhancement of the existing Performance-Based Bonus.

EO No. 201 likewise provides that the existing Year-End Bonus and Cash Gift shall be given in November of every year.

Who are entitled to the Year-End Bonus and Cash Gift?

The following are entitled the the YEB and CG:

All positions for civilian personnel whether regular, contractual, or casual 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 Senate and House of Representatives Joint Resolutions 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 Communications; and National Mapping and Resource Information Authority of the Department of Environment and Natural Resources.

Who are not entitled to the Year-End Bonus and Cash Gift?

The following are not entitled to the YEB and CG:

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 employer-employee relationships and funded from non-Personnel Services appropriations/budgets. Said individuals may include, but not limited to, the following:

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;

Student laborers and apprentices; and

Individuals and groups of people whose services are engaged through job orders, contract of services, or others similarly situated.

What is Monthly Basic Pay?

Monthly basic pay shall refer to the monthly salary for civilian personnel, including contractual personnel; the total daily wages for the twenty-two (22) working days a month for casual personnel (equal to the monthly salary of a regular personnel); the monthly base pay for the military and uniformed personnel; and the monthly honoraria for barangay officials and employees.

What is meant by total or aggregate service?

The total or aggregate service required from government personnel for the purpose of the grant of Year-End Bonus and Cash Gift shall include all actual services rendered while occupying a regular, contractual, or casual position in the national and/or local government, including leaves of absence with pay.

Guidelines on the Grant of Year-End Bonus and Cash Gift

The Year-End Bonus equivalent to one (1) month basic pay as of October 31 and Cash Gift of P5,000 shall be given to entitled government personnel not earlier than November 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 January 1 to October 31 of the current year; and

Personnel remains to be in the government service as of October 31 of the same year.

Those who have rendered at least a total or an aggregate of four (4) months of service from January 1 of the current year but who have retired or separated from government service before October 31 of the same year shall be granted within the month of retirement or separation, a prorated share of the: a) Year-End Bonus based on the monthly basic pay immediately preceding the date of retirement or separation; and b) Cash Gift of P5,000, as follows:

Those who have rendered a total or an aggregate of less than four (4) months of service from January 1 to October 31 of the current year and are still in government service as of October 31 of the same year, shall be entitled solely to a pro-rated Cash Gift pursuant to Section 2 of RA No. 8441, as follows:

YEB and CG of Part-Time Service Personnel

The Year-End Bonus and Cash Gift 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.

YEB and CG of Personnel on Detail

The Year-End Bonus and Cash Gift of personnel on detail with another government agency shall be paid by the parent agency, while those on secondment shall be paid by the recipient agency.

YEB and CG of Transferee

The Year-End Bonus and Cash Gift of personnel transferred from one agency to another shall be paid by the new agency.

YEB and CG of Compulsory Retiree whose services have been extended

A compulsory retiree, whose services have been extended, may be granted Year-End Bonus and Cash Gift, subject to pertinent provisions of this Circular.

YEB and CG of Personnel with Cases

Those who are formally charged administrative and/or criminal cases which are still pending for resolution, shall be entitled to Year-End Bonus and Cash Gift until found guilty by final and executory judgment, provided that:

Those found guilty shall not be entitled to Year-End Bonus and Cash Gift in the year of finality of the decision. The personnel shall refund the Year-End Bonus and Cash Gift received for that year.

If the penalty imposed is only a reprimand, the personnel concerned shall be entitled to the Year-End Bonus and Cash Gift.

Year-End Bonus and Cash Gift of Barangay Personnel

As determined by the respective sanggunian, elective or appointive barangay officials or employees who have rendered at least a total or an aggregate of four (4) months of service from January 1 of the current year and who are still in the service as of October 31 of the same year, may be entitled to the Year-End Bonus equivalent to one (1) month Honorarium received as of October 31 and Cash Gift of P5,000.

Those who have rendered a total or an aggregate of four (4) months of service from January 1 of the current year but who have retired or separated from government service before October 31 of the same year may be entitled to a proportionate share of the Year-End Bonus and Cash Gift, consistent with Item 6.2 of Budget Circular No. 2016-4. (download the Circular)

A pro-rated Cash Gift may also be granted to personnel who have rendered a total or an aggregate of less than four (4) months of service from January 1 to October 31 of the current year and are still in government service as of October 31 of the same year, pursuant to Item 6.3 BC No. 2016-4.

A salaried barangay employee may likewise be granted Year-End Bonus and Cash Gift, subject to the conditions provided in the Circular.

Source of Funds

For national government agencies (NGAs), the Year-End Bonus and Cash Gift for personnel occupying regular positions shall be charged against agency appropriations in the annual General Appropriations Act (GAA). For FY 2019, funds for this purpose were released to the agencies pursuant to National Budget Circular (NBC) No. 573 dated January 3, 2018. (download the Circular)

What to do in case of deficiency of funds?

Any deficiency as a result of the salary adjustment under EO No. 201 shall be charged against the Miscellaneous Personnel Benefits Fund (MPBF).

Agencies may request from the DBM for the release of funds charged against the MPBF.

The amounts required for the grant of Year-End Bonus and Cash Gift to casual and contractual personnel in the NGAs shall be charged against agency lump sum appropriations in the annual GAA.

For covered GOCCs, said benefits shall be charged against their respective approved corporate operating budgets.

For LGUs, said benefits shall be charged against their respective local government funds, subject to the Personnel Services (PS) limitation in the LGU budgets pursuant to Sections 325(a) and 331(b) of RA No. 7160 or the Local Government Code of 1991.

Enforcement of said PS limitation shall be waived insofar as the minimum Year-End Bonus of P1,000 for the punong barangay and P600 for the other mandatory barangay officials, and their Cash Gifts are concerned.

Is the YEB and Cash Gift Taxable?

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.

Related: What are the authorized De Minimis Benefits?