13th Month Pay is one of the most awaited December perks for everyone who works in the Philippines. And for someone who's just started with freelance work, this may be something you have been used to receiving every end of the year. But now that you are a freelancer, should you demand for this benefit from your clients?
Truth is, I have asked myself that same question before. And there are some points to consider why you should and why shouldn't ask for this benefit. Let me explain.
You shouldn't ask because you are a freelancer, not an employee
Terminologies can sometimes be confusing so to get things straight, let's define a couple of things.
a. Employee – Business Dictionary defines an employee as: “An individual who works part-time or full-time under a contract of employment, whether oral or written, express or implied, and has recognized rights and duties. Also called worker.” On the other hand
b. Freelancer – Working on a contract basis for a variety of companies, as opposed to working as an employee for a single company. Freelancers are often considered to be self-employed and have the freedom to pick and choose the projects and companies they would like to be associated with. A common profession for freelancing is writing; a writer then has the ability to submit their work to many different places, without being tied to any one company in particular.
If you work for a client from overseas on a freelance or contract basis, your client is not covered by Presidential Decree 851 or the 13th Month Pay Law. According to the implementing rules of PD 851:
Employers shall pay to all their rank-and-file employees a thirteenth-month pay not later than December 24 of every year.
Employers who are exempted from paying the 13th month pay include:
a. The Government and any of its political subdivisions, including government-owned and controlled corporations, excepts those corporations operating essentially as private subsidiaries of the Government;
b. Employers already paying their employees a 13th month pay or more in a calendar year or its equivalent at the time of this issuance;
c. Employers of household helpers and persons in the personal service of another in relation to such workers; and
d. Employers of those who are paid on purely commission, boundary, or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case the employer shall grant the required 13th month pay to such workers.
You should educate then negotiate
Different countries have different labor laws. Some have 13th month pay like Brazil, Colombia, Argentina (Source: NearshoreAmericas), Belgium, Germany, while others do not. Some clients are also more open to discussing how to compensate their contractors. As a matter of fact, I've had clients who've volunteered to give a 13th month pay last year. But if you have not been fortunate to have this kind of client, the best way is to educate them. While this may be a path not commonly tread by freelancers for fear of outright rejection it is something you would want to consider raising for clients whom you have established relationship and have built a certain level of trust and confidence. Negotiate but don't demand.
13th Month Pay or Bonus
There are also misconceptions that 13th month pay is the same as a year-end bonus. Let me clarify that. By definition:
Bonus is an amount granted and paid to an employee for his industry and loyalty which contributed to the success of the employer’s business and made possible the realization of profits. It is an act of generosity granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. The granting of a bonus is a management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient. Thus, a bonus is not a demandable and enforceable obligation, except when it is made part of the wage, salary or compensation of the employee.
When you chose to become self-employed or a freelancer, you've practically waived your rights of the Government mandated benefits such as 13th month pay, health insurance, and other perks that come with being an employee. The question of whether to ask your clients for these benefits is something you can negotiate but not demand. Sometimes, you won't even have to ask. As long as you do your job and perform your best, the rewards will come naturally and sometimes voluntarily.