What is "thirteenth-month pay" as defined in labor laws?

Thirteenth-month pay is essentially a mandatory form of monetary benefit granted to employees, typically within certain jurisdictions as part of labor laws. This payment is calculated as one-twelfth of the total basic salary earned by an employee during the entire year.

This means that an employee's total basic salary within the year is totaled up, regardless of the number of months worked, and then divided by twelve to arrive at the amount that constitutes the thirteenth-month pay. Its purpose is to provide financial relief and support to employees, usually around the end of the year or during festive seasons, which helps them manage their expenses during such times.

Other definitions presented in the choices do not accurately capture the essence of thirteenth-month pay. While the concept of an additional bonus may seem similar, the key aspect of the calculation method — one-twelfth of the basic salary earned — is what distinguishes it and qualifies it as a legal obligation under labor laws.