Thirteenth-month pay is a mandatory or optional bonus common in many countries, particularly in Latin America. Some countries also institute a 14th-month bonus.
Did you know that many countries in the world mandate more than just 12 monthly salaries? Many labor codes mandate a thirteenth-month salary — and some even include a fourteenth-month salary.
These are mandatory bonuses that amount to an extra month or two of compensation. Generally, they are paid at the end of their calendar year to help employees with holiday expenses.
However, different regions and countries have varying legislation around the 13th-month pay. Let’s take a closer look.
In many countries, 13th-month pay is obligatory. You must factor it into your employees' annual salary. In some places, employment law also dictates a 14th-month salary. This should be part of the total cost of hiring an employee.
There are different regulations on this type of payment that vary from country to country. Usually, they are paid at the end of the calendar year.
Of course, there are also customary holiday bonuses. Depending on the country, a basic salary required by law may not include these extra payments. However, employees may expect to receive one based on the local work culture.
Typically, full-time employees are eligible for the 13th month’s pay. Part-time staff and independent contractors will usually not receive this bonus. However, it’s important to check the local legislature to make sure.
In most cases, workers will receive a full month’s bonus upon working the entire twelve months in the preceding year. If they worked for a shorter period, they’ll receive a prorated amount. For example, employees who work for six months will get half the bonus. Again, each country’s laws may differ in this respect.
Also, employees who have taken approved sick leave or maternity leave will normally be eligible to receive total mandatory bonuses.
Dozens of countries around the world mandate 13th-month pay. A few also require 14th-month pay. Several others have the culture of paying an end-of-year bonus which often amounts to one month’s pay.
13th-month bonuses, known as “el aguinaldo”, are extremely common in Latin American countries. In fact, Chile is the only country in the region where the bonus is not legally mandated.
Most European countries don’t require 13th and 14th-month salaries by law. There are, however, many countries where it is customary to pay this bonus. This includes places like Croatia, Germany, and Switzerland.
There are no countries in the region that legally require a 13th or 14th-month bonus. However, performance-based bonuses are customary in Saudi Arabia and the United Arab Emirates.
Just like in the Middle East, 13th and 14th-month bonuses are rare in Africa. Of the 54 countries on the continent, only Angola mandates both a 13th and 14th-month bonus. It is also common to offer a performance-based bonus to employees in Nigeria and South Africa.
In most countries in Asia, it is not mandatory to pay a 13th-month salary. However, in many, it is customary or worked into employment contracts.
For example, China, Hong Kong, Taiwan, and Vietnam employees frequently receive performance-based bonuses around the Lunar New Year. It is also customary to see performance-based bonuses in Japan and Malaysia.
It can be challenging to navigate the different labor laws across the world. Partnering with an Employer of Record (EOR), like Borderless, will simplify the process. We can help you hire employees in 170+ countries around the world without the legal hassle.
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