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Thirteenth salary

From Wikipedia, the free encyclopedia

The thirteenth salary (possible to express as 13th-month pay, 13-month bonus, 13th-month salary or Aguinaldo) is a bonus that employers pay to their workers.[1] It is a very important factor of wage in many countries and the reason for the level of significance it plays could be connected with the season that it is paid to employees. It is usually paid by the end of the year (in December) in order to be able to enjoy the Christmas holidays. Another reason could be to compensate unexpected expenditure. Many people have their consumption equal to income, so one extra salary has enormous effect on savings and consumption. This leads to fact that in many countries it is even required by law. The thirteenth salary has many methods of computation, but most frequently it is one-twelfth of the employee salary in preceding 12 months.[2] The thirteenth month bonus is sometimes understood as holiday bonus, which is not true. Holiday bonus is additional amount of money, which is an evaluation of workers job.

The Aguinaldo (synonym for 13th-month salary in Latin America countries) has positive effect on the economy. It provides a short-time increase in demand.[3] People want to spend that extra money on market. That is also influenced by shopping spree before Christmas. They will want to enjoy holidays and buy more expensive food and presents, such as electronic devices or clothes.


One of the first information about thirteenth salary comes from Philippine in December 1975 and has a reasonable background. There was a problem with updating minimal wage rate.[1] Living with earnings equal to minimal wage is very difficult to manage. Moreover, if you had to borrow money for unexpected problems or if you want to have your children been educated and pay for their schools. It is almost impossible to save any money for that reasons without being suffered by yourself. Philippine president Ferdinand Marcos created law about paying 13th salary in order to improve this situation, because minimal wage had not been changed for 5 years.[1] The law has required improvement. It brings bonus amount of money not only to the low-salary ones, but to everybody, who is entitled to get it. This could lead to either increase in consumption or increase in savings.

 The first "thirteenth salary" appeared in the USSR.

 Compensation based on the results of the annual work - “the thirteenth salary” - is paid in addition to the basic salary on the basis of the decision of the Central Committee of the CPSU and the Council of Ministers of the USSR of October 4, 1965 “On improving planning and enhancing economic incentives for industrial production”. It is paid from the material incentive fund. The specific amount of funds is determined by the administration in conjunction with the committee of the union. If the company fulfilled or exceeded the annual plans for the sale of products (or profits) and estimated profitability, the “thirteenth salary” can be paid not only from the funds earmarked for the budget for these purposes, but also from other free cash balances from the material fund encouragement. If the company has not fulfilled these targets, the remuneration is paid in reduced amounts.[4]


Many countries were in similar situation and they wanted to help their workers by implementing laws about thirteenth salary, too. There is quite a high possibility that thirteenth month bonus could be followed by another benefits as holiday bonus. Some nations have accepted laws about additional salary called fourteenth-month pay (or even fifteenth salary). In addition, some regions have even fourteenth salary compulsory.[2] Looking on some countries detaily we can find that for instance Brazil has mandatory fourteenth month pay, but it is taken as holiday bonus.[5]

The payments also varies from country to country. Some has only one payment at the end of the year, whereas another nations divided instalments into usually two halves. One paid in the first half of the year and the second at the end.[3] It could motivate people to travel or to enjoy summer holidays. Dividing into more parts are possible, too. Companies are required to pay it every year by law. Corporation that fail to make this payments might get fined an amount according to the computation based on minimal wage.[3]


Some benefits are already mentioned above. It could be increase in saving or in consumption. Resulting in higher demand for goods as clothes, mobiles etc. Savings could be then used for children education or to have a buffer against unexpected expenditure.

In countries, where it is not mandatory to pay this extra money, it would help to improve employees loyalty and productivity. It could decrease the number of workers leaving the company, that also decrease the cost of finding and training new employees. Furthermore, it may improve corporate power and position to convince more workers to join the company. In a market with low unemployment rate it could be an opportunity to get very well skilled workers.

Who is entitled?

This is difficult to sum up for every nation together. There are differences according to the law in a particular regions.

Firstly, you should be informed about the additional salary in your contract. There should be conditions about 13th salary precisely formulated. Adding the amount or the calculation that will be used for computation. For instance, foreign employee who has appropriate employment documentation is entitled to receive it. On the other hand, a part-time gardener who has not signed a formal papers may not receive the payment.[3] There are more conditions. For example, you have to work for the company for more than one year. This helps the firm in situation somebody starts working in the last months of the year. It would be unfair to others to work only one month and get wage as for two.


13th salary is normally exempt from any taxes. However, it depends on the law of particular county. In some countries there are strict restrictions. For example, if the payment exceeds the one full month salary, it could be taxable.[6] There also could exist a maximum amount allowed without taxation.


The thirteenth salary is most frequently expressed as one full month salary or the one-twelfth of the sum of the year salary. However, it is not guaranteed that everybody is entitled to this amount. More information in part "Who is entitled". It can be seen in Mexico, most people receive at least 15 days wages.[3] For example in public sector (army, police) it could be based on the number of years in service.


If you earn $ 48 000 per year and you are expecting the full month salary as 13th-month pay. You will receive ($ 48 000 / 12 months) =  $4 000.


In Germany, a legal differentiation is made between the 13th salary and a Christmas bonus (though in most other countries they are used interchangeably). The latter's name and time of payment (usually with the November salary) refers to the Christian Christmas celebration in December. The payment is intended to contribute to the additional expenses incurred on the occasion of Christmas and is intended to retain the employee in the future. [7] The 13th salary, on the other hand, is the consideration of the employer for work performed by the employee on an ongoing basis. It represents a pro rata consideration earned for the work performed, which is only paid out at the end of a calendar year. In the course of the year, the employee thus acquires claims to payment of the 13th salary, which arose proportionately upon leaving the employment relationship before the end of the calendar year, unless the parties to the employment contract have agreed otherwise. [8] The amount of the 13th salary amounts to a fully agreed upon monthly salary, which is not always the case with a Christmas bonus.

Special payments that compensate for regular work performance (a requirement that the 13th salary fulfils in every case and the Christmas bonus in certain cases) can be counted towards the minimum wage as part of the wage threshold.[9] [10] [11] That could be done as in the following example:

A person works full-time and earns 8.03 EUR per hour until the minimum wage of 8.50 EUR per hour is introduced. In addition, the employment contract stipulates that the employee is entitled to respectively half a month's Christmas bonus and holiday payment each year, in total a full monthly salary. In order to at least arithmetically meet the minimum wage of 8.50 EUR per hour that has been required by law in Germany since January 2015, the employer then consolidates the holiday payment and Christmas bonus and pays a twelfth of such amount to the employee every month. The hourly wage of that employee would rise to 8.69 EUR and, hence, fulfill the minimum wage that the employer is required to pay.[12] That, of course, defeats any purpose the Christmas bonus originally had and only increases the employee's salary to the statutory one.

Once tax law is applied, the Christmas bonus is part of the other remuneration's category within the § 39b Abs. 3 of the EStG.[13] By 1990, the Christmas tax allowance was abolished via the Tax Reform Act of July 25, 1988.[14]

Since July 2008, federal officials do no longer receive Christmas bonuses. The previously granted special payments (Christmas and holiday bonus) amounting to 5% of the annual salary were integrated into the officials' basic salary.[15]


Most employers in Switzerland pay their employees' annual salary in 13 instalments and not 12. In December, an employee receives, in effect, two months' salaries (which helps pay their end-of-year bills, Christmas and New Year expenses, etc.). Sometimes, however, they receive half in July and half in December - similarly to the Christmas bonus and holiday payment in Germany. Note, however, that a 13th month's salary isn't a bonus but is, in effect, a delay in payment. It is stated in the employment contract whether a 13th month's salary is paid. Some companies don't pay a 13th month's salary but compensate their employees by paying a higher monthly salary. In the first and last year of employment, the13th salary is paid pro rata if an employee doesn't work a full calendar year.[16]

Some employers operate an additional annual voluntary bonus scheme based on each employee's performance or the employer's profits. Once an employee pays direct income tax and the 13th month's salary plus bonus are paid in the same month, a higher overall rate of tax has to be payed.[17]

1. European Countries[1][2]


  • Armenia: paid before the New Year holidays
  • Greece: 14th-month and holiday bonuses are paid. Paid on Christmas, Easter, and summer vacation
  • Portugal: paid by December 15th
  • Spain: mandatory 14th-month bonus ("pagas extraordinarias"), paid in summer and at Christmas. These salaries can be prorated into the regular twelve salaries[18]


2. Latin America Countries[1][2]

Throughout Latin America, it is commonly known as aguinaldo or prima in Spanish, translated as bonus.[19][20]


  • Argentina: two equal instalments - by June 30th and by December 18th
  • Bolivia: tax-free up to one month’s wages. 14th-month bonus is mandatory as a holiday bonus if GDP is over 4.5%
  • Brazil: paid in two equal parts, by November 30th and by December 20th. 14th-month bonus is mandatory as a holiday bonus. It is equal to 1/12 of the wage paid in December per month worked previously, if the worker was hired less than one full year ago, or the same amount as the December wage otherwise[21][5][22]
  • Colombia: The first half paid within the first 15 days of June and then within the first 20 days of December. Called as "primas"
  • Costa Rica: paid within the first 20 days of December
  • Dominican Republic, Mexico: paid by December 20th
  • Ecuador: 14th-month bonus is mandatory and paid in parts or as one
  • El Salvador: It is a Christmas bonus based on years of service
  • Guatemala: paid at mid-year. 14th-month bonus is mandatory and paid at the end of the year. Both in amount of month salary
  • Honduras: paid in December. 14th-month bonus is mandatory in July, both in amount of month salary
  • Nicaragua: paid by December 10th. Amount of one month’s salary
  • Panama: paid in three equal parts: April 15th, August 15th, and December 15th
  • Peru: paid in July. 14th-month bonus is mandatory and paid in December
  • Uruguay: paid in two halves: June 30th and by the end of the year
  • Paraguay, Venezuela: paid at the end of the year


Chile: paid in December or as two halves in September and December.

3. Asian Countries[1][2]


  • India: paid within eight months of the end of the financial year.
  • Indonesia: religious holiday bonus. Paid at least one week before the holiday.
  • Philippines: By the Labor Code of the Philippines it must be given to (permanent) employees in December. Possibility of two installments, in May and November. The rationale is so that the first tranche in May can aid for the upcoming predominant school year of June to March/April. Sometimes adding 14th, 15th and other bonuses[23]
  • Saudi Arabia: paid on the Eid al-Fitr holiday.


  • China: paid during the month of the Lunar New Year or Spring Holiday.
  • Hong Kong: paid at Lunar New Year or the end of the year.
  • Israel
  • Japan: as a summer bonus paid in June. 14th-month bonus is customary as a winter bonus, paid in December.
  • Malaysia: paid at the end of the year.
  • Nepal: at the same time as the payment of the last month of salary before the festival of Dashain.
  • Singapore (Annual Wage Supplement (AWS)[24], Taiwan: paid at the end of the year.
  • United Arab Emirates: 14th-month bonus is customary and paid at the end of the year.
  • Vietnam: paid month before the Lunar new year holiday. [25]

4. African Countries[1][2]

  • Angola: Mandatory as a vacation bonus paid before holiday. 14th-month bonus is mandatory as a Christmas bonus and paid in December.
  • Nigeria: paid before Christmas.
  • SouthAfrica: paid as a special bonus at the end of the year.

See also


  1. ^ a b c d e f g "13th Month Pay | An Employer's Guide to Monetary Benefits". Globalization Partners. 13 November 2019. Retrieved 29 February 2020.
  2. ^ a b c d e f "Revisiting 13th and 14th Month Bonus Rules in Latin America, Europe, Africa and Asia".
  3. ^ a b c d e Kagan, Julia. "Aguinaldo". Investopedia. Retrieved 29 February 2020.
  4. ^
  5. ^ a b Law 4749, of 12 August 1965
  6. ^ "13th Month Pay Vs. Christmas Bonus: Know The Difference". eCompareMo. Retrieved 29 February 2020.
  7. ^ "BAG, Urteil vom 12. 10. 2005 – 10 AZR 640/04". Retrieved 28 April 2020.
  8. ^ reserved, Copyright Haufe-Lexware GmbH & Co KG- all rights. "Dreizehntes Gehalt | Haufe Personal Office Platin | Personal | Haufe". News und Fachwissen (in German). Retrieved 28 April 2020.
  9. ^ "Bundesarbeitsgericht". Retrieved 28 April 2020.
  10. ^ "Bundesarbeitsgericht". Retrieved 28 April 2020.
  11. ^ SPIEGEL, DER. "Mindestlohn-Urteil: Weihnachtsgeld darf angerechnet werden - DER SPIEGEL - Wirtschaft". (in German). Retrieved 28 April 2020.
  12. ^ SPIEGEL, DER. "Mindestlohn-Urteil: Weihnachtsgeld darf angerechnet werden - DER SPIEGEL - Wirtschaft". (in German). Retrieved 28 April 2020.
  13. ^ reserved, Copyright Haufe-Lexware GmbH & Co KG- all rights. "Sonstige Bezüge im Lohnsteuerrecht | Haufe Personal Office Platin | Personal | Haufe". News und Fachwissen (in German). Retrieved 28 April 2020.
  14. ^ "DFR - BVerfGE 96, 1 - Weihnachtsfreibetrag". Retrieved 28 April 2020.
  15. ^ "Sonderzahlungen -»  dbb beamtenbund und tarifunion". 23 September 2015. Retrieved 28 April 2020.
  16. ^ "Salary and Benefits | ETAS". Retrieved 28 April 2020.
  17. ^ "Salary and Benefits | ETAS". Retrieved 28 April 2020.
  18. ^ [1]
  19. ^ [2]
  20. ^ Sueldo Anual Complementario o Aguinaldo, Ministerio de Trabajo y Seguridad Social, Uruguay
  21. ^ Law 4090, of 13 July 1962.
  22. ^ "13th Salary in Brazil".
  23. ^ "Revisiting 13th and 14th Month Bonus Rules in Latin America, Europe, Africa and Asia". Aon plc. September 2017. Retrieved 5 August 2019.
  24. ^ Ministry of Manpower Singapore - Variable wage components
  25. ^ [3]

Further reading

This page was last edited on 25 May 2020, at 19:14
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