A Guide to 13th & 14th Month Pay
If you’re based in a country like Australia, the United States, or the United Kingdom, the chances are that you’ve never heard of 13th or 14th-month pay. And if one of your employees tried telling you about it, you’d probably think they were pulling your leg!
13th and 14th-month pay is a real thing in some countries, though. It is also known by other terms such as “13th-month salary”, “13th salary”, or even “holiday” or “Christmas” pay.
While it may not be a common practice where you are, it’s crucial to have knowledge of 13th and 14th-month pay regulations if you employ international remote workers. If you fail to compensate workers with 13th or 14th-month pay where it’s required by law, your company could fall out of compliance with local laws and be liable for some hefty legal penalties.
In this short guide, we’re going to cover everything that you need to know about 13th and 14th-month pay and provide some practical guidance on how your company can ensure compliance.
What is 13th & 14th Month Pay?
In short, 13th and 14th-month pay is the payment of an additional month’s salary during the financial year. It’s a common practice around the world, but there are some variations that rest on the specific employment laws of a particular country or legal jurisdiction.
In the Philippines, for example, 13th-month pay is a form of compensation in addition to an employee’s annual (12-month) salary prescribed by law. In fact, it was in the Philippines where 13th-month pay (or “thirteenth salary” as it’s known there) originated. It was introduced to bridge the gap between minimum wage—which hadn’t been increased for several years—and the higher cost of living.
In contrast, some countries don’t require 13th or 14th-month pay by law. Instead, they leave it to the discretion of employers whether or not it is paid.
Which Countries Have Thirteenth Month Pay & Fourteenth Month Pay
Quite a lot of countries have thirteenth and fourteenth-month pay. There are so many countries that offer it with their own rules and customs, however, that it would be too much information to list here.
Thirteenth Month Pay in Europe
In Europe, thirteenth-month pay is mandatory in Armenia, Portugal, Greece, and Spain. In other countries such as Belgium and Croatia, it’s customary (but not a legal requirement.) Some countries, such as Greece, Spain, and Austria, offer fourteenth-month pay (or bonus), too.
In Switzerland, employees are paid their annual salary in 13 installments rather than 12. This means that employees usually receive two months’ worth of wages in December, which helps pay for Christmas bills.
Meanwhile, in Germany, a legal distinction is made between a thirteenth-month payment and a Christmas bonus, whereas in most other countries, the terms are used interchangeably: The thirteenth-month pay is salary, whereas the Christmas bonus (fourteenth month) is a special Christmas bonus intended to pay additional holiday expenses.
Thirteenth Month Pay in Latin America
Across most of Latin America, thirteenth-month pay—which is known as Aguinaldo or prima (bonus) in Spanish—is required by law. However, how and when this is paid depends on the country.
In Brazil, for example, thirteenth-month pay is paid in two equal parts, by November 30 and by December 20. A mandatory 14th-month bonus is a holiday bonus. In contrast, Peru requires thirteenth-month pay to be paid in July and a fourteenth-month bonus to be paid in December.
The only country in Latin America with customary thirteenth month pay not required by law is Chile, where it’s paid in December as a lump sum or in two halves, in September and December.
Thirteenth Month Pay in Asia
Just like in Latin America, much of Asia has thirteenth-month pay. Here, however, it’s more customary than mandatory. The only countries that legally mandate thirteenth-month pay are India, Indonesia, the Philippines, and Saudi Arabia, where payments are made on Eid al-Fitr.
In China and Hong Kong, customary thirteenth-month pay is made during the month of the Lunar New Year. In Japan, bonuses are paid in both June (summer) and December (winter).
Thirteenth Month Pay in Africa
In Africa, the following countries have thirteenth-month pay:
Is 13th & 14th Month Pay Mandatory?
As you’ve probably worked out by now, it depends on each country’s laws and customs.
Returning to the example of the Philippines, 13th-month pay is required by law here. But in many other places, it’s customary (i.e., businesses don’t have to pay it by law, but they do anyway.)
In places where 13th-month pay is customary, the terms of it are typically set out in employment contracts or through collective industry or trade union agreements. Businesses in these countries are also well within their legal rights to not pay it. In a country where 13th-month pay is required by law, however, serious penalties can be dished out for companies that refuse or otherwise fail to pay it.
Here are the countries where 13th-month pay is required by law, correct at the time of writing in February 2021: