Unwrapping the Bonus Surprise: The Joy of the 13th Month Salary!
The holiday season is upon us, and amidst all the merriment and festive cheer, there’s an additional reason to celebrate – the 13th month salary! This delightful surprise brings an extra wave of joy to employees across various industries. From the anticipation of unwrapping that extra paycheck to the excitement of unexpected treats, let’s dive into the enchanting world of the 13th month salary and discover the magic it holds!
In many countries, employers calculate the salaries of their employees using the regular 12-month salary based on the calendar year. However, there are some countries where employees are eligible to receive a so-called “13th-month salary.” Companies operating in countries that don’t require a 13th-month salary bonus, but hire workers in countries that do mandate or expect the payment, need to be aware of the requirement and their obligation to provide this benefit to foreign team members.
Tis the Season for Extra Cheer: The 13th Month Salary is Here!
As the year comes to a close, companies around the globe embrace the spirit of generosity by offering their employees an additional paycheck, fondly known as the 13th month salary. This bonus surprise serves as a token of appreciation for their hard work and commitment throughout the year. It provides a much-welcomed boost, allowing individuals to embrace the holiday season with an extra skip in their step and a sparkle in their eyes.
For many, the 13th month salary is a unique opportunity to fulfill long-awaited plans and aspirations. Whether it’s purchasing that dream vacation, upgrading to the latest gadget, or treating loved ones to special gifts, this unexpected financial windfall opens doors to new possibilities. It’s the perfect time to indulge in the joys of the season and make memories that will be cherished for years to come.
How to calculate the 13th-month salary
Understanding the payroll requirements of your employee’s home country is important for the 13th-month salary computation. The most common computation method is to simply divide a worker’s annual salary by 12 to determine their monthly pay and pay out that amount.
Some countries have different practices. For example, in Argentina, companies pay a bonus equal to the highest monthly earnings in the previous six months. In other countries, companies divide the annual salary by 13, or base the bonus on a percentage of one’s salary.
For employees who don’t work a full 12 months, employers in principle can prorate the 13th-month salary payment. The most common method for this is to multiply the employee’s base monthly salary by the number of months they worked and divide by 12 to determine the prorated payment.
Taxes and payouts
It’s critical to understand the individual country’s rules on taxation (and social security contributions) on the 13th-month payments, in order to avoid fines or penalties for non-compliance. The taxes vary per country and even some countries provide for a lower tax rate on the 13th-month than the normal taxation rate on salary. An example is Austria with a tax rate of only 6% on the 13th month pay. Which countries offer a 13th-month salary?
Although the practice of a 13th-month salary originated in the Philippines in the 1970s, it has since spread throughout the world. As mentioned above, some countries’ local laws either mandate that employers pay a 13th-month bonus, or such requirements are reflected in local collective bargaining agreements for certain industries, or it is just a customary benefit that employees expect but which are not mandatory.
Countries where a 13th-month salary is mandatory or often provided for in collective bargaining agreements, include
- Argentina
- Austria
- Belgium
- Brazil
- Colombia
- Finland
- Germany
- Greece
- India
- Indonesia
- Italy
- Mexico
- Nigeria
- Panama
- Peru
- Philippines
- Portugal
- Spain
- Uruguay
- Venezuela
Countries where a 13th-month salary is not required by law, but often customary and expected by workers:
- Chile
- Croatia
- Cyprus
- France
- Hong Kong
- Israel
- Japan
- Luxembourg
- Malaysia
- Netherlands
- Singapore
- Slovakia
- South Africa
- Switzerland
- Taiwan
- Vietnam