What is a 13th Salary & Which Countries Offer Them?

Alex Margolin December 07, 2021

13th and 14th salaries are additional compensation companies pay to their workforce as either voluntary, performance-based bonuses or as mandatory payments equal to a month’s salary. Mandatory 13th salaries are particularly common in Latin America, but are increasingly popular in Europe, Asia, and Africa. A smaller number of countries, including Brazil, Greece, and Angola, also require 14th salaries, with an extra payment made in the summer as well.

For companies opening foreign offices or hiring remote talent abroad, it’s essential to know which countries require 13th and 14th salaries. Failing to comply with the law can lead to fines and sanctions from governments.

In many cases, 13th salaries are part of collective agreements, sometimes on the national level and embedded in employment contracts. Correctly anticipating costs is essential to budget planning. Otherwise, it’s easy to miscalculate hiring expenses and face an unpleasant surprise at the year’s end.

What Are 13th and 14th Salaries?

As the name suggests, 13th and 14th salaries are payments to employees beyond their regular salary terms. The government in the Philippines enacted the first mandatory Christmas bonus in 1975 to help workers meet their holiday demands. Since then, the idea of a 13th salary has been adopted in one form or another by nearly 50 countries.

The policy typically takes one of three forms.

Mandatory Benefit – if countries mandate the payment of 13th or 14th salaries, there are penalties for companies that fail to make the payment. In Ecuador, for example, the 13th salary payment is mandatory and paid in December and a 14th salary is paid in March or April. Employees often depend on the additional compensation. The fines that result could be significant but the loss of trust in the workforce may be even more damaging.

Common Benefit – in many countries, companies are not legally obligated to pay 13th salaries, but the practice is widespread. In those countries, as in Cyprus and Czech Republic, the idea is closer to the traditional idea of a Christmas bonus granted to increase motivation and employee retention. As a common benefit, there may not be fines for not making the payments, but a company’s reputation may suffer if it does not participate and attracting and retaining talent will be more difficult.

Collective Agreements – In some countries, 13th salaries are included in collective agreements. In Italy, for example, under the Italian National Collective Labor Agreement, the 13th and 14th monthly payments are mandatory for employees and salaries are paid in 14 instalments.

Who Qualifies for Compensation?

The 13th and/or 14th salaries are typically paid to all salaried employees on employment contracts, though some countries make exceptions for executive-level leaders. It makes no difference if the employees are paid by direct payroll or through an Employer of Record (EoR) arrangement.

For companies with remote employees, the general guideline is that the employee is governed by the labor and tax laws of the country where the work is performed, so even if your company is based in the US, which does not mandate 13th salaries, you may still be obligated to your employees based in countries that do.

Independent contractors and freelancers typically do not get the additional salary.

Which Countries Have 13th or 14th Salaries?

As with most labor laws, the administration of these additional payments varies widely from country to country.

Europe13th and 14th Salary Status
Belarus13th salary is not mandated by law but commonly paid to workers in December. It is often included in collective agreements.
Austria13th and 14th salaries are often part of collective bargaining agreement, usually paid in December and the 14th salary paid in May.
Belgium13th and 14th salaries are mandatory - a Christmas bonus (100% salary) paid in December and a Holiday allowance (92% salary) paid in June.
Cyprus13th salary is a common benefit and depends on the employment contract.
Czech RepublicMany employers provide a 13th salary based on performance.
FinlandEmployers commonly provide 13th salary before Christmas.
Greece13th and 14th salary are mandatory in the private sector, paid at Christmas, Easter & in the Summer.
LithuaniaMany employers provide a 13th bonus based on performance.
LuxembourgIt is customary to give an annual allowance called K15 during the second half year. paid equally to all employees.
MacedoniaIt is customary to give an annual allowance called K15 during the second half year. paid equally to all employees.
Portugal13th and 14th salaries are mandatory, paid in June in time for the Holidays and in December in time for Christmas.
SloveniaCommon benefit paid at the end of the year.
SwitzerlandMany employers provide a 13th salary during December.
Middle East & Asia13th and 14th Salaries
Philippines13th salary must be paid on or before 24th December and is equivalent to one month’s pay.
Japan13th salary is customary as a summer bonus paid in June. 14th salary is also customary as a winter bonus paid in December.
ChinaIt is customary to pay a 13th salary at the end of the Chinese year.
Hong KongEmployers commonly provide a 13th salary during December.
India13th salary is mandatory for certain types of employees in India, paid within eight months to the end of the financial year.
Indonesia13th salary is mandatory, paid before Ramadan.
MalaysiaIt is customary to pay a 13th-month at the end of the year.
Saudi ArabiaCustomary to make payment on the Eid al-Fitr holiday.
SingaporeIt is customary to pay a 13th month salary at the end of the year.
TaiwanCustomarily paid on Lunar New Year.
VietnamCustomarily paid on Lunar New Year.
U.A.E13th salary is customary. 14th month is also customary and is paid at the end of the year.
South America13th and 14th Salary
Argentina13th salary is mandatory, paid in two equal instalments. One is paid on or before June 30 and the other is paid by December 18
Bolivia13th salary is mandatory, and a 14th holiday bonus is required if the GDP is over 4.5%.
Columbia13th salary payment is mandatory and paid in two equal parts. One part is paid in December and the other is paid in June to employees who do not receive an “integrated salary.”
Brazil13th and 14th salaries are mandatory, paid in two equal instalments. One is paid by November 30 and the other by December 20. The mandatory 14th month bonus is considered to be a holiday bonus.
Ecuador13th month salary is mandatory and paid in December and the 14th salary is paid in March or April.
Paraguay13th salary is mandatory, paid at the year-end.
Peru13th and 14th salaries are mandatory. 13th is paid in July and 14th is paid in December.
Uruguay13th salary is mandatory, paid over 2 instalments, one in June and one at the year-end.
Venezuela13th salary is mandatory, paid at the end of the year.
Central America13th and 14th Salaries
El Salvador13th salary is mandatory and paid in December as a Christmas bonus. The amount depends on the number of years of service.
Guatemala13th and 14th salaries are mandatory.
Honduras13th and 14th salaries are mandatory. The 13th is paid in December and the 14th is paid in July.
Nicaragua13th salary is mandatory, paid by December 10th
Panama13th salary is required but paid over three equal instalments in April, August, and December.
Costa Rica13th month salary payment is mandatory in Costa Rica, paid by December 20th.
Dominican Republic13th salary is mandatory, equal to one-twelfth (1/12) of the total regular salary earned during the year and paid by December 20th as a Christmas bonus.
Puerto RicoFor companies with at least 20 employees, a bonus of 2% of pay is mandatory. For companies with less than 20 employees, a $300 bonus is mandatory. During the first year of employment, employees receive half of mandatory amount, paid between November 15 and December 15.
Mexico13th salary is mandatory, paid by December 20th as a Christmas bonus.
Africa13th and 14th Salaries
Angola13th and 14th salaries are mandatory. One is a Bonus paid before vacation and the other is a Christmas bonus paid in December.
MoroccoSome employers offer a 13th salary or seniority bonus.
South AfricaMany employers provide a 13th salary during December.

How Countries Calculate 13th Salaries

There are a number of different ways companies calculate their 13th and/or 14th salary payments. The most common way is to divide the total annual pay by 12 and add the amount to the employee’s salary on the designated time. If the country also has a mandatory 14th salary, the same process would be repeated twice.

Other countries break down the total annual pay for each employee into 13 or 14 parts. In those cases, the additional pay is already factored into the employee’s gross pay. In those cases, it is common for the 13th and/or 14th salary to be included in the employment contract.

For companies hiring abroad, it is important to know how the additional salary items are calculated in the country where the employee is based. Otherwise, it is easy to make a mistake in budget planning and either underestimate or overestimate the hiring costs.

How are 13th Salaries Taxed?

How 13th and 14th salaries are taxed depends on how they are classified in each country. When they are treated as mandatory salary, they often come under the same tax rate as any other monthly salary payment.

When they are viewed as bonuses, it usually depends on the amount that’s paid and whether it crosses a threshold in that country. But even when the added payments are classified as a bonus, the tax laws vary from country to country on how it will be taxed. Many countries treat the added payment as

Just as there is no single rule on whether the 13th or 14th salary are mandatory or optional, there is no single formula for determining tax rates. It is advisable to consult a guide for the particular countries where you plan to hire to understand the tax ramifications.

Get the Papaya Experience in People, Payroll, and Payment Management

If your company is planning an expansion or engaged in hiring remote employees without regard for location, it makes sense to consult an employment manual such as Papaya’s Countrypedia, a guide to labor and tax laws in over 160 countries.

Countrypedia is part of Papaya’s Knowledge Center, which provides updated information on salary benchmarks, mandatory benefits, tax rates, and more – everything you need to know before hiring abroad.

In addition, our Company Hub contains direct access to Papaya’s team of experts, essential guides for onboarding in all relevant countries, and information on everything from compensation and benefits to equity management, immigration, labor laws and more – all tailored to each client.

Papaya’s end-to-end solution supports all types of global workers (payroll, EoR, and contractors) in over 160 countries. The automated, cloud-based SaaS payroll software provides an end-to-end solution, from onboarding to on-going management to payments across state or national borders.

The automated platform ensures payroll compliance, provides benefits management, and ensure data privacy in compliance with GDPR.

Contact us for a strategic consultation.

Papaya Global payroll platform lets you:

  • Automate payroll with zero processing errors
  • Manage global payroll, PEO & contractors via one platform
  • Make cross-border payments in 140+ countries