Glossary

What is 13th and 14th month salary?

13th and 14th-month salaries are additional salary payments, often mandated in various countries, serving as bonuses to reward employees. The 13th-month salary, typically one month's base salary paid at the end of the year, originated in the Philippines in 1975 and is commonly referred to as a "Christmas bonus" or "aguinaldo" in Latin countries. The 14th-month salary, though less common, is usually paid during the summer. Employers must be aware of local laws governing these payments to avoid penalties and damage to their reputation. Offering these bonuses can boost morale and enhance employee satisfaction, positioning a company as an employer of choice. Calculating these bonuses involves dividing the annual salary by 12, but the specifics can vary based on local regulations and company policy, making them essential for a competitive global compensation strategy.

How to Calculate 13th Month Pay

Calculating 13th month pay can differ by location. In some regions, the annual salary is divided by 12, while in others, it may be divided by 13 or based on a percentage of the salary. For instance, in Argentina, the "aguinaldo" equals 50% of the highest monthly salary earned in previous months.