13th/14th Salary
The Complete Guide
When branching out to employment in a new territory, it’s likely you’ll encounter some unfamiliar payroll jargon, including the terms 13th and 14th salary payments. Whilst only mandatory in 25 countries worldwide, it’s customary to include these in an additional 30 countries’ employment contracts. Here’s everything you need to know.
Key Chapters:
- What Is a 13th-Month Salary?
- What Is a 14th-Month Salary?
- How is it calculated?
- 13th and 14th Salary Practices by Country
- How is 13th month salary different to a bonus?
- How Are These Salaries Taxed?
- Key Considerations for Global Employers
- Simplify Global Payroll with an EOR
- Need help navigating 13th-month pay in your target country?
When expanding into a new market, you’re likely to encounter unfamiliar payroll terminology, such as 13th and 14th salary payments. While these are legally mandatory in around 25 countries, they are also commonly included in employment contracts in about 30 additional countries, based on local customs. Here’s everything you need to know.
What Is a 13th-Month Salary?
A 13th-month salary is an additional payment – typically equivalent to one month’s salary – given at the end of the year. It’s either mandatory or customary in several countries and is often considered part of the total compensation package.
What Is a 14th-Month Salary?
Less common, a 14th-month salary may be paid mid-year or during national festivals. It’s usually discretionary or tied to performance, but in a few countries (like Bolivia, conditionally), it’s governed by law.
How is it calculated?
13th and 14th salaries can be calculated in a few different ways depending on local laws and employer preferences. Here are the most common methods:
Standard Monthly Salary Method
This is the most widely used approach in countries where a 13th salary is mandatory.
Formula:
Annual salary ÷ 12 = 13th salary payment
An additional month’s wage is paid based on the employee’s regular monthly earnings.
Pro-Rated Method
In some regions, the annual salary is divided across 13 or 14 months to spread the total cost evenly.
Formula:
Annual salary ÷ 13 = Monthly salary
(Each month, the employee earns slightly less, but still receives a full 13th payment.)
Local Legal Formula
Many countries have specific rules governing how the 13th or 14th salary is calculated. These might:
- Exclude bonuses or commissions
- Be based on actual base pay over a defined period
- Be prorated if the employee has not worked the full year
Why It Matters
The calculation method can directly affect:
- How the base salary is presented
- Employer cost planning
- Employee expectations
When hiring through an Employer of Record (EOR), it’s essential to understand local regulations and practices to ensure compliance and clarity in salary structures.
13th and 14th Salary Practices by Country
Europe
Armenia | 13th-month salary customary, paid before New Year |
Austria | Both 13th and 14th-month salaries are mandatory, typically paid in June and November. |
Belgium | 13th-month salary is mandatory; a 14th-month bonus (écule de vacances) is common in summer. |
Croatia | 13th-month salary is customary, though not legally mandated. |
Czech Republic | 13th month salary is customary, typically paid at year-end. |
France | 13th-month salary is customary, often stipulated in collective agreements. |
Germany | 13th-month salary is customary, commonly paid in December. |
Greece | Three payments: Easter bonus, June (holiday), and December (Christmas) |
Italy | 13th-month salary paid in December; 14th often paid in June (varies by sector) |
Luxembourg | 13th-month salary is customary; some employers also offer a partial 14th-month bonus. |
Netherlands | 13th-month salary is customary, typically paid in December. |
Portugal | 13th and 14th salaries, paid in June and December |
Slovakia | 13th and 14th-month salaries are customary, usually paid in summer and at Christmas. |
Spain | 13th and 14th salaries are standard, paid mid-year and in December |
Switzerland | Switzerland – 13th-month salary is customary, generally paid in December. |
Latin America
Argentina | 13th only, split between June and December |
Bolivia | 13th is tax free, 14th paid as mandatory bonus only if GDP over 4.5% |
Brazil | 13th split across November and December, 14th paid in January |
Chile | 13th-month salary is customary, often paid at year-end. |
Colombia | 13th only, split between June and December |
Costa Rica | 13th only, paid in December |
Dominican Republic | 13th only, paid in December |
Mexico | 13th only, paid in December |
Ecuador | 14th mandatory, can be paid in one lump sum or in parts across the year |
El Salvador | 13th, paid as Christmas bonus |
Guatemala | 13th and 14th, paid in June and December |
Honduras | 13th in December, 14th in July |
Nicaragua | 13th only, paid in December |
Panama | 13th paid in 3 parts in April, August, and December |
Peru | 13th and 14th, paid in July and December |
Uruguay | 13th, paid in two halves in June and December |
Paraguay | 13th only, paid in December |
Venezuela | 13th only, paid in December |
Asia
China | 13th-month salary is customary, typically paid during the Lunar New Year. |
Hong Kong | 13th-month salary is customary, usually paid at Lunar New Year or year-end. |
India | 13th salary often refers to statutory bonus, payable within 8 months of year-end |
Indonesia | 13th salary paid as religious holiday bonus (Tunjangan Hari Raya) |
Israel | 13th-month salary is customary, often paid at year-end. |
Japan | Customary summer bonus paid in June and winter bonus in December. |
Malaysia | 13th-month salary is customary, typically paid at year-end. |
Nepal | 13th-month salary is customary, paid before the Dashain festival. |
Philippines | 13th salary mandatory; 14th/15th optional and employer-dependent |
Saudi Arabia | 13th salary not mandatory; sometimes paid around Eid as a bonus |
Singapore | 13th-month salary, known as the Annual Wage Supplement, is customary, usually paid in December. |
Taiwan | 13th-month salary is customary, typically paid at year-end. |
Vietnam | 13th-month salary is customary, often paid before the Lunar New Year. |
Africa
Angola | 13th and 14th, as a vacation bonus and in December as Christmas bonus |
Nigeria | 13th only, paid in December |
South Africa | 13th only, paid in December |
Middle East
United Arab Emirates (UAE). | 13th-month salary is customary, often paid in December. |
Note: Country practices evolve. Always consult a local payroll expert or Employer of Record (EOR) to stay compliant.
How is 13th month salary different to a bonus?
Although it may feel like a bonus, the 13th-month salary is not performance-based. It’s a fixed entitlement in many countries, intended to supplement employee income during key times of year – especially around holidays.
Unlike bonuses, which are typically linked to individual or company performance, 13th-month salaries are usually guaranteed and calculated based on base pay. Tax treatment also differs: some countries offer tax exemptions on 13th-month pay, whereas performance bonuses may be fully taxable or taxed differently.
How Are These Salaries Taxed?
In most countries, 13th and 14th-month salaries are taxed as regular income, subject to standard payroll taxes. However, tax treatment can vary significantly by jurisdiction. Some countries apply exemptions or reduced tax rates, often up to a specific income threshold.
In addition to employee taxation, employer contributions may also differ – certain countries apply reduced or separate social charges on these payments. When hiring through an Employer of Record (EOR), it’s crucial to factor in both the employee’s tax liability and employer-side costs.
Key Considerations for Global Employers
- Budgeting: Account for extra months of pay in annual compensation costs.
- Compliance: Non-payment where required can result in fines or legal action.
- Employee Expectations: Even if not mandatory, omitting these payments in countries where they’re customary can impact retention.
Simplify Global Payroll with an EOR
Managing salary structures across borders can be complex. A trusted Employer of Record (EOR) partner ensures compliance, handles local payroll nuances, and reduces risk – so you can focus on growing your team globally.
Need help navigating 13th-month pay in your target country?
Contact Gibson Watts Global for local insights and full-service EOR support.
Facilitating your requirements, wherever you are.
Talk to us about your PEO & EOR requirements
Written by Juliette Wreford
Juliette has over three years’ experience in the EOR industry, and over 15 years’ experience in Account Management and employment solutions. Prior to her professional career, she was University-educated, achieving a 2:1 BA (Hons) degree in English and Media.
In her role at Gibson Watts Global, Juliette manages relationships with clients, employees and local teams alike, to ensure a consistently customer service-led approach is delivered at all levels. Additionally, Juliette is actively engaged with the company’s marketing activity, both collaborating with external parties on new projects, and researching/creating industry-relevant content.