Hiring Glossary
13th month pay is a form of additional compensation, that is implemented in various countries to reward employees beyond their regular monthly earnings. This extra payment amounts to one-twelfth of the annual base salary, but this can vary by country. It is especially common in Europe, Asia and South America, and often used for vacation spending.
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As a business owner or human resources manager, you may come across the term "13th month pay" in various countries. This refers to an additional payment, typically equivalent to one month's salary, provided to employees beyond their regular annual earnings. In some nations, such as the Philippines and Brazil, this payment is legally mandated, while in others, it is customary but not compulsory. Understanding the concept of 13th month pay is crucial for ensuring compliance with local labor laws and meeting employee expectations in different regions.
For example, in the Philippines, employers are required by law to provide 13th month pay to all rank-and-file employees. This payment must be made by December 24 each year and is calculated as one-twelfth of the employee's total basic salary earned within the calendar year. Failure to comply with this requirement can result in legal penalties and negatively impact employee morale. Therefore, when managing a global workforce, it's essential to be aware of such practices to maintain compliance and foster positive employee relations.
Typically, full time, salaried employees are entitled to this form of compensation in countries where it is mandatory. However, some types of employees might not qualify to receive it – for example, managerial staff do not receive this benefit in the Phillippines.
Contractors and part-time workers usually do not receive a 13th month salary.
The provision of a thirteenth month salary is not universal but is widely embraced in several countries. It differs depending on the country whether the extra payment is a legal requirement and protected by local employment law and forms part of an employee's employment contract, or merely customary. Some countries also have a mandatory 14th month pay.
Here's a full breakdown of the requirements surrounding the extra payment, and when it is paid by region:
These are the countries in Europe that offer thirteenth month pay, when it is paid, along with a breakdown on whether the payment is customary or mandatory.
These are the countries in Asia that offer thirteenth month pay, when it is paid, along with a breakdown on whether the payment is customary or mandatory.
These are the countries in the Americas that offer thirteenth month pay, when it is paid, along with a breakdown on whether the payment is customary or mandatory.
These are the countries in Africa that offer thirteenth month pay, when it is paid, along with a breakdown on whether the payment is customary or mandatory.
These are the countries in the Middle East that offer thirteenth month pay, when it is paid, along with a breakdown on whether the payment is customary or mandatory.
There are two common ways to calculate the thirteenth month payment, as follows:
It differs from country to country which calculation method is commonly used to pay employees. Some countries also have different methods: for example, in India, it calculated as a percentage of annual salary
Employees with 14th month salaries will get two extra payments in a year, as opposed to 13 month pay where employees get one extra payment.
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13th month pay is sometimes referred to as the 13th month bonus or Christmas bonus. However, while a bonus is often tied to performance and not mandatory, many countries require 13 month pay to form part of an employee's remuneration by law.
ABOUT THE AUTHOR
Milani Notshe
Milani is a seasoned research and content specialist at Playroll, a leading Employer Of Record (EOR) provider. Backed by a strong background in Politics, Philosophy and Economics, she specializes in identifying emerging compliance and global HR trends to keep employers up to date on the global employment landscape.
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