What Is an Aguinaldo?

The term aguinaldo refers to an annual Christmas bonus that businesses in Mexico are required by law to pay to their employees. The payment, sometimes called the thirteenth salary, must be made by Dec. 20 of each year. Companies that fail to make an aguinaldo payment may be fined as much as 5,000 times the legal daily 澳洲幸运5官方开奖结果体彩网:minimum wage. S💦ome other Latin American nations, such as Costa Rica, also require employers to pay thei⭕r employees an aguinaldo.

Understanding Aguinaldos

Mexican labor laws require employers to pay their employees a bonus or an aguinaldo every year. This is on top of their regular salaries and other benefits. The law, which was established by legislation passed in 1970, mandates that workers are entitled to an annual bonus in December that is the equivalent of at least 15 days' wages. An aguinaldo may be prorated for those employed less than one year.

Employers must withhold taxes from aguinaldos as they are subject to taxation. Employees are not required to pay 澳洲幸运5官方开奖结果体彩网:income tax on their aguinaldo payment of an amount equivalent to 30 days of the legal daily minimum wage. For example, if the minimum daily wage is $60 pesos, the 澳洲幸运5官方开奖结果体彩网:tax-exempt amount of the aguinaldo is $1,800 pesos, or $60 pesos x 30 days.

Aguinaldos are also commonly paid by employers for the Christmas season in other Latin American countries, such as Guatemala and Costa Rica. Employers in Argentina and Uruguay give their employees an aguinaldo in two payments: one in June and the other in December.

Special Considerations

Aguinaldos are mandatory. This means that all employers are legally required to pay them. Employees who don't receive their bonuses can report their employers to the Federal Office of the Defense of Labor. Failure to pay, paying late, or making partial payments can result in fines as much as 50 to 5,000 times the minimum wage, which is $141.70 pesos per day.

Despite the consequences, only a minority of Mexican workers actually receive the payment, due to unfavorable working conditions, such as informal contracting and temporary employment. For example, a part-time gardener without a formal 💧contract may not receive an aguinaldo payment. Some people may choose to tip their workers, including maids, postmen, delivery people, before the holidays even if they aren't required to do so.

Advantages and Disadvantages of Aguinaldo

The aguinaldo provides a seasonal boost in demand for retail products such as automobiles, appliances, clothing, and furniture. A large portion of this additional income gets spent in department stores. Some employers increase aguinaldo payments to boost sales during El Buen Fin, which is Mexico’s equivalent of 澳洲幸运5官方开奖结果体彩网:Black Friday.

Employees who receive an aguinaldo payment are more likely to show loyalty to a company that values them. Loyal employees are typically more productive and less likely to leave, which re🌌duces recruitment and training costs.

Critics believe that these mandatory payments may put financial pressure on struggling companies that could result in layoffs and/or closures. To combat this risk, companies are permitted to make aguinaldo payments to th♒eir employees via installments, provided that they don't defer the entire payment. 

Examples of an Aguinaldo

Let's say someone has been employed with the same company for 10 years and their annual salary is $180,000 pesos. By law, their employer must pay them an aguinaldo or bonus of $7,500 pesos. Here's how it's calculated:

• $180,000 pesos ÷ 12 months ÷ 2

This is the equivalent pay of 15 days.

As mentioned above, aguinaldos for workers employed less than a year are prorated. So someone who only works for six months gets the equivalent of 7.5 days by Dec. 20.

In some cases, though. large companies may pay employees 30 days of wages or 13 months of salary per year. This is why the aguinaldo is sometimes referred to as the thirteenth salary. Some employees, including those who work in higher positions, may be able to negotiate higher bonuses with their employers.