13th-Month Salary
What is 13th-Month Salary?
13th-month salary is a mandatory or customary bonus payment equal to one month’s salary, typically paid at the end of the year. It’s a legal requirement in many countries across Latin America and Southeast Asia, including the Philippines, Brazil, and Argentina.
How 13th-Month Salary Works
Employers calculate this bonus based on the employee’s total basic salary over 12 months, then pay an additional month’s worth - usually in December. In some countries, it's split into two payments (e.g., June and December).
Philippines: Mandatory by law for all rank-and-file employees. Paid no later than December 24.
Brazil: Known as Gratificação de Natal, legally required, with tax implications.
Argentina: Called Sueldo Anual Complementario (SAC) or Aguinaldo, paid in two halves (June + December).
While it's often associated with full-time employees, some contractors may negotiate a similar benefit depending on market standards.
Why 13th-Month Salary Matters
For U.S. or global companies hiring in regions like LATAM or Southeast Asia, it’s essential to understand and budget for this additional payroll cost.
Avoid compliance issues: In countries where it’s mandatory, skipping it can result in fines or legal action.
Boost retention: Contractors and employees expect it - missing this payment damages trust.
Better planning: Knowing about this cost upfront helps set accurate compensation benchmarks.
Platforms like SigmaRemote automatically factor in regional bonuses like the 13th-month salary to ensure compliant and predictable payroll.
Example Use Case
A U.S. startup hires a developer in the Philippines for $1,200/month.
Come December, they are legally required to pay an additional $1,200 as 13th-month salary.
Using a global payroll platform like SigmaRemote, this is automatically calculated and disbursed in compliance with local law.
Related Glossary Terms
Employer of Record (EOR)
Cross-Border Compliance
Contractor Classification
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