13th-Month Salary

5 April, 2024

5 April, 2024

5 April, 2024

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

  • Global Payroll

  • Employer of Record (EOR)

  • Cross-Border Compliance

  • Contractor Classification


Explore More

📘 [Explore how SigmaRemote simplifies LATAM payroll]
📘 [Learn about cross-border compliance risks]
📘 [Compare SigmaRemote vs Deel in emerging markets]

Related Terms

A management platform to help you succeed

160+ countries

  • Argentina

  • Guinea

  • Scotland

  • Ecuador

  • Europe

  • Brazil

  • Romania

  • Vietnam

  • Canada

  • Belgium

  • Paraguay

  • Argentina

  • Myanmar

  • Cayman

  • Qatar

  • Honduras

12M secured users

A management platform to help you succeed

160+ countries

  • Argentina

  • Guinea

  • Scotland

  • Ecuador

  • Argentina

  • Guinea

  • Scotland

  • Ecuador

  • Europe

  • Brazil

  • Romania

  • Vietnam

  • Europe

  • Brazil

  • Romania

  • Vietnam

  • Canada

  • Belgium

  • Paraguay

  • Argentina

  • Canada

  • Belgium

  • Paraguay

  • Argentina

  • Myanmar

  • Cayman

  • Qatar

  • Honduras

  • Myanmar

  • Cayman

  • Qatar

  • Honduras

12M secured users

Analytics and Reporting

Grow Your Team, Grow Your Business

Streamline HR processes and empower your team with our products. Facilitate manage employee data, and more in one platform.

The payroll platform for businesses powered by global emerging talent.

A management platform to help you succeed

160+ countries

  • Argentina

  • Guinea

  • Scotland

  • Ecuador

  • Argentina

  • Guinea

  • Scotland

  • Ecuador

  • Europe

  • Brazil

  • Romania

  • Vietnam

  • Europe

  • Brazil

  • Romania

  • Vietnam

  • Canada

  • Belgium

  • Paraguay

  • Argentina

  • Canada

  • Belgium

  • Paraguay

  • Argentina

  • Myanmar

  • Cayman

  • Qatar

  • Honduras

  • Myanmar

  • Cayman

  • Qatar

  • Honduras

12M secured users

The payroll platform for businesses powered by global emerging talent.

The payroll platform for businesses powered by global emerging talent.