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In many countries around the world, employers are required by law to provide a 13th month pay to their employees as an additional bonus. This is typically paid at the end of the year or during peak holiday seasons.
This extra payment is designed to reward employees for their hard work and ease financial burdens during costly times of the year. However, not all countries have adopted this policy, and the specific rules regarding its calculation and timing can vary widely.
For any company hiring remote international employees, it’s essential to know the local regulations in which their new employees are based, to avoid legal complications.
13th month pay around the world
Explore our personalized map and find which nations mandate a 13th month pay. Click on country pins to access detailed information.
How to calculate it?
When calculating the 13th month pay, there are several key elements to keep in mind to ensure compliance with local laws and accurate payment to employees:
- Eligibility: Not all employees may be entitled to a 13th month salary. The criteria can vary by country or employer, often depending on factors like length of service, contract type, or specific labor agreements.
- Pro-rata calculation: Employees who haven’t worked a full year may receive a prorated amount based on the months or days they’ve worked.
- Timing of payment: Some countries mandate specific dates or periods when the 13th month salary must be paid, such as before Christmas or in mid-year installments.
- Calculation basis: The 13th month pay is usually based on an employee’s basic salary, but in some countries, it may include allowances, commissions, or other benefits.
- Taxation and deductions: While the 13th month salary may be tax-free or subject to lower taxation in some countries, it may be taxable in others.
Remember that each international employee is entitled to the mandatory benefits in their base country. Therefore, you should access local regulations to discover the variants involved in the final amount and create a step-to-step process to be repeated every year.
An integrated solution to calculating the 13th month pay and making it easier is outsourcing the payroll management. A payroll outsourcing company can be invaluable by offering expertise and support in compliance with local laws, tax, and deductions, timely payments, and minimized administrative burden.
Contact us to streamline your payroll management.