When navigating the employment terrain in Mexico, having the Aguinaldo on your compass isn’t just good manners—it’s the law. The Aguinaldo, or the 13th-month salary, is a legally mandated Christmas bonus that employers must dole out to their employees by December 20 each year. This isn’t merely a tradition but a legal obligation, serving as a financial cherry on top of the annual earnings cake for employees. This guide is your map to the Aguinaldo, helping tech companies and other employers to confidently dive into the nuances of hiring in Mexico, ensuring compliance and fostering a buoyant work environment.
Legality and Deadline
Mexican labor laws have penned a firm deadline on the calendar for Aguinaldo disbursement: December 20.
Late to the party? Prepare to face fines up to 5,000 times the legal daily minimum wage—a hefty price for tardiness. The law underscores an employer’s duty to ensure a fair and equitable reward for the yearly work of their employees (PROFEDET, 2020; Investopedia, n.d.).
Calculation
Now, let’s slice the Aguinaldo cake. The size of each slice is equivalent to at least 15 days of an employee’s base salary.
Here’s an example:
An employee with a yearly pay of $660,000 pesos is entitled to an Aguinaldo slice of $27,500 pesos, calculated like this:
$660,000 pesos ÷ 12 months ÷ 2
Staff with less than a year on the job will get their prorated piece of the pie. Some generous bakeries, err, companies, might even dish out 30 days of wages or a 13th month of salary per year. It’s why the Aguinaldo sometimes goes by the 13th Salary (Investopedia, n.d.).
Taxation
Employers must withhold taxes, yet employees are not required to pay income tax on Aguinaldo payments up to an amount equivalent to 30 days of the legal daily minimum wage (Investopedia, n.d.).
Side Note: The minimum wage per day guaranteed by law in Mexico as of October 2023 is 207.44 mexican pesos. Free Zone located near the northern border is the exception, where the minimum daily wage is 312.41 Mexican pesos.
Foreign Workers’ Eligibility
International employees with appropriate employment documentation are in for the Aguinaldo treat too, reinforcing Mexico’s open-arm policy towards equitable labor practices irrespective of nationality
Non-Compliance Consequences
The law isn’t shy about penalizing the Aguinaldo party-poopers. Employees can report the non-compliant employers to the Federal Office of the Defense of Labor, and penalties can soar from 50 to 5,000 times the minimum wage, ensuring the legal hammer comes down hard on Aguinaldo misers.
Economic Impact
The Aguinaldo isn’t just a personal wallet-filler; it’s a retail stimulant, oiling the gears of the economy. It fosters loyalty among employees, cutting down on the turnstile of recruitment and training. However, on the flip side, critics argue it can squeeze the finances of already struggling companies, presenting a conundrum wrapped in a financial enigma.
Aguinaldo in Other Nations
Mexico isn’t alone in the Aguinaldo fiesta. Many a Latin American country echoes this 13th-month salary tune, with variations in disbursement schedules and conditions, resonating the global echoes of this employment norm. By the way, Europe even has a 14th Month Pay available in case you are looking that way.
Reduced Aguinaldo Payments
The bonus amount is solely based on income, meaning lower-earners will find their Aguinaldo hat a bit snug and will receive a proportionally lower Aguinaldo, reflecting the income-based structure of this bonus.
Posthumous Aguinaldo Disbursement
In the event of an employee’s death, the Aguinaldo is disbursed to the employee’s named beneficiaries, showcasing the comprehensive embrace of this legal provision.
I hope these insights are valuable for you, just remember, adhering to the Aguinaldo mandate is akin to hitting the right notes in the employment symphony, ensuring a harmonious employer-employee duet, while dancing to the legal tunes of Mexico. Are you interested in more insights about hiring in mexico? Let us know in the chat!
References:
– Gobierno de México. (n.d.). Preguntas frecuentes sobre el Aguinaldo.
– Investopedia. (n.d.). Aguinaldo.
