Aguinaldo Definition

What Is an Aguinaldo?

The time period aguinaldo refers to an annual Christmas bonus that companies in Mexico are required by regulation to pay to their staff. The fee, generally referred to as the thirteenth wage, should be made by Dec. 20 of every yr. Firms that fail to make an aguinaldo fee could also be fined as a lot as 5,000 instances the authorized each day minimal wage. Another Latin American nations, equivalent to Costa Rica, additionally require employers to pay their staff an aguinaldo.

Understanding Aguinaldos

Mexican labor legal guidelines require employers to pay their staff a bonus or an aguinaldo yearly. That is on high of their common salaries and different advantages. The regulation, which was established by laws handed in 1970, mandates that employees are entitled to an annual bonus in December that’s the equal of a minimum of 15 days’ wages. An aguinaldo could also be prorated for these employed lower than one yr.

Employers should withhold taxes from aguinaldos as they’re topic to taxation. Workers should not required to pay earnings tax on their aguinaldo fee of an quantity equal to 30 days of the authorized each day minimal wage. For instance, if the minimal each day wage is $60 pesos, the tax-exempt quantity of the aguinaldo is $1,800 pesos, or $60 pesos x 30 days.

Aguinaldos are additionally generally paid by employers for the Christmas season in different Latin American nations, equivalent to Guatemala and Costa Rica. Employers in Argentina and Uruguay give their staff an aguinaldo in two funds: one in June and the opposite in December.

Particular Concerns

Aguinaldos are obligatory. Which means all employers are legally required to pay them. Workers who do not obtain their bonuses can report their employers to the Federal Workplace of the Protection of Labor. Failure to pay, paying late, or making partial funds can lead to fines as a lot as 50 to five,000 instances the minimal wage, which is $141.70 pesos per day.

Regardless of the implications, solely a minority of Mexican employees truly obtain the fee, as a consequence of unfavorable working situations, equivalent to casual contracting and short-term employment. For instance, a part-time gardener and not using a formal contract might not obtain an aguinaldo fee. Some folks might select to tip their employees, together with maids, postmen, supply folks, earlier than the vacations even when they don’t seem to be required to take action.

Benefits and Disadvantages of Aguinaldo

The aguinaldo gives a seasonal increase in demand for retail merchandise equivalent to cars, home equipment, clothes, and furnishings. A big portion of this extra earnings will get spent in department shops. Some employers enhance aguinaldo funds to spice up gross sales throughout El Buen Fin, which is Mexico’s equal of Black Friday.

Workers who obtain an aguinaldo fee usually tend to present loyalty to an organization that values them. Loyal staff are usually extra productive and fewer more likely to depart, which reduces recruitment and coaching prices.

Critics consider that these obligatory funds might put monetary strain on struggling firms that might lead to layoffs and/or closures. To fight this danger, firms are permitted to make aguinaldo funds to their staff by way of installments, offered that they do not defer all the fee. 

Examples of an Aguinaldo

As an instance somebody has been employed with the identical firm for 10 years and their annual wage is $180,000 pesos. By regulation, their employer should pay them an aguinaldo or bonus of $7,500 pesos. This is the way it’s calculated:

• $180,000 pesos ÷ 12 months ÷ 2

That is the equal pay of 15 days.

As talked about above, aguinaldos for employees employed lower than a yr are prorated. So somebody who solely works for six months will get the equal of seven.5 days by Dec. 20.

In some circumstances, although. giant firms might pay staff 30 days of wages or 13 months of wage per yr. That is why the aguinaldo is typically known as the thirteenth wage. Some staff, together with those that work in greater positions, could possibly negotiate greater bonuses with their employers.