What is a 13th Salary? (and how to calculate it)

Have you ever noticed that some months actually have 5 weeks instead of 4? Well, the employers in some countries have, and instead of paying their employees every month, they pay them every 4 weeks - and that’s where the 13th month comes from!  It’s defined as “one twelfth (1/12) of the basic salary of an employee within a calendar year" and is given to non-managerial employees usually just before Christmas.  Just in time for presents, bills... and the January sales! If you’re really lucky, you’ll find yourself a job somewhere where they pay a 14th (Easter) or even 15th (August) salary.

 

Where is it paid?


Although it’s not always by law and may simply be something that commonly happens, the following countries have been known to pay a 13th salary:

In the Americas:

Argentina, Mexico, Puerto Rico, Chile, Columbia, Brazil.

In Europe:

Italy, Portugal, Spain, France, Greece, Austria, Belgium, Cyprus, Finland, Sweden, Turkey, Denmark, Germany, Switzerland.

In Asia-Pacific:

India, Indonesia, Philippines, Singapore, Taiwan, China, Malaysia, Hong Kong, Nicaragua.

 

But Wait!

Before you get too excited though, it’s not (always) truly a bonus; it may simply be your annual salary divided by 13 rather than 12, taking into account the fact that some months are 5 weeks instead of 4 and paying you per 4 weeks rather than per month.  Or an advance payment for December, as it makes more sense for you to get it before the holiday than after.  

How is it calculated?

Don’t worry, I don’t like maths either.  But this is really easy maths, I promise.

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If you really do receive it as a bonus:

The definition says that it’s 1/12 of your basic annual salary, this means:

  1. Daily wage (times) number of paid days = basic salary within a calendar year
  2. Take that, divide it by 12, and there’s your 13th month pay!

Taken from here, this is what you would get if you only work, let’s say, a prorated 3 months.

  1. Basic salary paid for 3 months
  2. Divide by 12

It may actually be a 13th instalment of your salary rather than a bonus, in which case:

  1. Take your annual salary,
  2. Divide it by 13,
  3. There is no step 3!

You may get it in two payments, one at the end of the first half of the year and one at the end of the second:

  1. Take your annual salary, 
  2. Divide it by 12 (or 13),
  3. Divide that by 2.  

 If you work in a country that provides a 13th (or 14th or 15th) salary, let us know about when you receive it and how you use it!  If you don’t, tell us if you think it’s a good idea, and something that should be implemented in more countries.

Should employers be required to pay it by law, or should it be something that they can choose to do if they have the funds? Comments below please!

SOURCES
Radford.com
Society for Human Resource Management