# 13th month pay: which countries require it and how to plan for it

Published 6 October 2026 by The PayLoom team. https://payloom.in/blog/13th-month-pay-by-country

> A 13th month payment is required by law in countries such as the Philippines, Brazil, Mexico and Argentina, and by law or collective agreement in much of southern and central Europe; it should be accrued every month so that December, leavers and budgets carry no surprises.

Teams that grow from India into other countries often meet the 13th month salary for the first time in their first Latin American or Philippine hire. There is no equivalent in India, where statutory bonus is the nearest thing, so it rarely appears in the offer model. It then arrives in December as an extra month of payroll cost that nobody budgeted for.

Note: Rules as at October 2026 and simplified. Collective agreements and sector rules often add to the statutory minimum, so confirm the position for each entity with local advisers.

## Where it is required

- Philippines: one twelfth of the basic salary earned in the year, for rank and file employees who worked at least a month, paid by 24 December. It is tax exempt up to a ceiling shared with other benefits.
- Brazil: the décimo terceiro, one twelfth of the December salary for each month worked, where 15 days or more counts as a month. It is paid in two instalments, the first by 30 November and the second by 20 December, with social security and income tax on the second.
- Mexico: the aguinaldo, at least 15 days' salary, paid by 20 December and prorated for part of a year. Part of it is exempt from income tax.
- Argentina: the aguinaldo, paid in two halves, each equal to half of the highest monthly salary in that half year, due at the end of June and in December.
- Spain and Portugal: extra payments set by law, usually at summer and Christmas, which can often be spread across the twelve monthly salaries instead.
- Italy and Austria: a 13th salary, and in Austria a 14th, set by collective agreements that cover most employees.

## Annual salary or monthly salary

The most common mistake is in the offer letter. If a candidate in Brazil is offered an annual figure and payroll divides it by twelve, the 13th salary is paid on top and the real cost is 13 twelfths of what was approved. If the offer is a monthly figure, finance has to multiply by 13, or by 14 in Austria, to get the annual cost. Decide which convention each country uses and write it into the offer template.

## Accrue it every month

Even when it is paid once or twice a year, the 13th month is earned month by month. Accruing one twelfth each month keeps the monthly cost honest, makes the December payment a release of an existing liability rather than a spike, and gives the right figure when someone leaves.

## Leavers and joiners

- Leavers are owed the proportional amount earned so far, paid with their final settlement.
- Joiners earn it from their start date, so a September joiner in Brazil receives four twelfths in December.
- Unpaid leave and some kinds of absence can reduce the amount, depending on the country.
- Raises during the year change the amount where it is based on the December salary, as in Brazil, so the accrual has to be trued up.

## Where it usually goes wrong

- Budgeting headcount at twelve months of salary in countries that pay thirteen or fourteen.
- Paying the full amount to a mid year joiner because the payment is set up as a fixed December element.
- Forgetting it in a leaver's final pay, which is the easiest claim for a former employee to win.
- Applying the tax and social security treatment of one country to another, since exemptions differ widely.

## How PayLoom does it

PayLoom sets pay elements and statutory rules per country, so a 13th month payment is defined once for the countries that need it, with its own tax treatment and schedule. Final settlements and one off payments run outside the calendar and land on the same record and year to date figures, and reporting consolidates the cost to your base currency so the extra month is visible across the year.