<aside> ⏳ Summary: Vacation bonuses and 13th / 14th salaries are monetary bonuses typically provided at mid-summer and year-end equivalent to 1-2 months of salary. In some countries they are mandatory, others customary.

We assume that the total annual salary quoted will be inclusive of vacation bonuses, unless you would like to do otherwise.


What are vacation bonuses and 13th / 14th salaries?

They are monetary bonuses that are paid to employees typically mid-summer and year-end, on top of their normal monthly salary. They are called 13th / 14th salaries because they are equivalent to receiving an extra 1 or 2 months of pay. In some countries they are mandatory, in others they are customary. You find these types of bonuses around the globe, though it is most common in Latin American countries and some European countries.

Are they included in the annual salary?

Whether the bonuses are included in the regular salary or provided in addition to the regular salary is up to the employer. We typically assume that the bonuses are included in the annual salary. Why? Often, an employer is making an offer from a country that does not have vacation bonuses, and therefore would not have factored them into their budgeting.

How will it impact the employee's monthly salary?

It will mean that the monthly salary will be lower than if you were simply dividing the annual salary by 12. Let's take the example of an annual salary of $42,000 per annum.

Scenario 1 - No bonuses: The gross annual salary if divided equally by 12 months. $42,000 / 12 = $3,500 per month. Employee's monthly wages are $3,500 (less taxes and required social contributions).

Scenario 2 - 13th and 14th Salaries: The gross annual salary is divided by 14 months. $42,000 /14 = $3,000 per month. Employee's monthly wages are $3,000 (less taxes and required social contributions). However, Employee will also receive two bonus checks in the amount of $3,000 (less taxes and required social contributions) during the course of the year. Importantly, the total cost of employment paid by the employer remains the same every month.

Does that mean you are billed more for certain months when bonuses are due?

Generally, no. We will accrue for these bonuses equally over the year so that you are billed equal amounts 12 times a year. For example, a 13th month salary paid in December will be accrued by charging an additional 1/12th of their monthly salary each month of the year to the employer.

Which countries have mandatory bonuses?

Note: There are many other countries that have customary 13th / 14th salary / vacation bonuses which are dependent on the employer, role, bargaining agreements, etc such as Austria, France, Finland Germany & Switzerland in Europe and China, Japan, Malaysia, Singapore, Taiwan and Vietnam in Asia