Understanding the 13th Salary

Companies must pay a 13th salary (Christmas Bonus) to their payees. 13th salary is paid in two parts. The first installment corresponds to 50 percent of the total amount for 13th salary. The first installment should be paid by the end of November. Employees can also have their first installments paid in advance as part of their vacation pay. If the first installment was paid as part of vacation pay, the company does not need to pay any 13th salary to the employee in November. In this situation, a company can choose to recalculate the first installment and pay the difference to the employee.

Two parameters on the General Parameters Page define:

• Whether the company recalculates the first installment (discounting the advanced amount).

• Whether to use averages when recalculating the first installment.

Employees who receive variable compensation, such as overtime or a differential for a night shift, may be entitled to have their 13th salary based on the averages of this variable compensation. Eligibility for the average salary allowance depends on union rules and the Consolidated Labor Laws (CLT).

The entire 13th salary amount must be paid by December 20. This payment discounts the amount of the first installment already paid. To make this payment by December 20, you might need to run an off-cycle payroll.

To run an off-cycle payroll, you need to use one of two delivered special run types:

• KR 1A13SAL (for the first installment of 13th salary)

• KR 13SAL (for 13th salary payment).

Then, usually in December, the 13th salary is recalculated for everyone to ensure that if any difference occurred, the difference is paid to the employee.