What is 14th month pay?

14th month pay is a payment offered to employees in certain countries around the holidays – usually at summertime or the end of the year. Though not mandatory in most countries where it’s offered, 14th month is intended to provide financial assistance during the seasons of extra spending – summer vacations, holidays, etc.

Differences between 14th month and 13th month

13th month pay and 14th month pay tend to be very similar. Both payments appear during holidays or vacation seasons – often summer and end of year, and both are usually equivalent to around one month’s salary.

The difference is that 14th month payments are usually less likely to be mandatory. They tend to be seen as more customary payments – made a few months after the original 13th month payment has been made.

14th month payments around the world

14th month payments are treated differently all over the world. Here are a few examples of different rules and customs surrounding this payment:

Austria: 13th and 14th month payments are both mandatory requirements for companies in Austria. 13th month payments are made in the summer and 14th month payments are made at the end of the year.

Japan: Both 13th and 14th month payments are customary but not mandatory in Japan. These payments are usually made in the months of June and December, respectively.

Philippines: 13th month payments are always mandatory in the Philippines. 14th month payments are seen more as an optional or voluntary payment.

Ecuador: Employers must pay a 13th and a 14th-month salary in Ecuador. The 13th-month salary is usually paid in December and the 14th-month salary in March or April.

Greece: All private sector employees in Greece receive two additional monthly salaries divided into three payments – Christmas (a full monthly salary), Easter (half a monthly salary), and Vacation Bonus (half a monthly salary).

Guatemala: Salaried employees receive two bonuses per year equivalent to a month’s salary as a 13th and 14th-month payment. In Guatemala, bonus 14 (“Bono 14”) is paid in July, and the Christmas bonus in December.

Honduras: Full-time employees should receive a 13th-month salary payment as a Christmas bonus in December and a 14th-month salary payment in July. Under Honduras law, each payment equals one month’s salary.

Italy: Under Italian law, an additional 13th payment is paid out each year with the December salary.

Peru: 13 and 14-month payments are mandatory in Peru. Employers must pay an additional month’s salary two times a year, once at the end of July and the other during Christmas.

Portugal: There are mandatory 13th and 14th salary payments in Portugal, paid in June and December, or within the 12 regular salaries.

Spain: 13th and 14th-month salaries are mandatory in Spain. They are usually paid within the 12 monthly salary payments.

Offering 14th month pay to a global workforce

Each country has its own regulations and rules surrounding additional payments. This can complicate the process of getting global payments to the employees’ bank accounts simply because of the plethora of variables involved.

One solution is to work with a payment distribution platform with knowledge and experience in the different compliance and regulations.

Keep in mind that the platform you choose should be one with a demonstrated track record in working with different compliance and regulation standards.

How to compute 14 month pay

Employers can calculate 14th month pay by dividing an employee’s gross salary by 12. The 13th and 14th salaries are factored in as two extra payments of an employee’s monthly wage. To get the 14th month pay, divide an employee’s gross salary by 14. The bonus payments are then taken from the gross annual salary