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Global Work Glossary

What does the 13th month pay entail?

Thirteenth month pay is an additional salary provided by employers. It supplements employees' standard annual earnings, and is usually paid at year-end or split into two installments. It's generally equal to one month's salary.

In some countries, such as the Philippines, 13th month pay is federally mandated, obligating employers to provide it to all eligible employees, with penalties for non-compliance. In other nations it's a customary practice. It's left to employers' discretion and is often detailed in employment contracts or industry agreements.

Eligibility criteria vary. In the Philippines, an employee must complete a full month's work within a calendar year. Some countries exempt certain employee categories, like managers or civil servants, from receiving this bonus.

Various countries across Latin America mandate 13th month pay, while in Europe, it's mandatory in countries like Armenia and Greece, and customary in others. Africa's Angola provides 13th and 14th month pay, aligning with vacations and holidays.

Calculations differ by country, with methods like pro-rating or percentage-based calculations. Taxes on 13th month pay vary too; for example, payments over a threshold in the Philippines are taxed, while Austria taxes them at a reduced rate.

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