What is the Aguinaldo?

This time of the year the term aguinaldo  pops up.  It describes a year-end bonus that employees receive.  Here are a  few facts about this payment:

A law was established by legislation passed in 1970 that mandates that workers are entitled to an annual bonus in December that is the equivalent of at least 15 days’ wages.  An aguinaldo may be prorated for those employed less than the full year.

• An aguinaldo is a legally mandated annual Christmas bonus paid by businesses in Mexico to their employees.
• The amount of the payment is based on an employee’s base salary.
• The bonus must be paid by Dec. 20 of each year.
• Employers who don’t pay, pay late, or make partial payments to their employees can be fined as much as 5,000 times the minimum wage if they’re reported.
• Only a small portion of Mexican workers actually receive their aguinaldo because they are hired informally.
• Foreign workers with appropriate employment documentation are also entitled to receive bonuses.
• Aguinaldos are also commonly paid by employers for the Christmas season in other Latin American countries, such as Guatemala and Costa Rica. Employers in Argentina and Uruguay give their employees an aguinaldo in two payments: one in June and the other in December.
• To combat the risk of layoffs, companies are permitted to make aguinaldo payments to their employees in installments, provided they don’t defer the entire payment.
• If you work for an employer from home, you should be eligible for aguinaldo in Mexico. The main exception is for freelancers, who are self-employed and not part of the established payroll of a company.
• If an eligible employee dies during the year, their aguinaldo payment is disbursed among that employee’s named beneficiaries.
• The employee has the right to receive the bonus equal to the days worked during the year, even if employment has terminated.