Most American employers run payroll twelve or twenty-four times across a calendar year.

In some countries, there is a “thirteenth month” to think about. In those jurisdictions, employers, customarily or by law, cut one more check (considered “thirteenth month” pay) as regular or bonus pay. In other places, salaries must be paid out across thirteen months, rather than twelve.

As more workforces cross borders, these distinctions are difficult and yet vital to understand.

These are the hotspots in the world for thirteenth month pay:

Latin America:

Mandatory thirteenth month pay is most prominent across Latin America. In practice, the date and method of payment can vary, but very few countries in Latin America do not have this requirement.

Southern Europe:

Spain, Portugal, and Greece require thirteenth month pay. Elsewhere, particularly in the south, it is merely customary to make this payment. For example, it is not required in Italy, but depending on the National Collective Agreement applied by an employer, an employee’s annual salary must be paid in either 13 or 14 installments. These installments do not represent an extra payment above the agreed salary.

Asia and the Middle East:

Some countries like the Philippines, Indonesia, and India require thirteenth month pay while it is merely customary in countries like Japan, China, Singapore, and the United Arab Emirates.

Takeaway:

The consequences of getting this wrong can surface in taxation and classification for multiple years.