One of the multiple benefits of living in Mexico is that services are much less expensive than in the US or Canada, meaning that many people who have settled in this country, can afford to employ a cleaning person, gardener or handyman to help with chores around the house.
This weekend is the “Buen Fin” (sort of like a “Black Friday” weekend) and very soon the holiday seasons will arrive, so it is a good time to discuss the Mexican “Aguinaldo”. But… what exactly is the “Aguinaldo”?
According to the Mexican Labor Law in Article 87, it says. – “Workers shall be entitled to an annual bonus to be paid before the twentieth day of December, equivalent to at least fifteen days’ salary”.
This Mexican Christmas bonus due to all employees, including the domestic staff. Under Mexican law, all employees (including maids, gardeners, cooks) are entitled to a Christmas bonus. It also is an important way to show your appreciation for their hard work and to help build a strong relationship.
Employees are entitled by law to receive 15 days’ pay as their Christmas bonus. So, for example, if you have your housekeeper visit your home 2 times per week, her Christmas bonus should be equal to 4 days of her usual daily rate, or two weeks of her normal salary.
The Aguinaldo or “Christmas bonus” is a benefit provided for the Mexican worker and has been a part of the labor law since 1970. It is both compulsory and is not waivable. The payment is equal to at least 15 days of salary for the employee who has worked one year. If the worker has not worked a full year with the employer, he must receive the corresponding percentage of the time worked. This payment must be paid before December 20th.
How is the bonus calculated?
We interviewed Miguel Fernandez-Montilla a defense attorney specialized in “Labor Law” in Federal and Local Board of Conciliation and Arbitration, who explained to us how to make the appropriate calculations for the payment of “Aguinaldos”, according to the calculation used by the Mexican authorities in the Board of Conciliation and Arbitration.
An employee who has completed a full year, the bonus is equal to the payment of 15 days’ work. For this calculation you take the monthly salary and divide it by 30 days; the result will be the daily salary.
- A worker receives $6,000 pesos of salary per month
- $6,000 pesos / 30 days = $200 pesos (the daily wage)
- $200 pesos (the daily wage) x 15 corresponding days of “Aguinaldo” = $ 3,000 pesos
The worker will receive a $3,000 pesos bonus.
If the worker worked less than a year, it is necessary to calculate the daily wage using the same method as in the example already presented. When this calculation is done, the result must be multiplied by 15, and then divided by 365 days, and then multiplied by the days worked.
A worker receives $6,000 pesos of salary per month, but began his current job on July 1st, 2019. This person as of the 15th of December has worked 168 days. So this is how the calculation is done:
$6,000 pesos / 30 days = 200 pesos (the daily wage)
$200 pesos (the daily wage) x 15 corresponding days of “Aguinaldo” = $3,000 pesos
$3,000 pesos are divided by 365 days =$8.21 pesos multiplied by 168 days worked = $1,380.80 pesos.
The worker will receive $1,380.80 pesos of Aguinaldo.
Is the Christmas bonus free of taxes and discounts?
The bonus is considered by the current labor law as an income for the worker, so it is subject to the payment of Income Tax and it will be mandatory for the employer to calculate and retain the corresponding tax. The only exception is when the bonus is less than the amount equal to 30 days of minimum wage. No other discount is contemplated by the labor law.
What to do when faced with an irregularity in the payment of the bonus?
If the employer makes an incomplete payment, does not cover the benefit or does it late, the worker can present their claim to the Federal Office of the Defense of Labor (Profedet) as of December 20, or for one year thereafter. The Profedet will present the demand before the Federal Board of Conciliation and Arbitration or, where appropriate, the local Labor Defense Attorney, who will file the claim with the Local Board of Conciliation and Arbitration.
For employers who do not comply with the payment of the bonus, pay it incomplete or late, the law provides for a fine equal to 50 to 5,000 times the minimum wage, —currently at $102.68 pesos— which ranges from $5,134.00 pesos to $513,400 pesos.
The employee has the right to receive the bonus equal to the days he worked during the year, whether the employment relationship has ceased. As an example, if the worker started this year working for a company, but in the middle of the year resigned or was fired, the employer is still obligated to pay the bonus corresponding to the days the employee worked for the company.
Labor Law, Defense Attorney Miguel Fernandez-Montilla can be found at the number (999)1990301 in Mérida Yucatán.
The Yucatan Times