The Aguinaldo

’Tis the Season

This article is appearing a bit late (December 18) in the aguinaldo season, but you have a few days left...

A few days left for what? In Mexico, employees are legally entitled to an end-of-year bonus. This bonus is called an aguinaldo - although sometimes it is just referred to as a “Christmas bonus” or a “13th month salary”.

What qualifies an employee for an aguinaldo?

Being an employee. Seriously though, all formal employees in Mexico are required by law to receive an aguinaldo from their employer. Paying this year-end bonus is not optional. Employers must pay it.

When must the aguinaldo be paid?

Again, by law, the aguinaldo must be paid by December 20 each year. Failure to pay - or failure to pay on time - can result in fines issued to the employer of up to 5,000 times the current minimum wage. But, please don’t wait until December 20 - you can actually pay the aguinaldo any time of the year, as long as it happens by December 20. Paying earlier ensures that the employee has time to use that bonus for planning and doing their Christmas shopping, etc. Personally, I like to pay my aguinaldos at the beginning of December.

What amount is appropriate for an aguinaldo?

Once more, Mexican law steps in. The employer doesn’t get to decide the amount to pay - this is codified by law as well. The aguinaldo must be at least equal to the amount an employee would make for 15 days of work. Of course, employers can pay more than the proscribed amount, but they cannot pay less.

Here are a couple of quick examples of how to calculate the aguinaldo:

Let’s say you have a housekeeper who you pay 500 pesos per week. You would simply divide 500 by 7, which gives you the “daily” pay. And then you multiply that by at least 15, although many employers choose to use 20 or even up to 40 as the multiplication factor. So, for this housekeeper making 500 pesos per week, the minimum aguinaldo would be: 500 ÷ 7 = 71.43; 71.43 x 15 = 1,071.43. That is the minimum you must pay the housekeeper.

Now let’s say you have a cook who you pay by the month; this cook makes 2,000 pesos per month. In this case, you divide 2,000 by 30 - the law assumes that the number of days in a month averages out to 30. So 2,000 ÷ 30 gives you a daily rate of 66.67; multiplied by 15 gives you a minimum aguinaldo of 1,000 pesos. Of course, since the minimum aguinaldo is 15 days and a month is 30, you can just divide the monthly salary by 2. But calculating the daily pay helps if you want to give more than the 15-day minimum.

Do you still have to pay the aguinaldo if the employee has been employed by you for less than a year?

Yes, and you can prorate the amount in such cases. You simply figure out the regular aguinaldo amount given the formulas above, and then multiply that by the number of days in the current year the employee has worked for you divided by 365. So in the above example of a cook making 2,000 pesos per month - if this cook started working for you on November 1st of the current year, then they will have been an employee for 61 days (November has 30 days, December has 31). 61 ÷ 365 = 0.17; this is the fraction of the year the employee has worked for you. So you can take the total aguinaldo and multiply it by 0.17 to get the prorated amount: 1,000 x 0.17 = 170.

What about “informal” employees?

“I don’t have to pay an aguinaldo to my housekeeper because I pay her in cash and have no formal employee/employer arrangement with her”. Oh please. While it is true that many workers in Mexico have no formal employee status, they still expect and rely on the aguinaldo - to buy special food for Christmas, to buy their children and grandchildren and other family members presents, etc. Even if your housekeeper, gardener, or whoever is not a formal employee, the cultural expectation is that they get this end-of-year bonus. Please pay it.

My property manager hires and manages my housekeeper, gardener, etc - what about that?

If you have a property manager or some other entity who provides your household staff for you, then it is the property manager’s responsibility to pay the aguinaldo (which they will of course pass on to you in their management fees). In such cases, however, you should give your household staff an extra propina(tip) - this is always a nice and appropriate gesture as the year winds down.

Where did this aguinaldo come from?

Generally speaking, Mexico’s labor laws lean more toward employee benefits and rights than those of the employer (United States, take note). There are many statutory rights granted to the Mexican employee, and the aguinaldo is one that was codified into law as part of Mexico’s federal labor law reforms of 1970.

So there we have it - more details about Mexico’s aguinaldo than you ever wanted to know.

And, if you haven’t paid your aguinaldos yet - good news: you still have 2 days to get it done. But don’t wait, do it today!