13th-month salary
is an extra month’s pay on top of annual salary, usually paid in December. It is legally mandatory in some countries (Philippines, Indonesia, Brazil), set by collective agreements in others (Austria, Italy — often with a 14th), and customary in several more (Switzerland, Netherlands via holiday allowance analogues). Employers hiring internationally must budget it per country.
Key facts
- Mandatory by statute in the Philippines, Indonesia (THR) and Brazil; CBA-driven in Austria and Italy (often with a 14th).
- Customary and contractually expected in Switzerland — most offers without it are uncompetitive.
- Usually calculated as 1/12 of annual basic salary, pro-rated by months worked.
- Owed pro-rata to leavers in most mandatory regimes.
- Adds 8.3–17% to annual cost versus a naive salary × 12 budget.
Where is the 13th month salary mandatory in 2026?
The obligation takes three forms: statutory (written into labour law with deadlines and formulas), collective (imposed by sector agreements that bind employers) and customary (so standard that omitting it makes offers uncompetitive and, in some states, contractually implied by practice).
The formula also varies: some countries divide annual base salary by 12 and pay it as a bonus; others pro-rate by months worked in the year; several split it across summer and Christmas instalments.
| Country | Status | Mechanics |
|---|---|---|
| Philippines | Mandatory (statutory) | Pro-rated 1/12 of basic salary, by 24 December |
| Indonesia | Mandatory (THR) | Religious-holiday allowance, one month after one year’s service |
| Brazil | Mandatory (statutory) | Two instalments, November and December |
| Austria / Italy | Collective agreements | 13th and often 14th month via CBAs |
| Switzerland | Customary / contractual | Widely paid in November–December; expected in offers |
| UAE / Singapore / UK | Not required | Discretionary bonus culture instead |
How should employers handle the 13th month?
Three rules keep it clean:
- Budget it as salary, not bonus: in mandatory and CBA countries it is deferred wages — provision monthly, don’t discover it in December.
- Write the correct basis into contracts: annual salary ‘including 13th instalment’ or ‘plus 13th month’ changes the cost by 8.3% — ambiguity creates disputes.
- Pro-rate correctly on exit: leavers are typically owed the accrued fraction; several countries enforce this at termination.
On assignments and EOR employment the 13th month follows the employment country’s rules, not the employer’s home habits — one of the details an Employer of Record localises automatically.
Costing the 13th month into offers
Miscosting the 13th (and 14th) month is one of the commonest budgeting errors in first-time international hiring: a Manila or São Paulo hire costs 8–17% more than the monthly salary × 12 arithmetic suggests. Model total annual cost per country before making offers. Access Financial’s payroll teams provision statutory extras automatically across 60+ countries — request an employment cost simulation.
FAQ
Find answers to our most frequently asked questions below.
Is the 13th month salary mandatory in Switzerland?
No statute requires it, but it is so widespread that most Swiss employment contracts include a 13th salary paid in November or December, and market offers without it are uncompetitive. Where the contract or an applicable CBA promises it, it becomes legally enforceable — and is pro-rated for partial years of service.
How is the 13th month salary calculated?
The base formula is one-twelfth of the annual basic salary, pro-rated by months worked in the calendar year. Statutory schemes define the base (usually basic pay excluding overtime and allowances) and the deadline; CBA schemes follow the agreement’s formula, sometimes splitting payment across two dates. Exit payments include the accrued fraction.
Is a 13th month salary taxable?
Generally yes — it is employment income subject to normal tax and social contributions, though a few countries apply preferential treatment (the Philippines exempts 13th-month pay and bonuses up to a capped amount). Payroll must apply the country’s specific treatment rather than the December-bonus logic of the employer’s home system.
Which countries pay a 14th month salary?
Austria and Italy are the best-known cases, both via collective agreements — typically a summer instalment plus a Christmas one. Spain’s pagas extraordinarias produce a comparable two-extra-payments pattern unless prorated monthly. Greece retains statutory holiday bonuses in the private sector. Each follows its own formula, so per-country payroll setup matters.
Does the 13th month apply to contractors?
Not to genuine independent contractors — it is an employment entitlement. But workers engaged through umbrella or payrolling structures are employees of the provider, so a mandatory or CBA-based 13th month can apply to them; in Switzerland many payrolled contractors have the 13th built into their agreed rate. Check the employment contract, not the job title.