Articles 93 through 99 of the Labor Code (Act No. 185) establish the employer’s obligation to pay all workers an additional month of salary, known as the thirteenth month, or the proportional amount corresponding to the time effectively worked.
The thirteenth month must be paid within the first ten days of December, or within the first ten days following the termination of the employment contract. Failure to make this payment within the legal timeframe requires the employer to pay the worker a penalty equivalent to one day’s salary for each day of delay, as provided in Article 95 of the Labor Code.
However, national labor jurisprudence has clarified that this penalty only applies when the employer willfully omits payment within the legal period. In Judgment No. 231/2016, the National Labor Court of Appeals determined that the penalty does not apply when the employer proves an intent to comply on time or shows evidence of effective steps taken to make the payment.
Furthermore, the National Labor Court of Appeals has set the maximum amount of this penalty. In Judgment No. 25/2011, the Court held that when there is both a principal obligation (payment of the thirteenth month) and a subsidiary obligation for non-compliance (the penalty under Article 95 of the Labor Code), the subsidiary obligation cannot exceed the principal obligation, and when both are claimed simultaneously, the subsidiary cannot exceed one-fourth of the principal amount. This criterion is based on the principle contained in Article 2002 of the Civil Code, applied equivalently in labor matters for reasons of equity and in accordance with the fundamental principles of Labor Law, particularly the Sixth Fundamental Principle of the Preliminary Title of the Labor Code.
For calculation purposes, the thirteenth month must be determined based on the last monthly salary received when the salary is fixed, or on the highest salary earned in the last six months when remuneration is variable (e.g. commissions, piecework, task-based, or other modalities), as regulated by Article 94 of the Labor Code.
Article 96 of the Labor Code establishes that the following count as effective working time for calculating the thirteenth month: vacation days taken, justified absences, paid or unpaid leave, public holidays, and any time off covered by sickness pay, among other situations provided by law.
The payment of the thirteenth month enjoys special protection: it is exempt from garnishment (except for alimony & child support obligations), exempt from taxes, and free from deductions, and cannot be carried over from one year to the next, in accordance with Articles 97 and 98 of the Labor Code.
Private-sector employers must ensure timely payment, properly document delivery, and verify that compliance adheres to current labor regulations and the jurisprudence issued by the National Labor Court of Appeals.
Please contact us if you have questions or require legal advice regarding this or any other labor-related matters.