#ElSalvador 🇸🇻 #BDS_AlertaLaboral: CONAPINA Establishes Amounts Employers Can Provide to Employees for CAPI Services
At the end of last year, a reform to the Crecer Juntos Act allowed for the creation of a new...
Nov 29, 2022 3:06:39 PM
1 min. read
#Panama 🇵🇦 #BDS_LaborAlert: Proper Handling of the Christmas Bonus or Gratification
With the arrival of the Christmas and end-of-year season, it is usual for companies to grant an additional incentive to their workers as gratification or Christmas bonus.
The Christmas bonus or gratification is a sum of money paid once a year to employees –as a gift in addition to their salary–, as a result of the religious holidays or end-of-year festivities.
It should be noted, however, that the Christmas bonus in Panama is not mandatorily paid. This Christmas bonus, where granted, is not considered a custom or practice or an employment condition, as this is a discretional and optional payment for each company.
In addition to the foregoing, Article 43 of the General Regulation on Social Security Administration Revenue sets forth the exceptions in terms of salary; said provision establishes that the Christmas bonus or gratifications will not be considered salary, provided that they do not exceed one month of salary.
Moreover, Article 142 of the Labor Code sets forth that any payments made to workers for thirteen-month bonus improvements, bonuses, gratifications, donations, and participations will not be deemed salary –whether of permanent or occasional nature.
It should be noted that Christmas bonuses or gratifications must be considered for the calculation of vacation entitlements, maternity leave and seniority pay benefits.
The Christmas bonus should not be reported to the Social Security Administration as it is not considered salary, except in case of payments exceeding one month of salary in which case the report must be submitted.
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