#DominicanRepublic 🇩🇴 #BDS_LaborAlert: Ministry of Labor Suspends Work Activities Due to Tropical Storm Melissa
The Government has announced the suspension of all public and private work activities starting at...
On October 15, 2025, Volume No. 449, No. 194 of the Official Gazette of the Republic of El Salvador published two significant reforms that will affect both the tax treatment and the reference date and payment of the additional compensation known as the aguinaldo (Christmas bonus).
Through Decree No. 432, it was established that Christmas bonuses of up to one thousand five hundred U.S. dollars (US$1,500) will be considered exempt from Income Tax (ISR). Bonuses exceeding this amount will be subject to the ISR withholding and payment on the portion exceeding the non-taxable threshold, which must be deducted for calculation purposes.
This measure took effect upon publication —Wednesday, October 15—and must be applied in the fiscal year corresponding to the Christmas bonuses to be deposited in 2025.
Please note that this tax exemption is temporary and applies only for the current year.
Moreover, Decree No. 433 introduces the previously announced amendment to Articles 197, 200, and 202 of the Labor Code, which entails a modification to the calculation and payment date of the Christmas bonus.
Traditionally, the reference date has been December 12. Under the new regulation, the date granting entitlement to the Christmas bonus will be October 20 of each year. This applies to both employees with active contracts and those eligible for proportional payment due to contract termination.
Another amendment concerns the payment period for the Christmas bonus, which must now be made between October 20 and December 20 of each year. Employers will continue to have the discretion to determine the payment date within this range, but in no case may it extend beyond December 20.
Although the reforms described provide greater administrative flexibility, there is a problem regarding their application for the current year, since the decree stipulates that the regulation will enter into force “eight days after its publication in the Official Gazette,” that is, Thursday, October 23—three days after the new reference date.
Because this provision is not considered a matter of public order, it does not have retroactive effect. Therefore, it will not be legally feasible for employers to calculate the Christmas bonus based on the newly established reference date for 2025.
In light of this, we recommend maintaining the original reference date of December 12 for calculating the Christmas bonus, as previously planned. The new provisions should be deferred until October 2026 to ensure proper implementation.
This approach safeguards labor rights while supporting financial sustainability and avoiding unforeseen financial impacts and labor accounting inconsistencies that would arise from recalculating the October–December period already considered in the Christmas bonuses paid in 2024.
Please contact us if you have any questions or require legal advice regarding the application of these new provisions.
