CHRISTMAS BONUS AND EXEMPTION FOR PAYING THE BONUS

 

Law 148 of June 30, 1969, as amended, and known as the Private Company Christmas Bonus Law states that all employers are obliged to pay a Christmas Bonus to all employees:

 

  • That have worked 700 hours or more during a twelve (12) month period covered from October 1 of any given year to September 30 of the following; or
  • Employees hired after January 26, 2017 that have worked for more than 1,350 hours during a twelve (12) period covered from October 1 of any given year to September 30 of the following.

 

Payment of the Bonus

 

The payment of the Christmas Bonus will depend on the amount of employees of any given business:

 

Total Number of Employees Bonus to be Payed
15 or less 3% of the salary up to $300
More than 15 6% of the salary up to $600

 

 

Employees hired after January 26, 2017 (Work Reform Law)

 

Total Number of Employees *

Bonus to be Payed
21 or more 2% of the salary up to $600**
20 or less 2% of the salary up to $300**

 

*During a period of 26 weeks within the period covered from October 1 of any given year to September 30 of the following.

 ** The required bonus for the first year of employment will amount to fifty per cent (50%) of this amount.

 

The bonus will be applied to the salaries earned by each employee, up to a maximum of $10,000.

The employer must pay the bonus on or before the fifteenth day (15) of the month of December.  If the bonus is not payed on the due date, the employer is subject to paying a penalty of 50% of the bonus as an additional compensation, if the payment is made within the first six (6) months of noncompliance.  If payment is not made during this six (6) month period, the employer will have to pay a sum equal to the bonus due as an additional compensation.

 

Exemption for Paying the Bonus

 

Law 148-1969 provides for an exemption to paying the full or part of the amount due for bonus when the employer has been operating his business without receiving any profit.

In order to take use of this exemption, the employer must present the following documents to the Secretary of Labor and Human Resources on or before November 30, 2018:

 

  • Formal letter and Delivery Notice on which he indicates the following information on the business for which he is submitting the exemption:

 

      • Legal and commercial name of the business
      • Physical and postal address
      • Telephone and fax number, email address
      • Name of the owner or of an authorized representative
      • Number of employees
      • Employer’s social security number
      • Nature of the business

 

  • In addition, the employer must include a Financial Statement that shows the profit and loss for the period covered from October 1, 2017 to September 30, 2018.  This report must be compiled, revised and audited. The report must be signed and sealed by a Certified Public Accountant (CPA).  In case the economic year of the business does not include September 30, the financial statement may be the one that corresponds to the economic year of the business, but must include temporary financial statements that cover the economic activity of the business to up to September 30 of the year on which the bonus is to be payed.

 

If the employer fails to submit these documents within the established period he will be obliged to pay the bonus in full even though he has not obtained any profits or if these are insufficient.

 

TCG has the resources and experience to help you out, please contact us today.

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