Sofia Santos
3/26/2024Are you already thinking about the Christmas bonus? You're not the only one; many Mexicans start planning early for their bonus.
They want to know how the Christmas bonus is calculated so they can have an estimated amount of what they will receive in December or earlier. Each company has its own policies on when to deliver the Christmas bonus.
And what if you are a freelancer?
This information will also be useful to you because even if you are a self-employed worker, you might provide services to a company. Or maybe you are a freelancer who has people under your charge, then you need to know how to calculate the bonus for your collaborators.
So, take note of what's coming.
To understand how the bonus is calculated, we must first know what it is. It is a payment that bosses must make to their workers in December, also known as a Christmas bonus.
This payment is a right that employees cannot reject. It is different from other benefits and represents an extra income on top of the annual salaries. Usually, the bonus helps cover the expenses of the end-of-year festivities. That's why workers look forward to it eagerly.
In Mexico, and other parts of Latin America, giving a bonus is mandatory. In our country, it is established by Article 87 of the Federal Labor Law of 1970.
As the law indicates, the bonus is for all workers, whether they are permanent, temporary, salespeople, and others under the Federal Labor Law.
According to Article 87 of the FTL, employees have the right to receive a bonus each year. This payment must be made no later than December 20th and is equivalent to fifteen days of salary.
Even those who have not worked a full year have the right to receive the Christmas bonus. It does not matter if they continue working for the company at the time of the bonus payment; they must receive an amount proportional to the days worked.
And if I work remotely?
The mode of work doesn't matter; if the company that hired you allows you to work remotely and complies with Mexican laws, you will receive the bonus.
According to Mexican labor standards, employers are obligated to pay the bonus before December 20th of each year. This is established by law, ensuring that all workers receive this annual payment before that date.
It is common for employees to negotiate with their employer to receive the bonus in two parts:
one before December 20th and the other
in January of the following year.
This helps workers have resources available at the beginning of the new year.
For companies, it is crucial to comply with the deadline for the bonus payment. Failing to do so will face penalties that include fines. Therefore, organizing the payment of the bonus is a priority for human resources departments at the beginning of December.
Now, let's get to the main point of this article.
To calculate the bonus, consider your current salary and the time worked with your employer. For example, with a monthly salary of $11,000:
1. Divide your monthly salary by the 30 days of the month. If you earn $11,000, your daily wage is $366.67.
2. Multiply your daily wage ($366.67) by the 15 minimum days of the bonus established by the Federal Labor Law. This results in a standard bonus of $5,500.
3. To know how much bonus you earn per day throughout the year, divide $5,500 by the 365 days of the year, which gives approximately $15.07 per day.
4. If you have worked 210 days (for example, 7 months), multiply those days by $15.07, resulting in a proportional bonus of approximately $3,164.70.
Thus, with six months of work and a salary of $11,000 per month, you will receive around $3,174.70 in proportional bonus. This amount will depend on your seniority at work, and you can use it responsibly, whether for year-end expenses, paying off debts, or saving for your goals.
With these simple formulas, you can calculate the standard bonus and the proportional bonus. The key is knowing how much you earn as a programmer, marketing director, etc.
Are you a worker without a fixed salary? If so, and you are paid for work performed or by commissions, the law stipulates using the daily average of earnings. But not for the whole year, rather for the last 30 worked days to calculate the Christmas bonus.
Let's take a simple example: if in the last 30 worked days you have earned a total of $12,250, divide that sum by 30. This gives you an average daily wage of $408.3. Multiply that average by 15 (the minimum days of bonus mandated by law), resulting in a bonus of $$6,125. This is how simple it is to calculate the bonus for people with variable salaries.
In Mexico, although the bonus is a special payment apart from other benefits, it is taxed with income tax (ISR). This key tax in the country is directly deducted from incomes, including the bonus.
After deducting the ISR from the gross salary, you get the net salary that the employee receives.
For the bonus, the employer calculates and withholds the corresponding ISR. However, if the bonus does not exceed the equivalent of 30 days of the minimum wage (Unit of Measure and Update, UMA), this tax does not apply.
UMA is a reference to determine payments and legal obligations, and the daily minimum wage in Mexico for 2024 is $248.93 pesos, which monthly adds up to $7,467.90 pesos.
Thus, ISR is the only deduction allowed on the bonus according to the law, except for advances on it or for alimony pensions.
To ensure your Christmas bonus doesn't disappear as quickly as it arrived, here are some recommendations:
Use DolarApp to save part of your bonus in dollars. If you haven't yet decided on what to spend the money, it's better to keep it safe on a platform like ours. With your DolarApp account, you instantly receive a United States account in your name, an international debit card, and all the additional advantages.
Create a budget. Want to spend? That's fine, do it. But have a defined budget so you can buy the things you need, thus avoiding overspending on unnecessary products.
Start a savings plan. Use the bonus to boost your savings, so you don't reach the January slope without oxygen. Ideally, save 25% of the Christmas bonus and from there, you can continue to feed it every month.
Now you know how the bonus is calculated, what the law says about the different types of workers and salaries, and when you are going to receive it. So, you just have to start preparing the savings plan, create your account on DolarApp, and make the most of your bonus.
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