Your Domestic Staff and the Aguinaldo Deadline
The holiday season is quickly approaching, and if you have employees, you need to be aware of the annual bonus all workers are entitled to during the month of December.
What is aguinaldo?
An annual Christmas bonus that employers in Mexico are required by law to pay to their employees, and it must be paid by December 20. Aguinaldo is separate from vacation pay and it
benefits families for the added expenses that come with the holiday season.
Article 87 Federal Labor Law states that all employees in Mexico will be entitled to an annual bonus. Not only business owners need to provide this bonus, but this also includes domestic workers, cleaning, gardening or maintenance personnel you may employ on your property.
The aguinaldo is based on 15 days of wages for any worker that has one year or more of service, and if the employee has less than one year, the bonus will be calculated by proration.
Calculating the bonus for employees that have one year or more is based on their wage divided by 30 days (a month) which provides the daily wage, the daily wage multiplied by 15 days is the bonus.
- If your gardener earns 8,000 pesos per month divided by 30 = 266.66 daily rate x 15 days = 4,000 pesos aguinaldo.
Part-time employees
- If your gardener only works two days a week at 400 pesos a day = 800 divided by seven days of the week = 114.28 daily rate x 15 days = 1,714.28 pesos aguinaldo.
This income is subject to ISR (income tax) and as the employer you are expected to withhold and submit the tax, but if the aguinaldo is less than one month’s wage, it will be exempt from income tax.
If your employee works any statutory holiday such as Christmas or New Year’s Day, you are required to pay double time plus their regular wage for those days. Essentially employees earn triple time on a statutory holiday. This information is especially important for homes that employ nannies or kitchen staff over the holidays.
For information and advice about Mexico’s labor laws and employee benefits, email an accountant at contact@mextaxes.com