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Christmas is coming up, so your employees will receive the Aguinaldo, or Christmas bonus. Under Costa Rican labor laws, the Aguinaldo is an obligation if you employ a maid, a gardener, or any other employee in Costa Rica.
The Aguinaldo, or Christmas bonus in English, is an “additional salary.” Any employer must pay it to every employee in any activity before December 20th.
Every worker who has worked for at least one continuous month for the same employer has the right to receive the Christmas bonus, regardless of the method of payment and regardless of whether they are hired for a fixed-term contract, a specific task (eventual, occasional), or working for specific days and hours a week.
The Easy Times, your Costa Rica real estate newsletter, not only tells you stories about buying and selling your property in Costa Rica. We also give you a weekly update on many topics to help you adapt to your new country.
How to calculate the Christmas Bonus
The Christmas bonus is one-twelfth of all ordinary and extraordinary wages. It is calculated from the 1st of December of the year before November 30th of the year in question. So it is obtained from the sum of such salaries and divided by twelve. Download the Costa Rica Christmas Bonus Calculator below to calculate the Christmas bonus.
Download our Christmas Bonus Calculator here
What is included in the Christmas Bonus
You should not only include the regular working hours in the calculation. It is important to include any overtime paid and other “extra” you might have paid. You also need to take into account “salary paid in kind.” If the parties are not able to put a value on this, it will be estimated as 50% of what the employee gets paid.
What happens if you don’t pay the Christmas Bonus
If you don’t pay your employee the Christmas Bonus, pay it late or incompletely; this will be treated as wrongful retention and is serious misconduct. The consequence of this misconduct is a fine by the Ministry of Labor, which depends on how many employees you have. The fine will be one or several minimum salaries.
Adapt to the culture
When we move to a new country with a different culture, language, and rules, we should learn to adapt as much as possible. Some of us feel we take advantage of the locals and don’t pay them enough. So we tend to pay them more than needed or give them all kinds of extras. Therefore, a note full of wisdom from a very dear client who has lived in Costa Rica and employed people in her household for years.
A note of wisdom
You are lucky to have a gardener who is worth his weight in gold (it’s hard to find good gardeners)—paying twice the minimum salary increases if you do everything legally and correctly. It’s mandatory to pay the full Christmas bonus over this salary. You must also pay Caja over the entire wage or have him/her pay as a volunteer, though this is illegal. And when you have to get rid of him, you have to pay pre-aviso and cesantía over the full amount.
A bonus has to be considered for all the above, but a cash bonus is like a tip and not traceable. So, while you do the employee a favor, nobody will crybaby about it.
A disadvantage is that they get used to a salary. And they lose perspective to the rest of the market. They usually do not realize how well off they are until it is too late, and you must fire them. And that’s when that double pay gets back at you.
You should also know which holidays you should give your maid or gardener, paid or unpaid.
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2 Comments
seems to be the kind of regulation that ensures the proliferation of the legal profession – and you will have to add respective costs into your internal calculations.
A source also of trouble between former friendly parties and abounding misunderstandings ; many workers in CR are still illiterate, have no solid or only half-knowledge from hearesay and/or are infected by entitlement-thinking….
Beware !
Those who create new laws or make changes in the laws are mostly lawyers Rolf. But in this case, the Aguinaldo is a socialist tool. But it’s a great help for the large middle class. The Aguinaldo will allow them to pay the marchamo in December and many taxes that need to be paid in January. I’ve been on the paying end of the Aguinaldo for 45 years and have never complained about it. I love to pay a good employee the extra month, because only good employees will receive it from my business. That’s because the system allows me to get rid of any bad employees whenever I want. By the way, your misinformed about illiteracy. 98,04% of the population is literate.