Obligatory Christmas Bonus to all Employees in Costa Rica
Christmas time is coming up and that means the Aguinaldo, or Christmas bonus, to your employees. The Aguinaldo is an obligation by the Costa Rican labor laws 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”. It has to be paid by any employer to every employee in any activity before December 20th.
Every working person who has worked at least for one continuous month worked for the same employer has the right of receiving the Christmas bonus. Regardless of the method of payment. And no matter if they are hired for a fixed term contract or for a specific task (eventual, occasional) or working for certain days and hours a week.
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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 prior to November 30th of the year in question. So it is obtained from the sum of such salaries and divided by twelve. To calculate the Christmas bonus, download the Costa Rica Christmas Bonus Calculator below.
What is included in the Christmas Bonus
You should not only include the regular working hours it the calculation. Any paid overtime and other “extra” you might have paid has to be included. You also need to take into account “salary paid in kind”. If the parties have not been able to put a value to 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 incomplete, this will treated as wrongful retention and is a 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 of 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 we can. Some of us feel we are taking advantage of the locals and we 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 (its hard to find good gardeners). Paying twice the minimum salary ads up if you do everything legal and correct. You have the obligation to pay full Christmas bonus over this salary. You also have to pay Caja over the full salary or have him pay as a voluntary. Though this is really 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 taken into account 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.
The other advantage is that they get used to a salary. And they lose perspective to the rest of the market. They most of the time do not realize how well off they are until it is too late and you have to get rid of 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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