Important Information Regarding the Christmas Bonus

Act No. 148 of June 30, 1969, as amended, requires that employers pay bonuses to all employees who have worked more than 700 hours during the 12-month qualifying period, starting on October 1st and ending on September 30th.

Employers with up to 15 employees shall pay their qualified employees a bonus equal to 3% of the employee's earned wages during the qualifying period, up to $10,000; therefore, a maximum bonus of $300. Employers with 16 or more employees shall pay their qualified employees a Christmas bonus equal to 6% of the employee's earned wages during the qualifiying period, up to $10,000; therefore, a maximum bonus of $600.

Nevertheless, the total amount to be paid shall not exceed 15% of the annual profits the employer generated during the qualifying period.

According to regulations of the Puerto Rico Department of Labor and Human Resources, an employee's wage includes the base salary, commissions, vacation and sick leave payments, uneployment insurance, and disability insurance.

Employees in agricultural activities, domestic activities, charitable institutions, and nonprofit institutions are excluded from the application of Act No. 148, and need not to receive the bonus as prescibred by said law.

If an employer wants to be exempt from the payment of all or part of the bonus as a result of operating losses, he should submit a written notification to the Secretary of Labor and Human Resources no later than November 30, 2013, accompanying financial statements starting from October 1st through September 30th, reviewed by a CPA.

Act No. 148 also requires that the bonuses be paid to employees no later than December 13th. An alternate payment period could be applicable if employers and employees agree to it in writing, and the change in payment period should be notified to the Department of Labor and Human Resources on or before November 30th of the current year. Since this year November 30th is on a Saturday, employers will have until December 2, 2013 to submit the written communication and supporting documents.

If the bonus is not paid in the period prescribed by law or the alternate payment period, if applicable, the employee will be entitled to receive an additional bonus, which can range from 50% to 100% of the amount of the bonus, depending on the date paid.