How is the Thirteenth Month calculated?

LAST NEWS: We have created the Thirteenth Month PDF Guide and an Excel Calculator so that you know how much will you be paid with very simple explanations of the step-by-step of each calculation. 

To download the Guide and the Calculator, click HERE

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In Panama, workers receive the Thirteenth Month in addition to their regular salary, which is a special bonus that corresponds to them as an extra right and must be paid by every employer. This right is outlined in Cabinet Decree No. 221, of November 18th, 1971. The Thirteenth Month or “Décimo” -as it´s commonly known in Spanish- must be paid in three installments on the following dates: April 15th, August 15th, and December 15th. It’s important to clarify that if employers fail to pay this benefit, they could be sanctioned by the Ministry of Labor and Workforce Development (MITRADEL for its acronym in Spanish).

The amount to be paid shall be calculated in the ratio of 1 day’s salary for every 11 days or fraction of actual or effective work, whether continuous or not, also considering as days worked those in which the worker was absent due to illness, occupational accident, maternity leave, and vacations, duly verified. Additionally, 7.25% of social security and income tax will be deducted, where applicable.

How is the payment for the Thirteenth Month calculated with the deductions corresponding to social security?

Let´s suppose we want to know the amount of the Thirteenth Month of a worker, corresponding to August 15th, with a fixed salary of 1,500 balboas per month.

To do this, we must first calculate the total salary earned by that worker between April 15th and August 15th, and divide it by 4 to obtain the average monthly wage. Then, we divide the result by 3, to obtain the ratio to be paid in this period (the “décimo” is paid in three parts during the year).

To download for free the Laboremia Thirteenth Month Guide and the Excel Calculator, click HERE

Note:

It’s important to note that to settle up the base salary for the calculation of the Thirteenth Month, the payments for overtime work or legal surcharges, work commissions, premiums, maternity leave, vacations, paid time off, occupational hazard, and any special bonus received during the corresponding period must be included in it.

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