Christmas Bonus

Law 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 September 30, 2006 and ending October 1, 2007 (“qualified employees”).
This Christmas, employers with 1 to 15 employees have to pay their qualified employees a bonus equal to 2.75% of the employee’s earned wages during the qualifying period, up to $10,000 (maximum bonus $275). Employers with 16 or more employees have to pay their qualified employees a bonus equal to 4.5% of the employee’s earned wages during the qualifying period, up to $10,000 (maximum bonus $450). For 2008 the percentages will increase to 3% for employers with 1 to 15 employees and 6% for employers with 16 or more employees.

According to regulations of the Department of Labor and Human Resources of Puerto Rico (“DTRH” for its Spanish acronym), an employee’s wage includes the base salary, commissions, vacation and sick leave payments, unemployment insurance and disability insurance.

Employees in agricultural activities, domestic activities, charitable institutions, and the government are excluded from the application of Law No. 148 and need not receive the bonus as prescribed by said law.

Employees covered by a collective bargaining agreement will receive their bonus as prescribed by the agreement as long as it matches or exceeds the bonus they would have received under Law No. 148. If the bonuses under the collective bargaining agreement are lower than those under Law No. 148, employers must pay what their employees would receive under the law.

Law No. 148 also requires that the bonuses be paid to employees between December 1 and December 15. An alternate payment period could be applicable if employers and employees agree to it in writing; the payment period is before December 31 of the current year; and the change in payment period is notified to the DTRH before November 30 of the current year.

If the bonus is not paid in the period prescribed by law or the alternate payment period, if applicable, employers will have to pay as bonus to their employees 1.5 times what they would have received, if the payment is made no latter than 6 months after the expiration of the period and 2 times what they would have received, if the payment is made 6 months after the expiration of the period.