How to Calculate Christmas Bonus for Employees

What is a Christmas Bonus?

The Christmas bonus is an annual benefit to which all workers in the USA are entitled, guaranteed by the Federal Labor Law. It consists of a bonus of 15 days of salary, which must be paid before December 20 of each year.

If the person was fired or changed jobs, a proportional part of the bonus must be included in his or her severance pay.

How do you Calculate Christmas Bonus?

To Calculate Christmas Bonus that corresponds to workers who worked the entire year, the following steps must be followed: 

1. Determine the daily wage: Calculate the fixed wage per day by dividing the total monthly wage by 30 days.
2. Multiply the daily amount by the 15 days of bonus: according to USA’s LFT, you must multiply the daily salary by 15 days to obtain the standard bonus.
3. Divide the total bonus by 365 days: divide the total amount of the bonus by the 365 days of the year to determine how much bonus corresponds to each day worked.
4. Multiply that value by the days worked: once you have obtained the daily amount of the bonus, multiply that value by the number of days actually worked to obtain the total amount of the bonus.

You can also use our Christmas Bonus Calculator, which is automatic and free.

Formula to calculate Christmas bonus

To calculate the bonus, the worker’s daily salary and the days worked during the year are taken into account, and divided by the days of the year (365 or 366 if it is a leap year). The basic formula is:

Bonus = (Daily Salary) × (Days Worked) ÷ 365

Proportional Christmas Bonus

It depends on the number of days worked; for example, If an employee worked only for 6 months, the proportional part (half) of the bonus corresponding to the year of service will be calculated. Taking into account that the daily salary is $500, the calculation of the proportional bonus would be: 

• Daily Salary: $500 
• Standard Christmas Bonus: $500 x 15 days = $7,500 
• Proportional Christmas Bonus: $7,500 / 2 = $3,750 

Commission Agents and Variable Salaries

In the case of variable salaries, an average daily salary is calculated considering the income from the last 30 days worked. For example, if a salesperson earned around $800 in the last 30 days, his/her bonus will be calculated by multiplying this amount by the days worked in the year. 

• Average Daily Wage: $800 
• Standard Christmas Bonus: $800 x 15 days = $12,000

Disabilities, Absences and Vacations

Absences due to illness should not be counted in the bonus calculation; this is calculated only on the days that they actually worked. If an employee has a daily salary of $600 and had a disability of 30 days in a year, the calculation would be as follows:

• Working days: 365 days – 30 days = 335 days
• Daily Salary: $600 
• Standard Christmas Bonus: $600 x 15 days = $9,000 
• Proportional Christmas Bonus: ($9,000 / 365 days) x 335 days = $8,260.27 

Public Employees’ Bonus

In the case of public sector workers, they follow the specific regulations of their institution, which may differ in terms of calculations and payment criteria.

For example, if the regulations indicate that a 40-day bonus should be considered instead of the 15 days stipulated by the LFT, the calculation would be as follows: 

• Daily salary: $700 
• Standard Christmas Bonus: $700 x 40 days = $28,000 

When is the Christmas Bonus Paid?

The deadline for payment of the bonus per year of work may vary depending on the type of employment between these two options:

• Private Employees: According to the Federal Labor Law (LFT), the bonus of private workers is paid at the end of the year, before December 20.
• Public Employees: In the case of the public sector, workers usually receive their annual bonus before December 15, in compliance with the regulations.

What do you do if your Christmas Bonus is not paid?

In USA, the LFT indicates that failure to pay the Christmas bonus entails fines and sanctions for employers. Affected workers can file the corresponding claims with the Federal Labor Defense Office (PROFEDET). There they will find advice and will be able to resolve the situation legally and fairly. 

Does the Christmas Bonus Pay Taxes?

In some cases, Income Tax (ISR) is applied to the bonus amount. However, according to the ISR Law, those workers with an income of less than one month of the Measurement and Update Unit (UMA) are exempt from paying it.

The UMA is determined annually by the National Institute of Statistics and Geography (INEGI). 

How to Make the Most of Your Christmas Bonus?

Receiving your Christmas bonus is an excellent opportunity to improve your financial situation and prepare for the future. Here are some tips to help you get the most out of it: 

• Plan your Expenses: take advantage of the date on which this bonus is paid (December 20th of each year) to plan your Christmas and New Year expenses responsibly. 
• Pay off Debts: You can also use part of your Christmas bonus to reduce your debts. This will help you improve your financial situation and reduce the cost of interest.
• Save: Having an emergency fund can help you feel secure about your long-term financial stability and deal with unexpected events without affecting your finances.
• Invest: Research safe and profitable options to make your money grow in the long term. Options such as investments in funds, real estate or high-yield savings accounts are good ideas.
• Education and Training: Find out about courses, workshops or studies that can provide you with better salaries in the future. Investing in your education is a way to improve your income in the long term.

Knowing the details of the payment of Christmas bonuses is a fundamental aspect for the human resources department to recognize the work of employees. Likewise, its correct calculation ensures compliance with labor law.

How to Use our Bonus Calculator?

Calculate your Christmas bonus easily with our online tool. If you have been working for more than a year, you only need to enter your monthly net salary, your daily salary and the estimated Christmas bonus days, which by law must be 15 days, and this will give you the corresponding Christmas bonus. 

If you have not worked a full year, you must add the monthly net salary, the daily net salary, the days of bonus, the amount of the bonus, the corresponding daily amount of bonus and the days worked. In this way, you will obtain the proportional bonus that corresponds to you.