Important Dates and Requirements for the Private Sector Employees’ 2022 Christmas Bonus
The deadline for private Puerto Rico employers to pay the Christmas bonus is fast approaching. According to Act 148-1969 (“Act 148”), the payment of the annual bonus, commonly known as the Christmas bonus, to eligible private sector employees must be paid between November 15 and December 15 of each year. Here we summarize the most important aspects that employers must keep in mind when determining eligibility and paying the bonus.
On June 20, 2022, the Governor of Puerto Rico, Pedro Pierluisi, signed into law Act 41-2022 (“Act 41”) to amend multiple employment laws, including Act 148. The newly enacted Act 41 changed the eligibility of employees, as well as the basic requirements for employers to pay the Christmas bonus. Previously, Act 4-2017 (Labor Transformation and Flexibility Act “LTFA”) established that employees hired on or after January 26, 2017, were required to work 1,350 hours or more from October 1 of any calendar year until September 30 of the subsequent calendar year (the “coverage period”) to qualify for this bonus. On the other hand, employees hired before that date would continue to be eligible for an annual bonus when they accumulated 700 hours or more during the coverage period.
Now, Act 41 establishes that employees that were hired before January 26, 2017, and who work 700 hours or more from October 1 of any calendar year until September 30 of the subsequent calendar year, will receive a bonus of 6% of their total salary, up to the maximum salary of $600.00 if their employer has 13 employees or more. If their employer has 12 employees or less during more than 26 weeks within the coverage period, employees are entitled to a bonus of 3% of their total salary up to a maximum of $300 if they worked 700 hours or more. Conversely, if the employee was hired on or after January 26, 2017, the employee is entitled to a bonus of 3% of the annual salary up to $600.00 if the employee worked more than 700 hours and if their employer has more than 20 employees for 26 weeks during the coverage period. If the employer has 20 employees or less during the coverage period of a given year, the employee is entitled to a bonus of 3% of the annual salary up to $300.00 if they worked more than 700 hours. In the case of microbusinesses and small and medium businesses, the employees must work 900 hours instead of 700. Also, dock employees may have different requirements specific to their industry.
It is important to stress that in accordance with the recent Opinion of the Secretary Num. 2022-04, issued by the Secretary of the Department of Labor and Human Resources, private employers must pay the Christmas bonus for the current and subsequent years in accordance with the amendments established in Act 41. According to said Opinion, it is incorrect for an employer to classify its employees among those hired before or after Act 41 to determine the eligibility and amounts to be paid. Instead, employers must classify their employees based on the hire date before or after January 26, 2017.
To provide a quick reference as to the requirements summarized above, we include a table that illustrates the effect of Act 41 on the payment of the Christmas bonus in the private sector.
|Date of hire||Minimum hours of work during the coverage period||Minimum amount of annual bonus|
|Before January 26th of 2017 (Before LTFA)||700 hours or more for the most employers
100 hours in the case of dock workers
|6% of the maximum annual salary of $10,000.00
If their employer has 12 employees or less, 3% of the maximum annual salary of $10,000.00
|After January 26th of 2017
|700 hours or more for the most employers
900 hours or more for employees that work for microbusinesses, small and medium business, in accordance to Act 62-2014
|3% of the annual salary up to $600.00
If the employer has 20 employees or less, 3% of the annual salary up to $300.00
Consequently, between November 15 and December 15 of 2022, private sector employers in Puerto Rico, that are not exempted under Act 148, are obligated to compensate the Christmas bonus to all its employees who worked 700 hours or 900 hours, as applicable, during the past coverage period (October 1, 2021, to September 30, 2022). Employers who wish to be exempted from paying the annual bonus to their employees under Act 148 because they have suffered economic losses or received earnings that are insufficient to cover the total bonus without exceeding the limit of fifteen percent (15%) of the annual net earnings, must submit to the Department of Labor and Human Resources the required documents before Wednesday, November 30, 2022.
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