Legal reforms regarding the Christmas bonus for 2019

Dear Clients and Friends:

ROMERO PINEDA & ASOCIADOS reminds you that the Christmas bonus is an inalienable right and a labor benefit independent of other legal benefits, consisting of a bonus for each year of service, which must be paid by the employer between December 12 and December 20, in accordance with Article 200 of the Salvadoran Labor Code.

The remuneration will depend on the seniority of the employee as follows:

  • Up to 3 years of seniority: 15 days of salary.
  • From 3 years to 10 years of seniority: 19 days of salary.
  • More than 10 years of seniority: 21 days of salary.

Those employees who do not complete a year of working for the same employer as of December 12, will have the right to be compensated with the corresponding proportion for the time worked.

This year, the Legislative Assembly approved various reforms in relation to the Christmas bonus:

The first one regarding to the exemption of income tax payments for Christmas bonuses that do not exceed the sum of two monthly minimum wages of commerce and services (Equivalent to US$ 600), for which the Tax Code and the Income Tax Law were reformed and published in the Official Gazette on November 14, 2019.

In this regard, numeral 16) was added to article 4 of the Income Tax Law to incorporate the income received as a Christmas bonus by the employees, up to an amount no more than two monthly minimum wages (US $ 600), as non taxable income, being excluded from the computation of the income obtained, In addition, the second paragraph of article 155 of the Tax Code was reformed so that the bonus is not subject to withholding for purposes of payment of Income Tax, provided that it does not exceed the minimum amount established in the reform of the Income Tax Law.

Previously the Legislative Assembly issued temporary decrees to exonerate the collection of taxes for Christmas bonuses that did not exceed US $ 600, but with the reforms made the exemption will be permanent. However, Christmas bonuses that exceed the two monthly minimum wages will constitute taxable income, so they will be subject to the withholding and payment of said tax, deducting the two minimum wages mentioned

In the second reform published in the Official Gazette on November 25, 2019, the Legislative Assembly modified the content of article 201 of the Labor Code so that employees do not lose the right to obtain the Christmas bonus due to disciplinary reasons, for unjustified absences from work or due to any another cause. Prior to the reform, the aforementioned provision stated that employees could lose this right when the employee had more than 2 unexcused absences, in 2 different months, whether consecutive or not, in the period between December 12 of the previous year and December 11 of the current year.

For more information and legal assistance on the requirements and payment of the Christmas bonus and other Corporate and / or Labor matters, please do not hesitate to contact Ms. Beatriz Merino (Coordinator of the Labor Unit) at (503) 2505-5555 or to the email

It will be our pleasure to assist you.

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