Bastian Lehmann

Human resource management is crucial to running a smooth-sailing business organization. Integral to the system is determining employee remuneration packages. Ideally, yours prove competitive enough. That’s to attract the best talents and, more importantly, encourage them to stay for the long haul.

If a competitive edge is what you seek compensation-wise, it pays to look beyond the usual contents of a salary contract. Consider 13th and/or 14th month pay, for starters.

The 13th and/or 14th month pay is given to employees for the invaluable work they contribute to an organization. In some places, they are called 13th or 14th salary or holiday pay. These bonuses are a way for business owners and managers to show appreciation for their workforce. They communicate that you’re willing to go out of your way to improve employee experience and satisfaction.

What is it for?

If you do business in the United States, you probably haven’t heard about the 13th and 14th month pay. After all, they do not factor into the country’s statutory benefits for employees. So, you might get confused as to the motivation behind this additional compensation.

In the Philippines, which is considered the origin of the additional pay concept, the 13th month pay was established as a law to bridge the gap between the increasingly high cost of living and the country’s almost stagnant minimum wage. The principle was to make up for inflation, which devalues the Philippine peso, by adding another month’s worth of salary to employees’ yearly earnings.

Some generous companies even provide bonuses amounting to an 18th month pay, depending on business revenue standing and individual employee performance.

On top of compliance, another reason behind these bonuses is to keep an organization’s competitive edge regarding human resource management. It’s no news that money motivates people. And employees who feel like they are taken care of by their employers, as evident in their paychecks, are more likely to stay loyal.

In the era of The Great Resignation, the subject of employee compensation and benefits has never been more relevant. Employers who do not want to incur the high costs of frequent turnover must show their existing employees why they should not be looking for greener pastures.

Is it mandatory?

Some countries legally mandate the provision of 13th and/or 14th month pay. Others leave it to the discretion of employers. Here are examples of countries that execute the 13th and/or 14th month pay, whether for compliance or customary reasons.

• Legal Mandate
• Armenia
• Portugal
• Greece*
• Spain*
• Argentina
• Bolivia*
• Brazil*
• Colombia
• Costa Rica
• Dominican Republic
• Ecuador
• El Salvador
• Guatemala*
• Honduras*
• Mexico
• Nicaragua
• Panama
• Paraguay
• Peru*
• Uruguay
• Venezuela
• India
• Indonesia
• Philippines
• Saudi Arabia
• Angola*
• Nigeria
• South Africa
• Customary
• Austria*
• Italy*
• Belgium
• Croatia
• Chile
• China
• Hong Kong
• Japan*
• United Arab Emirates (UAE)*

These countries implement both the 13th and 14th month pay.

Countries differ on when and how they pay the 13th and/or 14th month pay. For example, in the Philippines, where it’s legally mandated, the 13th month pay must be given before Christmas Day. Meanwhile, non-Catholic or Christian states like China and Hong Kong save these bonuses for the month of the Lunar New Year.

You must note that culture and customs inform how the 13th and/or 14th month pay is distributed. The details of allocation are outlined in employment contracts. Failure to deliver to contract stipulations, especially in countries where these bonuses are legal requirements, may result in severe penalties.

Who qualifies for compensation?

All workers labeled as employees are eligible to receive the 13th and/or 14th month pay. Those include paid tenured employees, new hires, paid interns, and documented foreign employees.

Even employees who haven’t spent more than a year with a company should receive these bonuses. The same goes for employees who leave the company before the month in which these bonuses are released. The 13th and/or 14th month pay will be prorated in both instances.

Here is a list of working categories ineligible for the bonuses.

• Workers paid on a task basis

This category covers freelancers, such as graphic designers paid for every completed project or rideshare drivers paid per client serviced.

• Workers paid on a commission basis

This category covers workers whose compensation relies on reached quotas. These include sales agents, insurance agents, and real estate brokers.

• Personal service workers

This category applies to independent contractors providing specific services such as accounting, caregiving, gardening, and other skill-specific jobs.

• Civil servants

Employees in the public sector belong to this group.

• Managerial staff

This category covers those in high-ranking and policy-making roles in an organization.

How is the 13th and/or 14th month pay calculated?

Countries differ on how the 13th and/or 14th month pay is computed. Here’s the most common mathematics applied:

Computing the 13th and/or 14th month pay is straightforward for employees who have spent an entire calendar year within an organization. The bonus excludes other benefits on top of the base salary, such as night differentials, allowances, commissions, and other monetary perks.

For instance, if the base monthly pay for a worker is $2,000, that’s the 13th month bonus they must receive. If an organization provides a 14th month pay, double that base pay, and so on.

For employees who haven’t rendered services for an entire year or have left the company before the release of the bonus, prorated computation is applied. For example, a worker earning $24,000 per annum will receive a 13th month pay of $333 if they have rendered only six months of service before the bonus.

$24,000 ÷ 12 x 6=$333

Again, depending on the country’s unique legal requirements, taxes may or may not be applied to the 13th or 14th month pay. In the Philippines, for example, it’s considered a non-taxable bonus.

When is it given?

As for countries where the 13th and/or 14th month pay is legally mandated, the bonus’s release falls on the following schedules:

• India: Within eight months of the end of each financial year
• Indonesia: One week before the holiday
• Philippines: In December or two installments in May/June and November/December
• Saudi Arabia: On Eid al-Fitr
• Armenia: Before the New Year holidays
• Greece: At Christmas, Easter, and summer
• Portugal: By December 15th.
• Spain: In summer and at Christmas, or via monthly salary instead
• Argentina: In two equal installments by June 30th and December 18th
• Brazil: Paid in two equal parts, plus mandatory 14th month pay as a “holiday bonus”
• Colombia: In two equal parts, namely 1st–15th June and 1st–20th December
• Costa Rica: During the first 20 days of December
• Dominican Republic: By December 20th
• Ecuador: In parts or as a lump sum by yearend
• El Salvador: Paid as a Christmas bonus based on the length of service
• Mexico: Paid by December 20th
• Nicaragua: Paid by December 10th
• Panama: Paid in three equal parts on April, August, and December 15th
• Paraguay: Paid at the end of the year
• Peru: Paid in July and December
• Uruguay: Paid in two halves on June 30th and by the end of the year
• Venezuela: Paid at the end of the year

U.S. Labor Laws

U.S. businesses hiring overseas human resources must acquaint themselves with country-specific labor laws. That is on top of ensuring compliance with U.S. statutory labor requirements, such as the following:

• Probation period: The standard is a 90-day probationary timeline to give the company and the employee adequate time to assess job and culture fit.

• Annual leave: On average, U.S. workers receive 10 days of paid holiday leave.

• Public holidays: U.S. employers must honor public holidays, such as the following:
– New Year’s Day (January 1st)
– Martin Luther King Jr. Day (Every 3rd Monday of January)
– Memorial Day (Last Sunday in May)
– Independence Day (July 3rd)
– Labor Day (1st Monday of September)
– Veterans Day (November 11th)
– Thanksgiving (4th Thursday of November)
– Christmas Day (December 25th)
• Maternity and paternity leave: The Family and Medical Leave Act (FMLA) entitles new parents to up to 12 weeks of unpaid or job-protected leave.
• Sick leave: The FMLA entitles employees to up to 12 weeks of unpaid sick leave annually for certain medical conditions.
• Work hours: The average weekly working hours in the U.S. is 33 hours, inclusive of a half-hour lunch.
• Overtime: The Fair Labor Standards Act (FLSA) entitles employees to overtime pay for work hours rendered exceeding the threshold of 40 within a workweek.

Wrapping It Up

Although the 13th and/or 14th month pay is not a standard legal requirement in the United States, those looking to expand their workforce will surely encounter the subject once they begin hiring talents from specific countries overseas. At first, you might think it superfluous. Rest assured, however, that it’s an investment worth making.

Bonuses that recognize the value of employees improve employee experience and satisfaction. Consequently, your team becomes more motivated at work, increasing overall productivity.

The opposite scenario is seeing your workforce suffer from burnout, which may increase your company’s turnover rate. And that’s quite costly, perhaps even costlier than giving your employees what they deserve.

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Horizon Worlds becoming the subject of mainstream ridicule is only a speed bump for Meta’s ambitions – but its failure highlights deeper problems that the company has yet to solve

It’s never a good sign when the world at large – not just the specialist press – decides that your new business venture has failed so badly that it’s actively funny. That’s precisely what has happened to Meta’s flagship metaverse product, Horizon Worlds, over the past few weeks.

As various reports have shown up the low user numbers and engagement with the service, and the company’s struggle to get even its own employees to use it, the cup of schadenfreude has run over. Negative headlines in specialist technology and financial publications are to be expected, but Horizon Worlds has also become a regular punching bag for the mainstream media and particularly for America’s late night TV hosts, who relish the spectacle of what seems, to the general public at least, like a billionaire’s vanity project crashing and burning.

Even if that presentation of what’s happening isn’t entirely fair – and I’d argue that it isn’t, though I wouldn’t go so far as to suggest there’s any particularly glittering silver lining on all the clouds gathering over Meta’s metaverse ambitions – it’s going to be a tough thing to recover from.

After years of hype around extremely vaguely defined notions of the metaverse, which jostled with “blockchain” for the title of most commonly used vacuous buzzword in corporate communications, Horizon Worlds is being put forward as the first taste of what it might actually look like in practice – and has promptly seen its public perception sink drastically.

Even among people who likely don’t know what Horizon Worlds actually is and have never tried a VR headset in their lives, the service is now linked, perhaps permanently, to an image of hubris and failure.

Up front we should acknowledge a really basic problem: Meta is still trying to run before it can walk

I don’t know that Horizon Worlds can ever climbs back from those doldrums. I suspect it won’t, to be honest; the work required to get people to take seriously a platform that first came to public awareness as something for comedians to dunk on over and over again is immense. It’s important to have perspective here, though.

Meta’s ideas about the metaverse have never been restricted to Horizon Worlds, which for all its ambition has always seemed primarily to function as an experimental playground for metaverse concepts and approaches. The expectation, I think, has always been that Horizon Worlds would be a place where the company figured out what worked and what didn’t. Granted, it’s not ideal that what seems to have emerged is a far clearer idea of what doesn’t work than of what does work. Horizon Worlds would be a much more useful platform even as an experimental test bed if it had a lot of active, engaged users – but not attracting a huge userbase at this point in the evolution of Meta’s metaverse strategy and technology isn’t a fatal blow by any means.

This isn’t to say that Horizon Worlds being publicly viewed as a major failure isn’t a hard pill to swallow for Meta, or that it doesn’t have consequences.

Beyond the immediate impact on the platform itself or on its parent company, this will have dampened overall enthusiasm for metaverse concepts – though that may not be a bad thing overall, as some of that enthusiasm was running far ahead of technical and social realities, and a little cold water now might help to set expectations more realistically.

Even a failure is a learning experience, though, and you’d expect that Meta has learned a fair bit from Horizon Worlds so far – although casting a critical eye on the company’s metaverse efforts more broadly does raise some questions that go quite a bit beyond Horizon Worlds alone, and won’t be solved simply by applying the lessons from that platform’s less-than-lukewarm reception.

Up front we should acknowledge a really basic problem: Meta is still trying to run before it can walk. The user experience ambition of Horizon Worlds is not matched by its technology – either by the software of the service, which has invited comparisons to Nintendo’s 15 year old Mii avatars that are not entirely unfair, or the hardware of the VR headsets required to access it, which remain bulky, cumbersome, and uncomfortable to use for extended periods of time, while also providing visual fidelity that can be pretty impressive in stylised games, but is a long way from being good enough for the professional and social applications Meta has in mind.

The more fundamental problem with Meta’s overall approach is that it doesn’t seem to have a clear idea about what the metaverse will actually be

The discomfort aspect in particular is a huge problem for a service that wants to explore ideas around socialising, working, and attending events in virtual worlds; it’s for good reason that short-bite experiences have proven to be the best fit for VR gaming, and these are in sharp contrast to the extended hours that Meta envisages people spending doing stuff in its metaverse.

Of course, for a company the size of Meta, spending money on hashing out potential services and products for hardware that doesn’t actually exist yet is an important aspect of R&D. Major tech companies need to be skating towards where the puck will be, not chasing where it is now, if they want to remain relevant in the future. That’s well and good – but the more fundamental problem with Horizon Worlds, and Meta’s overall approach, is arguably that it doesn’t seem to have a clear idea – either being pursued internally or articulated externally – about where the puck will be, or to be more precise, what the metaverse will actually be.

Looking at the range of work Meta is doing in this space at the moment, it’s clear that there’s a huge amount of activity, but it feels like it’s pushing in ten different directions at once. The company’s ideas about how people will perform different core activities like socialising or working in VR environments seem fragmented, while other teams are working on promising technological advancements that don’t quite fit into the overall picture, at least not yet. Underlying the whole thing is an almost total failure to articulate what the idealised end-goal for all this work actually is, beyond a bunch of Neuromancer/Snow Crash starry-eyed notions – and more importantly, to articulate why it’ll actually be a good and worthwhile thing for consumers and businesses alike.

I’ve noted several times before that one of the problems with the metaverse is that every company working on a thus-labelled project has a different definition of what a metaverse actually is. It increasingly seems like that’s also a problem within Meta itself; lots of very smart and talented people are working on metaverse projects that don’t seem to fit together coherently. Maybe that’s because the company lacks a real thought leader who has a clear and effective vision for all of this, though we shouldn’t discount the possibility that it’s because there simply isn’t a clear and effective vision for the metaverse right now – that there really isn’t a social case or a business case for these sorts of “virtual worlds” as anything other than a niche curiosity, at least until the technology undergoes some truly radical transformations.

To come back to the point about Meta lacking a leader with clear vision, it’s worth noting that much of the reporting around Horizon Worlds has suggested that Mark Zuckerberg himself is a big part of the problem. Without Zuckerberg, of course, it’s unlikely that Meta would be making such a huge push into metaverse technologies – up to and including changing the company’s name to reflect this priority. He’s clearly enthusiastic about the concept, perhaps more than anyone else in the world – but Zuckerberg’s passion for the metaverse concept doesn’t seem to be matched with a clear sense of direction and mission.

Many reports suggest that precisely because the metaverse pivot is Zuckerberg’s personal passion project, the company’s metaverse teams find themselves attempting to read tea leaves and figure out what they should do to “make Mark happy” (leading, apparently, to an internal acronym of “MMH” for metaverse projects), rather than letting product development be led by a coherent vision and informed by consumer research.

This situation – in which a single powerful executive’s personal like or dislike of a project’s direction is far more important than any commercial or technological metric – is not entirely uncommon, and is sometimes celebrated in the same way that auteurs are fêted in creative industries.

Perhaps the most important thing Meta needs to learn is that making Mark happy doesn’t seem to be making anyone else happy

There’s some heavy survivorship bias at work, though – nobody writes lengthy profiles of powerful, dominant executives whose vision turns out to be crap and whose products flop – and in reality this arrangement rarely works out very well for anyone involved. Steve Jobs is the often-cited example of this kind of leadership, and certainly an example of survivorship bias. It worked for him; for all that he made some glaring mistakes and was by all accounts an unpleasant and difficult man to work for a lot of the time, his decision making tended to be based on a fairly sharp eye for design and usability, which informed the development of some of the most iconic technology products of recent decades.

The reality for most companies with an overbearing chief executive, however, tends to be a lot less positive – and whatever else Mark Zuckerberg has turned out to be extremely adept at in the years since founding Facebook (as a college website for rating pictures of women, lest we ever forget), developing and articulating a coherent, radical vision for new technology creating a better world certainly isn’t one of them.

Perhaps the most important thing Meta needs to learn, as it figures out what lessons it can salvage from Horizon Worlds’ cratering user numbers, is that making Mark happy doesn’t seem to be making anyone else happy. If the metaverse concept is to actually achieve anything in the long run, its motivating vision will need to be driven by proper research, data, and analysis – not by the need to curry the favour of a single man who is arguably the world’s least typical or representative end-user.