The 13th-month salary is one of the main labor obligations for companies operating in Brazil. Established under Brazilian labor law, this mandatory benefit entitles employees to an additional salary payment each year.
As the end of the year approaches, companies must pay particular attention to payment deadlines, calculation procedures, and the financial planning required to meet this obligation.
For Japanese subsidiaries operating in Brazil, proper planning is especially important, as financial decisions and funding approvals often depend on the parent company overseas.
This article explains the main aspects of the 13th-month salary and the precautions companies should take.
1. What Is the 13th-Month Salary?
The 13th-month salary is a mandatory additional payment made annually to employees in Brazil.
Simply put, an employee who has worked throughout the entire year is generally entitled to receive the equivalent of one additional month’s salary.
Practical Example:
An employee earning a monthly salary of BRL 5,000 who has worked throughout the year will generally be entitled to a gross 13th-month salary of BRL 5,000.
For employees who have worked only part of the year, the amount is calculated proportionally based on the period worked.
It is important to emphasize that the 13th-month salary is not a performance bonus or a discretionary payment voluntarily granted by the company.
It is a legal right guaranteed under Brazilian labor law.
2. What Are the Payment Deadlines?
The 13th-month salary is paid in two installments, according to the following schedule:
| Installment | Payment Deadline |
| First installment | Between February and November, no later than November 30 |
| Second installment | No later than December 20 |
In practice, many companies pay the first installment in November and the second installment in December.
Therefore, those responsible for managing Brazilian operations should confirm in advance that the payments have been properly scheduled.
This is particularly important for Brazilian subsidiaries that depend on financial approvals or fund transfers from their overseas parent companies.
3. How Do Payroll Deductions Work?
An important aspect of the 13th-month salary is the difference between the net amounts employees receive in the first and second installments.
First Installment
The first installment generally corresponds to half of the remuneration used as the basis for the advance payment, without deductions for Brazilian Social Security contributions (INSS) or Income Tax.
Second Installment
The second installment includes the necessary adjustments, including applicable statutory deductions.
As a result, the net amount received by employees in the second installment is usually lower than the amount received in the first installment.
Companies must also account for labor-related and social security charges associated with the 13th-month salary.
Consequently, the total cost of this obligation is not limited to the amount paid directly to employees.
4. What Precautions Should Companies Take?
Payment of the 13th-month salary is a legal obligation in Brazil.
Late payment or failure to pay may result in administrative penalties and labor claims.
To reduce these risks, companies should take several important precautions.
Verify Employee Eligibility
Companies should confirm that all eligible employees have been included in the calculation.
Review Variable Compensation
Companies must consider variable compensation, such as sales commissions and overtime pay, when calculating the benefit.
Ensure Adequate Financial Planning
Companies should ensure that sufficient financial resources are available to make payments within the legal deadlines.
These measures help companies comply with Brazilian labor obligations while maintaining effective financial management.
5. Special Considerations for Japanese Subsidiaries in Brazil
For Japanese subsidiaries operating in Brazil, the 13th-month salary requires particular attention to financial planning and communication with the parent company.
In many organizations, funding arrangements and payment approvals depend on internal procedures carried out in Japan.
Therefore, Brazilian subsidiaries should communicate the estimated payment amounts, deadlines, and related charges to their parent companies well in advance.
This coordination allows the parent company to properly incorporate the obligation into its annual budget and helps prevent cash flow difficulties at year-end.
Conclusion
The 13th-month salary is an important labor obligation in Brazil and should be included in every company’s annual financial planning.
In addition to meeting payment deadlines, companies must verify calculation criteria, consider applicable charges, and ensure sufficient funds are available.
For Japanese subsidiaries, understanding these specific requirements of Brazilian labor law is essential to preventing labor-related risks and ensuring efficient business administration.
About ORGATEC
ORGATEC specializes in providing accounting, tax, and labor compliance services for Japanese companies operating in Brazil.
Our team is available to assist your company in complying with Brazilian labor obligations, providing specialized support tailored to the needs of Japanese subsidiaries.