What is 'Aguinaldo (Mexico)'

Aguinaldo refers to an annual Christmas bonus that businesses in Mexico are required by law to pay to their employees. The payment must be made by December 20 of each year. Companies that fail to make an aguinaldo payment may get fined between three and 315 times the legal daily minimum wage. Foreign workers who hold appropriate employment documentation are also entitled to receive an aguinaldo. Apart from Mexico, some Latin American nations such as Costa Rica also require employers to pay an aguinaldo to their employees.

BREAKING DOWN 'Aguinaldo (Mexico)'

The aguinaldo is equivalent to at least 15 days wages and may be prorated if the employee has been with the company for less than a full year. For example, if an employee earns Mex $180,000 per year, they receive an aguinaldo payment of Mex $7,500 = (Mex $180,000 / 12 months) / 2. Large companies may pay employees 30 days wages, which is effectively 13 months of salary per year. Employees are not required to pay income tax on their aguinaldo payment of an amount equivalent to 30 days of the legal daily minimum wage. For example, if the minimum daily wage is Mex $60, the tax-exempt amount of the aguinaldo is Mex $1,800 = Mex $60 x 30 days.

Although an aguinaldo is required by law, only a minority of Mexican workers receive the payment due to unfavorable working conditions, such as informal contracting and temporary employment. For example, a part-time gardener who has not signed a formal contract with his or her employer may not receive an aguinaldo payment. To learn more about the Mexican economy, see the Q/A: Is Mexico an emerging market economy?)

Benefits and Limitations of Aguinaldo Payments

The aguinaldo provides a seasonal boost in demand for retail products such as automobiles, appliances, clothes and furniture. It is estimated that 70% of aguinaldo income gets spent in department stores. Some employers increase aguinaldo payments to boost El Buen Fin sales; El Buen Fin is Mexico’s Black Friday equivalent.

Employees who receive an aguinaldo payment are more likely to show loyalty to a company that values them. Loyal employees are typically more productive and less likely to leave, which reduces recruitment and training costs. Critics of the aguinaldo believe that these mandatory payments may put financial pressure on struggling companies that could result in layoffs and/or closures. To combat this limitation, companies are permitted to make aguinaldo payments to their employees via installments, however, they're not allowed to defer the entire payment. 


  1. Mexican Stock Exchange (MEX) .MX

    The Mexican Stock Exchange (Bolsa Mexicana de Valores, or BMV) ...
  2. Termination of Employment

    Termination of employment refers to the end of an employee’s ...
  3. Terms of Employment

    Terms of employment are conditions that an employer and employee ...
  4. Advance Payment

    An advance payment is one that is made ahead of its normal schedule, ...
  5. Performance Bonus

    A performance bonus is supplemental compensation that an employer ...
  6. Bonus

    A bonus is any financial compensation, reward, or return over ...
Related Articles
  1. Financial Advisor

    Life Insurance Plans to Help Your Small Business Retain Employees

    How to use and design cash value life insurance plans as an incentive to help attract and retain key employees.
  2. Insurance

    Life Insurance as a Bonus Plan for Key Employees

    A Section 162 plan is a life insurance plan provided by an employer to key employees.
  3. Personal Finance

    Why Low-End Jobs Are Paying More

    More companies are now paying employees in low-end jobs higher wages. Here is why – and who benefits.
  4. Personal Finance

    Financial Wellness Programs: How Employees Benefit

    More and more employees, regardless of age, career or income, are turning to their employers for help with their personal financial plans.
  5. Personal Finance

    How Minimum Wage Impacts Unemployment

    We explain how the minimum wage affects unemployment, public assistance, and the economy overall.
  6. Taxes

    Have Household Help? Don't Get In Tax Trouble

    Hiring household workers can be a complicated process. Know what the government requires so you can prevent penalties and problems down the road.
  7. Insights

    3 Ways Donald Trump Can Make Mexico Pay for a Wall

    We'll explore three practical ways in which Donald Trump can get Mexico to pay for his proposed wall on the southern border.
  8. Managing Wealth

    5 Low-Cost Perks for Small Business Employees

    Money isn’t the only way to motivate employees. Here are some savvy strategies even the smallest business can use.
  9. Taxes

    Small Business Tax Obligations: Payroll Taxes

    Don't leave it up to your accountant - owners are ultimately responsible for fulfilling tax obligations.
  10. Small Business

    3 Reasons to Develop an Employee Handbook for Your Small Business

    Learn how a small business can benefit from an employee handbook covering labor laws, codes of conduct, leave policies and media relations.
  1. What does a merger or acquisition mean for the target company's employees?

    Learn about the likely impact of a merger-and-acquisition deal on the target company's employees, including their benefits ... Read Answer >>
Trading Center