Puerto Rico Christmas Bonus: Eligibility, Amount, and Deadlines

The Puerto Rico Christmas bonus, known locally as the aguinaldo, is a mandatory annual payment that every private-sector employer on the island owes to eligible employees under Act No. 148 of 1969, as amended by Act No. 4-2017. The amount depends on when the employee was hired, the size of the employer, and the wages earned between October 1 and September 30. Payment must reach the employee between November 15 and December 15, and missing that window can double what the employer owes.

Who Is Eligible

Eligibility is measured in hours worked during the October 1 through September 30 coverage period, and the threshold depends on hire date.

Employees hired before January 26, 2017 must have worked at least 700 hours during the coverage period. Dock workers qualify at just 100 hours.
Employees hired on or after January 26, 2017 must have worked at least 1,350 hours during the same period, regardless of employer size.

An employee who falls short of the applicable threshold has no right to the bonus for that cycle.¹

Act 148 does not cover every worker on the island. Farm workers, household and domestic workers, employees of charitable nonprofits, and all government employees at the Commonwealth, municipal, and public corporation levels are excluded. Employers in those categories have no statutory bonus obligation, though some pay one voluntarily.²

How Much the Bonus Is

Two different formulas apply, depending on when the employee was hired. There is no single flat rate.

Employees Hired Before January 26, 2017

The bonus is a percentage of wages earned during the coverage year, applied to the first $10,000 of wages only.

Employers with more than 15 employees pay 6% of wages up to $10,000, for a maximum bonus of $600.
Employers with 15 or fewer employees pay 3% of wages up to $10,000, for a maximum bonus of $300.

An employee who earned $50,000 in the coverage year still has only the first $10,000 counted toward the calculation.¹

Employees Hired On or After January 26, 2017

Act 4-2017 set lower amounts for newer hires and changed how employer size is counted. Size is now measured by whether the business had the relevant headcount for more than 26 weeks of the coverage year.

Employers with more than 20 employees for more than 26 weeks pay 2% of total wages earned, capped at $600.
Employers with 20 or fewer employees for more than 26 weeks pay 2% of total wages earned, capped at $300.

During an employee’s first year of employment, the required bonus is 50% of whatever the formula produces.¹

The 15% Net Profit Ceiling

Whatever the formulas produce for individual employees, the combined total of all Christmas bonuses an employer pays in a year cannot exceed 15% of the company’s net annual profit for the coverage period. This ceiling is automatic and requires no petition. If the formulas would produce more, the obligation stops at 15% of net profit.²

When the Bonus Must Be Paid

The coverage period is October 1 through September 30. Every hour worked and every dollar earned in that window feeds the calculation. Payment must reach eligible employees between November 15 and December 15 of the year in which the coverage period ends.¹ December 15 is a hard deadline.

Employees Who Left Before Payment

Leaving a job before the November–December payment window does not forfeit the bonus. A former employee who worked the required hours during the coverage period is still owed the full amount, whether they resigned or were terminated. At separation, the employer must tell the departing worker the date and method of payment.

If the employer cannot locate a former employee to pay them, Act 148 requires the employer to deposit the bonus with the Department of Labor within 15 days of the statutory payment deadline. Ignoring the obligation because the person is gone does not eliminate it; it just adds penalties.

Crediting Voluntary Bonuses

An employer who has already paid voluntary bonuses or extra compensation during the coverage year can apply those payments toward the Christmas bonus obligation, but only under strict conditions. The payment must be genuinely voluntary and above what the employee was otherwise entitled to receive. Compensation negotiated as part of salary or promised as a condition of employment does not qualify.

To use the credit, the employer must give the employee written notice within five business days of each payment, stating that the amount will be credited toward the Christmas bonus. The notice can be delivered in person, by mail, or electronically. Without timely written notice, the credit is lost.

Hardship Exemption

An employer whose profits are too thin to support even the reduced bonus can petition the Department of Labor and Human Resources for a formal exemption. The written petition goes to the Secretary of Labor no later than November 30 and must include Department of Labor Form NNT-BN-21 and original financial statements for the October 1 through September 30 coverage period, signed and stamped by a Puerto Rico licensed CPA. Compiled statements are accepted; a full audit is not required. The records must show the employer’s inability to pay.

Filing does not itself grant relief. The Department reviews the documentation and issues a written determination. Only an affirmative written decision counts as a valid exemption, and the determination letter should be kept on file. Without it, an unpaid or reduced bonus is treated as a violation. Missing the November 30 deadline generally results in automatic denial.¹

Tax Withholding on the Bonus

The Christmas bonus is wages for federal payroll tax purposes. Employers withhold FICA (Social Security and Medicare) just as they would from any other wage payment, unless the employee has already reached the Social Security wage base for the year.

Puerto Rico income tax withholding is tiered:

$600 or less: no Puerto Rico income tax is withheld.
More than $600 but not more than $1,500: 7% withheld from the total bonus.
More than $1,500: standard withholding rules from the employer’s guide apply.

Because the statutory caps hold most bonuses at or below $600, most workers see no Puerto Rico income tax withholding on the payment.

Penalties for Late or Missing Payment

The penalty structure is automatic and steep. If the bonus is not paid by December 15:

Paid within six months of the deadline: the employer owes the full bonus plus an additional 50% as a penalty.
Paid more than six months late: the employer owes the full bonus plus an additional 100%. The worker receives double.

The Secretary of Labor has no authority to waive these penalties, and they cannot be negotiated down after the fact.¹ Employees can pursue unpaid bonus claims through the Department of Labor or the courts, and an employer who loses in court also pays the employee’s legal fees on top of the doubled amount. Paying on time, or filing a timely exemption petition by November 30, is almost always the cheaper path.

1
Oficina de Gerencia y Presupuesto de Puerto Rico. Puerto Rico Act 148 of 1969 – Christmas Bonus for Employees of Private Enterprise
2
Departamento del Trabajo y Recursos Humanos. Act 148 – Private Sector Bonus Act