Friday, December 18, 2009

The Christmas Bonus

Earlier this week, I came across an article in the local paper titled "Hoy vence el pago del bono de Navidad." Translation: "The Christmas bonus payment expires today." In case you weren't aware of this, in Puerto Rico, all employers must pay their employees a Christmas bonus. This law also applies to part-time employees, and businesses operating with a net income loss. No, your eyes are not playing tricks on you! As long as someone has worked for you for more than 700 hours during the year, you must pay them a bonus. Should employers come under severe hardship, and are unable to meet this obligation, they must inform Department of Labor of Puerto Rico. By the way, this law (#148) was enacted on June 30th of 1969, and it's known as the "Christmas bonus law" ("ley de bono de navidad"). Low and behold, this bonus also applies to local government employees.

In an attempt to cut costs, as the government deficit just keeps going nowhere but up, Gov. Luis Fortuño did cut many of his cabinet members' bonuses. This year, 608 businesses reportedly asked to be exempted from this obligation. Compared to last year, the increase is said to be 29%. Numbers vary, ranging from just under 33,800 to 66,000, the amount of workers affected. In my opinion, this Christmas bonus law is archaic and it hurts many small to medium-sized business owners, especially during this economic recession. Besides, isn't a Christmas bonus supposed to be something extra? Shouldn't it also depend on your work and company's performance, or am I just going out on a limb here? This mandatory Christmas bonus creates a huge burden on many businesses. Moreover, it often rewards workers who do less than mediocre work, and it also fails to incentivize and motivate better job performance.

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