Navigating Ecuador's "Décimo Tercer" and "Décimo Cuarto" Sueldo: A Comprehensive Guide for Employers and Employees

This guide provides an authoritative, practical breakdown of these essential payments, injecting insider knowledge to help you avoid common and costly mistakes.

The Legal Foundation: Ecuador's Código del Trabajo

The obligation to pay these bonuses stems directly from the Código del Trabajo (Labor Code of Ecuador). These provisions are designed to provide workers with crucial financial support for holiday expenses and the start of the school year. Failure to comply can result in significant fines and legal action from the Ministerio del Trabajo.

The Décimo Tercer Sueldo: The "Christmas Bonus"

Governed by Artículo 111 of the Labor Code, the "Thirteenth Salary" is an annual bonus paid to all employees under a formal employment relationship (relación de dependencia).

Key Details:

• Calculation Period: The calculation is based on all remuneration earned between December 1st of the preceding year and November 30th of the current year.
• Payment Deadline: Employers must pay this bonus no later than December 24th of each year.
• Calculation Formula: The bonus is equivalent to one-twelfth (1/12th) of the total remuneration the employee received during the calculation period. This must include their base salary, overtime (horas suplementarias y extraordinarias), commissions, and any other regular earnings. It is not simply one month's salary.
• Taxation: The Décimo Tercer Sueldo is subject to social security contributions (IESS) and income tax (Impuesto a la Renta).

Hyper-Specific Detail #1: The Monthly Option (Mensualización)

As per Artículo 115 of the Labor Code, an employee can formally request to receive their décimos on a monthly basis (mensualizar) instead of in a lump sum. This request must be submitted in writing to the employer within the first 15 days of January. Once made, the decision is binding for that fiscal year. Employers must keep this written request on file as proof of compliance during an inspection.

Correct Proportional Calculation Example:

An employee starts work on June 1st, 2024, earning $800 per month plus an average of $100 in monthly commissions. By the end of the calculation period (November 30th), they will have worked for 6 months.

• Total remuneration earned (June-Nov): ($800 salary + $100 commission) x 6 months = $5,400.
• Décimo Tercer Sueldo = $5,400 / 12 = $450.

The Décimo Cuarto Sueldo: The "School Bonus"

Governed by Artículo 113 of the Labor Code, this bonus is a flat-rate payment intended to assist with school-related expenses. Its value is tied directly to the national minimum wage.

Key Details:

• Calculation: The bonus is equivalent to one full Salario Básico Unificado (SBU). For 2024, the SBU is $460.00. This amount applies regardless of the employee's actual salary.
• Taxation: The Décimo Cuarto Sueldo is exempt from both income tax and IESS contributions. This is a key distinction from the Décimo Tercero.
• Payment Deadlines & Calculation Periods: The timing is critical and depends entirely on the employee's region of work, which corresponds to the school calendar.
  • Sierra and Amazon Regions: Paid by August 15th. The calculation period is from August 1st of the preceding year to July 31st of the current year.
  • Coastal Region (Costa) and Galápagos Islands: Paid by March 15th. The calculation period is from March 1st of the preceding year to February 28th/29th of the current year.

Hyper-Specific Detail #2: The SUT Registration Mandate

Payment is only the first step. Employers are legally required to register proof of payment online through the Ministry of Labor's platform, the SUT (Sistema Único de Trabajo). This is mandated by regulations like Acuerdo Ministerial No. MDT-2023-140. For the Sierra region's Décimo Cuarto paid in August, the registration deadline is typically around September 15th. Missing this separate administrative deadline results in automatic fines, even if the employees were paid on time.

Correct Proportional Calculation Example:

An employee in Cuenca (Sierra region) works for 9 months within the calculation period (August 1st to July 31st).

• SBU for 2024: $460.00
• Calculation: ($460.00 / 12 months) * 9 months worked = $345.00.

Common Expat Pitfalls and Expert Insights

• Miscalculating the Décimo Tercer: A frequent error is to simply pay one month's base salary, forgetting to include commissions and overtime in the calculation base. This is the single most common cause of employee complaints (reclamos laborales) related to this bonus.
• Confusing Regional Deadlines: A business with a sales office in Guayaquil (Costa) and a main office in Quito (Sierra) must manage two different payment and registration deadlines for the Décimo Cuarto. This logistical oversight is a trap for new employers.
• Forgetting Proportional Payouts in Settlements: When an employee resigns or is terminated, the employer must calculate the proportional amounts of both décimos earned up to the last day of work. This amount must be clearly detailed and paid out in the official settlement document, the acta de finiquito, as stipulated by Artículo 185 of the Labor Code.

Hyper-Specific Detail #3: The "Finiquito en Línea" System

The final settlement (finiquito) process is now managed digitally through the SUT. An employer who improperly calculates the proportional décimos will find their acta de finiquito rejected by the system or flagged for review by a Ministry inspector, delaying the employee's formal separation and exposing the company to penalties. The cost of an error here isn't just financial; it's a significant administrative headache.

⚠️ Legal Alert: When to Consult an Attorney

This guide provides a solid framework, but you must seek professional legal counsel if:

1. You are undergoing an inspection by the Ministerio del Trabajo.
2. An employee disputes the calculation of their bonus or final settlement.
3. You manage employees across different regions (Costa/Sierra) and are unsure about logistical compliance.
4. You need to correctly structure employment contracts to account for variable compensation (e.g., sales commissions) that impacts bonus calculations.
5. You are terminating an employee and need to generate a legally sound acta de finiquito.

Properly managing the Décimo Tercer and Décimo Cuarto Sueldo is a non-negotiable aspect of doing business in Ecuador. By understanding the specific legal articles, calculation periods, and administrative obligations like SUT registration, you can protect your business, foster trust with your employees, and operate with confidence.

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