13º Salário (Décimo Terceiro)

If you are hiring in Brazil through an Employer of Record (EOR), one of the first line items you will encounter on your cost sheet is the decimo terceiro salario. Literally translated as “thirteenth salary,” this is Brazil’s mandatory year-end bonus. It is not discretionary. It is not performance-based. Every formal employee in the country receives it, and failing to pay it on time triggers fines from the Ministry of Labor.

For companies new to Brazilian employment, the Decimo Terceiro tends to catch people off guard. Not because it’s complicated (the formula is actually simple), but because the payment schedule, tax treatment, and termination rules all have specific deadlines and consequences that don’t exist in most other countries. Here’s what you need to know.

The decimo terceiro was established by Lei 4.090 in 1962 under President Joao Goulart and later regulated by Decreto 57.155 in 1965. It’s been a constitutional right since 1988, written into Article 7 of the Brazilian Constitution. That makes it extremely hard to modify or remove.

Everyone employed under Brazil’s CLT (Consolidacao das Leis do Trabalho) is entitled to it. That means urban workers, rural workers, domestic workers, temporary workers, and apprentices. Retirees and pensioners receiving INSS benefits also receive it. The only formal employees who lose the entitlement are those dismissed for just cause (justa causa). Independent contractors and PJ (pessoa juridica) workers do not qualify, since they operate outside the CLT framework. This distinction matters when structuring your EOR engagement in Brazil, because misclassifying a worker as PJ when they should be CLT exposes you to back-payment claims, including unpaid decimo terceiro.

The decimo terceiro is paid in two installments. This is not optional. Employers cannot consolidate it into a single December payment, even if the employee asks for it.

First installment (adiantamento): Due anytime between February 1 and November 30. Most employers pay it by the end of November. It equals 50% of the employee’s gross monthly salary, paid without any deductions. A common practice is to pay the first installment alongside the employee’s annual vacation (ferias), since many employees request this.

Second installment: Due by December 20. This is the remaining 50%, but with INSS (social security) and IRRF (income tax) deductions applied to the full annual amount. Because all deductions land on this second payment, the net amount is noticeably smaller than the first installment.

If either deadline falls on a weekend or holiday, the employer must pay on the preceding business day. Late payment results in a fine of R$170.26 per affected employee as of 2026, and repeated violations can trigger a labor ministry audit.

For an employee who has worked the entire calendar year (January through December), the calculation is dead simple: the decimo terceiro equals one full month’s gross salary, based on the December pay rate. If the employee received a raise in October, the December rate applies to the full bonus. That’s a nice perk for workers.

For employees who joined partway through the year, the amount is prorated:

(December gross salary / 12) x months worked

The “months worked” part has a specific rule: any month in which the employee worked 15 days or more counts as a full month. Fewer than 15 days, and that month doesn’t count.

Worked Example

An employee joins on April 10, 2026. Their December gross salary is R$8,000. Since April counts as a full month (they started before the 15th and worked more than 15 days), they have 9 months of service (April through December).

Decimo terceiro = (R$8,000 / 12) x 9 = R$6,000

The first installment would be R$3,000 (half, no deductions). The second installment would be R$3,000 minus INSS and income tax deductions calculated on the full R$6,000.

What About Commissions, Overtime, and Variable Pay?

Commissions, overtime averages, shift differentials (adicional noturno), hazard pay (periculosidade), and other habitual salary components all get factored into the decimo terceiro calculation. For variable components, the standard approach is to average them across the months worked that year. This is where the math gets messier and where EOR providers earn their fee, because getting the variable calculation wrong is one of the fastest ways to end up in Brazilian labor court.

The decimo terceiro is taxed separately from regular monthly salary. It gets its own tax calculation. Two main deductions apply:

INSS (social security): Uses Brazil’s progressive rate table. In 2026, rates range from 7.5% on the first R$1,621 up to 14% on earnings above R$6,433.58, capped at the INSS ceiling of R$8,475.55. The maximum INSS deduction in 2026 is R$988.07.

IRRF (income tax): Also uses a progressive table. A significant update for 2026: under Lei 15.270/2025, workers earning up to R$5,000 per month are now fully exempt from income tax, including on the decimo terceiro. This affects millions of Brazilian workers and meaningfully increases the net value of the 13th salary for lower and middle earners.

All of these deductions hit the second installment. The first installment is always paid gross, with zero deductions. That’s why employees notice a big difference between the two payments.

When an employee is terminated without cause (sem justa causa), they receive the proportional decimo terceiro as part of their severance. If someone is let go in August after working since January, they’re owed 8/12 of their monthly salary as decimo terceiro.

Resignation works the same way: the employee receives the prorated amount in their final settlement.
The one exception is dismissal for just cause. In a justa causa termination, the employee forfeits the decimo terceiro entirely. But justa causa is a high bar under Brazilian law and must be backed by documented evidence. It can’t be used as a cost-saving shortcut.

If you’re using an Employer of Record to hire in Brazil, the EOR takes care of the entire decimo terceiro process. That includes calculating the correct amount (including variable pay components), withholding INSS and income tax on the second installment, making both payments within the legal deadlines, handling the proportional calculation if the employee started or left partway through the year, and filing the relevant reports with Brazilian tax authorities.

This is one of the areas where the value of a good EOR provider really shows up. Getting the decimo terceiro wrong in Brazil doesn’t just mean an angry employee. It means fines, labor court exposure, and potential audits that can cascade into other compliance issues. The better providers bake the cost into their monthly invoices so you’re never surprised by a large December outflow.

When comparing EOR providers for Brazil, ask how they handle the decimo terceiro in their billing. Some spread the cost across 12 monthly invoices (essentially accruing it). Others bill it as a lump sum when the payments are due. The first approach is easier for your cash flow planning. The second can hit hard if you’re not expecting it.

The most frequent one is treating the decimo terceiro like a discretionary bonus. It is not. You cannot tie it to performance, withhold it as a disciplinary measure, or skip it in a bad financial year. It is a statutory right.
Another mistake is under-budgeting. Companies that are new to hiring in Brazil often plan headcount costs based on 12 monthly salaries and forget that the 13th salary, vacation pay (which is effectively a 14th salary), and FGTS contributions push the real annual cost well above 12x the base salary. A rough rule of thumb: budget for approximately 14 to 15 months of salary per year per Brazilian CLT employee when you include all statutory obligations.

Finally, some companies try to avoid the decimo terceiro by engaging workers as PJ contractors instead of CLT employees. If the working relationship looks like employment (fixed hours, subordination, exclusivity), Brazilian labor courts will reclassify the arrangement, and you’ll owe back-dated decimo terceiro, vacation pay, FGTS, and penalties on top of it.