Annual Bonus In Private Sector Gradually Increases

On September 29, 2005, Governor Aníbal Acevedo Vilá signed the amendment to Act No. 148 of June 30, 1969 (known as the Annual Bonus Act) to increase the minimum amount of the annual bonus payable to private sector employees. The Governor stated that private employees have been left behind in comparison with public employees, who enjoy an annual bonus of up to $1,000.

The amendment establishes three consecutive increases per year beginning in 2006. The increase will vary depending on the number of employees. For instance, employers with more than fifteen (15) employees will pay a minimum annual bonus of 3% of the
first ten thousand dollars ($10,000) in wages earned by the employee in 2006; 4.5% of the same amount in wages in 2007, and 6% of the same amount in wages in 2008. For employers with fifteen (15) or less employees, the amount of the statutory annual bonus would increase to 2.5%, 2.75% and 3%, respectively for the years 2006, 2007 and 2008, of the first ten thousand dollars ($10,000) in wages earned by the employee. The total sum payable by employers, regardless of the amount of employees, shall not exceed fifteen percent (15%) of the net profits of their operations.

If the employer cannot pay the annual bonus because of insufficient profits, as defined by the act, it must file a notice of its intent along with a certified profit and loss statement with the Puerto Rico Department of Labor by November 30. In the absence of this filing, it must pay the bonus in full as if it had sufficient profits.

Also, the amendment permits the Puerto Rico Secretary of Labor to issue rules and regulations for the administration of this act. Moreover, it authorizes the Secretary of Labor to request from an employer information regarding its economic situation, as well as payroll and related documents.

This increase might also be accompanied by another economic burden on employers, since the Puerto Rico Legislature is also in the process of approving House Bill No. 1714 presented by Rep. Luis Raúl Torres to increase the Puerto Rico minimum wage in 2006. Governor Acevedo Vilá has made public its support of said bill.

 

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