Changes in accumulation of benefits for employees of small and medium-size businesses

July 21, 2017

Business owner, do you know about the changes in calculating the Christmas bonus and disability leaves for your employees? Here is a summary.

The importance of small and medium-size businesses in the Puerto Rico economy is growing daily. For many, they are the hope for creating jobs and development on the Island. Now, more than ever, given the economic challenges we face.

But “small and medium-size businesses face different realities and limitations than other employers. With the Labor Transformation and Flexibility Law (known as the Labor Reform, and in effect since January 26, 2017), certain changes were incorporated in the accumulation of employee benefits. These changes benefit small and medium-size businesses,” said Anabel Rodríguez Alonso, an attorney with the firm Schuster Aguiló, LLC., and an expert in Labor and Employment Law. The purpose of these changes is to allow small businesses to compete in the market against the largest companies.

Five changes in benefits for employees

As the owner of a small or medium-size business, it is important for you to know about the most significant changes in terms of accumulation of benefits by your employees:

  1. Occupational (Fondo) and non-occupational (SINOT) disability leave: The job must be reserved for the employee for a maximum of six (6) months for employers with 15 or fewer employees. Previously, those employers had to reserve the job for 12 months.
  1. Christmas Bonus: Employers with 20 or fewer employees are required to pay only 50% of the Christmas bonus of 2% of the total salary, up to a maximum of $300.00. This change applies exclusively to employees hired after the Law took effect. Previously, to receive the Christmas bonus, the employee had to work 700 hours a year; now, 1,350 hours are required. This change applies exclusively to employees hired after the Law took effect.
  1. Vacations: Those who work for companies with 12 or fewer employees will accumulate ½ day of vacation time per month, for a total of six (6) per year.
  1. Lactation: The Labor Reform introduces the right of part-time employees to have a period for lactation. If the employee works a part-time schedule of at least four hours, a 30-minute period must be provided for each four consecutive hours of work.
  1. Caps or limits on compensation that can be awarded a complainant: “The Labor Reform, in an effort to match federal legislation on available remedies for emotional damages in discrimination claims, establishes a series of three caps or limits on compensation that can be granted to a complainant for emotional damages. Under the new Law, for employers with 100 employees or less, the maximum that can be received under this statute is $50,000. Previously, there were no caps, so any company, regardless of its size, had unlimited exposure,” said Rodríguez Alonso.

This article is part of a series prepared by our Business Banking Division with the goal of helping you develop your business. We invite you to read the following article: Regulations about dismissing employees and paying severance. Remember that our desire is always to support you in the successful management of your business.


Banco Popular de Puerto Rico, its subsidiaries or affiliates do not provide legal, tax or accounting advice. The information provided in this material should be used only as a guide and not as a source of legal advice. The information provided here is current as of April 26, 2017, and does not consider, or will consider, any change that could have occurred or may occur in the future. The law firm Schuster Aguiló, LLC, and Popular, Inc., and/or its subsidiaries, affiliates, or related entities are not responsible for losses or damages (direct or indirect) that may be incurred by any institution, company, entity, business or person from the information contained here. All information provided in this material or any other related topic should be confirmed and corroborated with your legal advisor.