Career and Enterprising

Goodbye 2014, Hello 13th Month Bonus?

13th Month Bonus (Image credit: Ross G. Strachan, via Flickr)

Phew! After a year of hard work, it’s time to bid 2014 farewell. It may had been a good year for many but a mediocre year for some – whichever the case, it’s time to move on and hope that 2015 will be better year.

It is also the time where everyone starts to set their New Year resolutions.

Improve self? Checked.
Improve fortunes? Checked.
Make new friends? Checked.
Improve career? Checked.
Travel to new places? Checked.

Before you start checking the entire list, wouldn’t it be good to have a fat bonus to accomplish all your resolutions?

It’s good to find out what you will received on top of your monthly salary, or what we call the Variable Wage Components which consists of the Annual Wage Supplement (AWS), Bonus and Variable Payment.

13th Month Bonus or AWS
The Annual Wage Supplement is also known as the 13th month bonus which you will receive in addition of your December’s salary. It is a single annual payment to employees that supplements the total amount of annual wage earned. If you have already received your bonus in December, lucky you!

But wait, is that a bonus or a supplement? While some would argue that it a mandatory compensation for a ’52 weeks in a year/4 weeks’, the Ministry of Manpower (MOM) defined it as:

Payment of AWS depends on the contractual agreement between the employer and the employee i.e. whether it is provided for in the employment contract or collective agreement.

What if it is not stated in the contract?

If it is not stipulated in the employment contract, AWS payment is subject to negotiation and mutual agreement between the employer and employee, or the trade union representing the employee.

Unlike countries like the Philippines and Latin America, it is not mandatory although it has been customarily provided for by companies in Singapore.

The AWS was first introduced back in July 1972 by the National Wage Council (NWC) to minimise the gap in the public and public sector and to promote a fair and equitable system of bonus payment. It has since set the precedent on how companies give out bonuses.

The point to note is that it is more of a privilege rather than a right, unless provided for in collective or individual agreements.

Bonus, on the other hand, is paid out once to reward you for the efforts and contributions you made to the company. Like the AWS, it is not compulsory unless it is a contractual obligation and if it is provided for in the contract.

There are many different types of bonus such as Performance Bonus, Variable Bonus and Dividend Bonus.

Variable Payment
Variable payment is paid out as an incentive to increase the employee’s productivity or as a reward for your contributions. Take for example – commissions, overtime, variable allowance, incentives and gratuity. Variable payments are also not compulsory unless provided for in your contract.

As civil servants rejoiced at their 1.8 month bonus, which of you has received even more generous bonus? And how are you going to spend them? Discuss them in the forum here:

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