Variable Pay, the 13th Month – Is it Really a Bonus?

AttunePress_bonus

Bonuses are typically what you receive as rewards for a job well done, and of course this is on the basis of past performance reviews. Say if you were leaving a company or got retrenched, should you be still given a bonus? The answer is yes. 

Why? Bonuses are based on past performance and it has nothing to do with your or your company’s future plans.

When a bonus or a severance package is given out, what you can see are employees expressing their opinions about the company’s calculated moves on staff benefits for their services rendered. 

A low bonus may lead to more employees calling it quits due to a lack of job security for them to carry on normal BAU (business-as-usual). This is often the case if the sole reason for staying in the company is monetary. A low bonus can also cause low employee morale within the company. Employees may view it negatively and be unappreciative of this gesture given by the company. 

Even though it may seem like common company practice, bonuses aren’t compulsory for everyone; however, if you get the chance to speak up about your bonus, you should do so as this variable allowance is reflective of your past performance and can help you in your future job-seeking opportunities. It creates a gauge for you to benchmark against when you’re discussing about your future remuneration packages.

glass-buildings-design-photography-business-companies

So, what is the 13th month “bonus” anyway?

It’s a single yearly payout which employees get on top of their monthly remuneration, usually at the end of a company’s financial year. Although it’s not compulsory, it’s dependent on what’s stated in your initial contract. Employers sometimes negotiate a lower bonus payout when business isn’t doing well or are hit with a downturn.

It, essentially isn’t a bonus. You actually deserve it. In a year, there’re 11 months which exceeds the 4 weeks (or 28 days) we take into account as a month. So with this idea, here’s how many days each month exceeds the 28 days, with the exception of February: 

  • January – 3 days
  • March – 3 days
  • April – 2 days
  • May – 3 days
  • June – 2 days
  • July – 3 days
  • August – 3 days
  • September – 3 days
  • October – 3 days
  • November – 2 days
  • December – 3 days

That’s about 30 additional work days we could be paid, for the hours we have clocked.

Hence, based on this, it’s in fact more ideal to quote your salary in yearly terms instead of monthly.

This way, you’re able to account and include any foreseeable bonus that you might like to receive in a given year – although this may be discussed with you on a more formal or private basis. It gives the future employer an idea of what cost they’re aiming at which could help in their budgeting. Additionally, for you, this ensures that your extra work days are covered and you will not need to worry about volatile variable pay.

Another way to deduce if you’re getting a fair pay is to take your wage amount in yearly terms plus your 13th month and compare it with the previous year’s and account for the inflation rate of your country in the current year. If the year’s inflation rate exceeds your percentage pay increment, you lose out. Hence, a point to note is to always, always account for inflation rates. Inflation rates varies from 1 to 5 percent yearly in a metropolitan city.

So remember that the 13th month isn’t a bonus, it’s your wage for the additional hours clocked that wasn’t accounted for in the monthly payout.

Will this bonus be paid out to me if I resign in January?

Technically, yes, as “bonuses” are salaries for clocked hours. However, it will be pro-rated accordingly depending on your financial year. Some companies operate from June to July while some operate from January to December and pay out bonuses in January the following year.

white-envelope-bonus-money-company-business-employees

Monetary rewards such as bonuses are one of the most useful tools a company can use to incentivize performance or retain its employees at the workplace. While incentive trips and medical coverage are appreciated, cash payments are said to be more practical with regards to the inflation rate and higher cost of living. However, companies must also understand that monetary rewards cannot guarantee to retain employees forever. Whether employees are comfortable, satisfied with their job scope, their relationships with co-workers and management and whether career progression is possible also play a crucial role in determining performance and employee retention. 

Ultimately, your bonus is a representation of your past year performance from the perspective of your employer, regardless of the amount. There’re other factors circling a bonus amount; companies do take into consideration the economic standing of the company and the market environment for that given year. It could also account for the number of employees the employers have and the quantity/quality of performance for the company as a whole.

Having no or low bonus does not necessarily mean that you’re under-performing or you should start jumping into conclusions. It could mean that market sentiments are weak for now, however on the other side, you have nothing to lose if you speak up about it. 

Like this article? Share it or leave us a comment below!

Join the discussion

Your email address will not be published. Required fields are marked *