Understanding year-end bonuses: What are the employer’s obligations

Understanding year-end bonuses: What are the employer’s obligations

Podcast

Understanding year-end bonuses: What are the employer’s obligations

Podcast

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Malesela explains that when we talk about 13th cheques or bonuses, one is referring to additional payments that are regulated either by an agreement between employer and employee or by company policy.

Malesela adds that a 13th cheque is typically equivalent to an employee’s monthly Cost-to-Company (CTC) and is often guaranteed, forming part of the contractual terms. A bonus, on the other hand, is usually discretionary. Its value may depend on various factors, such as the employee’s individual performance, team achievements, or departmental success. Ultimately, while a 13th cheque is a guaranteed additional monthly CTC, a bonus is variable and linked to specific performance metrics.

Malesela says that when an employment contract is signed, it establishes agreed-upon terms, including monthly remuneration. A 13th cheque, as an additional payment, recognises an employee's contributions over and above the 12 calendar months of the year. It’s not about an employer "holding back" funds to distribute later but rather fulfilling a contractual obligation or rewarding performance at the end of the fiscal year.

Malesela emphasises that employment contracts are based on mutual agreement, and there’s always room for negotiation. If an employee feels the terms should be adjusted, they can initiate a discussion. However, this requires the employer’s willingness to revise the terms or offer more.

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