Where's my bonus? A multi-country perspective
Authors: Ronelle Barreto and Paula Flores
A little something "extra" in the pay packet at the end of the working year may be a global expectation, but it is one that is met in a variety of ways depending on where in the world you find yourself. Here, we provide some 2023 bonus payment statistics from the UK and offer a summary of bonus payment requirements in 15 other jurisdictions.
In the UK, bonuses are often discretionary rather than mandatory. However, in other countries a bonus payment may be a legal, religious or cultural requirement.
Some jurisdictions have a 13th- or 14th-month payment obligation. As a global employer, you need to know whether or not these payments are additional, separate "bonus" payments, ie whether they are included in the employees' quoted annual salary. If you don't, significant and costly misunderstandings might arise.
Bonuses in the UK
December is the beginning of the "bonus season". Most bonuses are discretionary, meaning that employers are entitled to exercise discretion in making bonus payments and, as such, may use them as part of a motivational reward system to retain and attract staff. In the financial sector, bonus payments are often considered more important than basic salary.
So how do employee expectations measure up to the reality of bonus payments in the UK? To provide an accurate picture we looked at recent bonus-related information from the Brightmine Compensation Planning dataset (XpertHR's live reward data product consisting of organisations' payroll information), current as of November 2023.
Out of a total sample of 1.52 million employees, the proportion of individuals receiving a bonus was 16.4%. The median bonus payment across the whole sample (249,435 employees from 426 organisations) was £1,000, representing 2.9% of the average basic salary of £34,173. However, staff were likely to receive £1,000 or less (53.6% of those in receipt of a bonus) whereas high payments - of £25,000 or more - were paid mostly to managers or directors (1.9% of the sample).
Nearly a quarter (23.6%) of bonuses paid to individuals in our sample were based on an organisation's overall performance, while a further 31.3% combined this with a measure of personal performance. A minority (7.8%) use personal performance alone to determine payment levels.
More information on bonuses can be found at Cendex. Data can be examined by job level and industry.
Bonuses globally
In other parts of the world, employers may be obliged to provide a holiday or year-end bonus. Although the details vary significantly according to a range of legal requirements, spiritual beliefs and cultural norms, there are commonalities. The bonus often constitutes compensation in addition to any other wages or benefits, and there may be statutory requirements regarding the details, eg who receives the bonus, when it is paid and the amount to be paid.
- In the Philippines certain categories of employees are entitled to an additional annual 13th-month payment that must be paid not later than 24 December each year.
- In Hong Kong if the employment contract does not specify the amount of the end-of-year payment, it must be equal to one month's pay, and if the contract does not specify the payment period, the period is the Chinese lunar year.
- In Indonesia the employer must pay workers a religious holiday allowance for one religious festival per year. These festivals are stipulated as Eid al-Fitr for Muslims, Christmas for Christians, Nyepi for Hindus, Waisak or Vesak for Buddhists and Chinese New Year for Confucians. This statutory holiday allowance is set at one month's wages and is paid in cash at least seven days before the religious festival concerned. There are penalties in the event of non-payment.
- Although a bonus is not a statutory requirement in Singapore, employment contracts and collective agreements may provide for employers to make end-of-year payments to employees, known as the "13th-month's pay" or "annual wage supplement", with the aim of encouraging a reward system based on productivity and profitability.
To view bonus structures across different parts of the world, use the interactive maps below. Please note that the maps provide only a broad overview of bonus practices and there may be additional variations within each country depending on specific circumstances.
Employees in Europe enjoy various bonus rights entrenched in both tradition and statute. Use the map below to view a quick summary of the requirements in six European countries.
Across the globe bonus payments are designed to motivate and reward, but getting it wrong may have the opposite effect. Managing cross-country bonuses not only requires you to make a careful cost analysis (they may involve an additional two months' salary in some countries), but to anticipate and understand legal, economic and religious differences. Accurate information is the key to providing a reward scheme that is financially sustainable and resonates with different cultural expectations.
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