Since the Ber months rolled in, Pinoys have anticipated that Christmas is fast approaching. It is the holiday that everyone looks forward to because it plays a big part in our culture. The Christmas season is associated with the sweet sound of classic Christmas songs, the sight of children caroling, the colorful parols, the family reunions, the good-smelling Noche Buena, and most importantly, the Christmas holiday bonus that many Filipinos await.
Filipinos look forward to Christmas bonuses because apart from it signifying a year’s worth of hard work, Christmas bonuses make the holiday celebrations for Filipinos even more joyful. Thus, accounting services in the Philippines attest that all employers must consider these bonuses when drafting their compensation package contracts for their employees.
Are you a new business owner or an aspiring entrepreneur? You might be wondering what employee bonuses are. Are these bonuses mandatory? How it will benefit your business or your company? If you are a new or aspiring entrepreneur and you are still not sure about what employee bonuses are, this article can help and serve as a guide to employee bonuses in the Philippines.
What are Bonuses?
Bonuses serve as a reward given to employees for their behavior or for achieving a certain goal. Companies give employees bonuses depending on the performance of the employee and/or how well the company is doing. To compute the correct bonuses, the accounting and auditing of the financial statements need to be properly executed, ideally by a reputable team of tax and audit services in the Philippines.
There are bonuses that are often conflated especially the 13th-month pay and the Christmas Bonus. The 13th-month pay is usually mistaken for the Christmas Bonus. Note: they are not the same. The private sector employers are mandated to give 13th-month pay to their rank-and-file or non-managerial employees. According to the DOLE regulations, this 13th-month pay must be given in full by Dec 24. Employers can also opt for an alternative two payment scheme, by splitting the amount in half to make it less burdensome for the employer. The first is to be given in June and the rest in December.
What are Discretionary and Non-Discretionary Bonuses?
Discretionary Bonuses are bonuses that do not have an amount limit. However, this is not mandatory and the employees cannot demand the employers to give it to them even if they do something exemplary for the company
Meanwhile, Non-discretionary Bonuses are bonuses that employers set in advance. According to tax services in Manila, employer set the standards that the employees should attain or achieve for them to qualify and receive the bonus. Once the employee meets the criteria, their employer will give them a bonus.
What are the Different Types of Bonuses?
Check out the different types of bonuses you can give our employee:
- Performance Bonus
As the name suggests, these are bonuses given to employees based on the employee’s performance. Performance bonuses are given out usually when the target sales, target profit, and/or business goals are achieved.
- Spot Bonus
These are bonuses given to employees on the spot. Employees are granted this type of bonus usually when they do a good job on vital projects or tasks.
- Long-Term Incentive Plan
These are bonuses that are given to senior regular employees. From the name long-term, these are bonuses that cannot be earned in a year. It will take more than a year to earn a long-term incentive plan bonus.
4. Christmas Bonus
These are bonuses given to employees on the Christmas holiday. This is not mandatory. Giving these bonuses totally depends on the employer unless written in a contract between the employer and the employee. Employers are not required to grant Christmas bonuses to their employees. However, there are some employers who have made giving Christmas bonuses whether in cash, gift card, or kind to their employees a long-standing tradition.
How Does Giving Your Employees Bonuses Help Your Business?
Giving out bonuses is a kind gesture. When you give your employees bonuses, they will feel appreciated and valued as an employee. Employees feel gratified when they see that their work is appreciated. Hence, this will motivate them to continue and keep up their good performance.
Do take not that giving bonuses is a kind gesture, but the act may also leave you in a bind if you don’t know how to account for it. Make sure you do not get your bonuses wrong. Do not underpay the amount you promised to give. Be objective in granting bonuses to employees because having your own personal bias may annoy other employees and make them lose their motivation to do a good job in their work.
Make sure you utilize these bonuses properly. Grant bonuses with a good and generous heart. Make your employees feel appreciated and cared for especially during one of the most awaited season–Christmas. If you need assistance, call our accounting services in Pasig so we can help.