Bonus vs 13th cheque

As 2013 draws to a close, many employees will be eyeing the prospect of receiving their bonus or thirteenth cheque – but are they guaranteed?

According to Benjy Porter, the CEO of Legal and Tax, while many employees use the terms “13th cheque” and “bonus” interchangeably, they are not exactly the same.

“A 13th cheque is a bonus that the employee can expect with certainty if this is part of his or her employment contract,” Porter said.

“A bonus is a reward based on the employee’s performance and the performance of the business.

With many South African companies battling to be profitable in a tight economy, employees can no longer take their bonuses for granted unless they are specifically entitled to a 13th cheque, Porter said.

According to Porter, one’s individual contract of employment will specify what an employee is entitled to – either a 13th cheque, or a bonus that depends on performance or the performance of the company.

However, no employee has a right to a bonus under South African labour law, unless it is stated in their employment contract, he said.

“Just because you received a bonus last year, doesn’t necessarily mean you will get one this year – or that it will be as large as it was in earlier years.”

No-bonus blues

“Study your employment contract and company policy to understand what you can expect before you spend money you may not be getting.”

“If you are taking a new job and you are promised a bonus or 13th cheque as part of your package, be sure that this condition is in your employment contract before you sign,” Porter noted.

If a company has followed the company policy or the terms of an employment contract, employees will not be able to contest a company decision not to give a bonus.

However, in the event that employers breach employment contracts – when a company pays no bonus or a low bonus when it is contractually obligated to – employees may be able to take legal action.

“If bonuses are paid because they have become ‘custom and practice’, the non-payment of the bonus may fall under the definition of Unfair Labour Practice. The reason for this is that it might be seen as a change to terms and conditions of employment,” Porter said.

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Bonus vs 13th cheque