13th Month, Year-End Bonus, Bonuses..., Benefits or Gifts?
10 January 2011
Read by 9261 persons
No law mandates bonus payments, yet most employers are obligated to provide them. Many companies only offer a 13th-month bonus. A performance evaluation system is the only way to reduce disputes.
December is the month of gifts. For employees, year-end bonuses, whether in the form of various bonuses or a 13th month, are highly anticipated. Generally, there's no legal basis for these bonuses, but most employers are nonetheless obligated to provide them, making them a benefit for employees. "In terms of bonuses, our company only pays a 13th month. It's an old practice that all the successive directors have continued. For us, it's a right that can no longer be taken away. In the ten years I've worked for this company, we've only received a productivity bonus (a kind of 14th month) for two consecutive years," explains a manager at a service company.
A manager at a textile company emphasizes that in their company, "there are two types of bonuses: a year-end bonus and a performance bonus. The year-end bonus is generally granted to all personnel without exception, while the performance bonus is exclusively reserved for financial managers, as if they were the only ones contributing to the results. Without an evaluation system, the bonus is practically capped at 100% of the salary for most of the personnel. I think this system is flawed because this bonus is acquired anyway and doesn't actually reflect the individual's performance. It's a kind of laziness bonus."
In practice, the granting of a year-end bonus within a company can result from various sources: a collective bargaining agreement in the same sector (as for banks, for example), a collective bargaining agreement concluded within the company, especially for some large companies, the employment contract, the work regulations, or simply practices and customs.
How much is this bonus? Obviously, the crucial evaluation session, especially in well-organized companies, is the decisive step in determining the amount. Unfortunately, for many employees, the disappointment can be significant. Either because the amount received is considered insufficient relative to their contribution, or because it is reduced due to the company's situation, which may struggle to maintain a bonus distribution policy during a crisis.
For Amina Khajil, an administrative manager at a local bank, the year-end evaluation ritual remains, in most cases, an administrative hassle that needs to be completed just for form's sake. "Unfortunately, the rating still depends on the client's opinion. Consequently, the amount of some bonuses does too," she complains.
It's true that in terms of compensation, the trend is increasingly towards individualizing salaries, particularly in large, organized companies. According to HR surveys conducted locally, a majority of companies generally provide a variable portion in compensation. This evolution is undoubtedly the result of objective management that prioritizes performance. "Many companies today prefer to offer variable compensation or reversible salary supplements to strengthen the sense of belonging or reward individual and collective performance," notes Houcine Berbou, senior consultant at LMS-ORH.
The amount of certain bonuses is determined by the client's opinion
That said, managers know that a purely variable system has limits. Thus, even if the bonus rewarding the achievement or exceeding of objectives is generally granted individually, there is a team spirit bonus corresponding to the performance of the entity, a solidarity bonus corresponding to the collective performance or that of the company... Consequently, the employee may receive one or more bonuses representing the variable part of their compensation. In short, many good gestures to be rewarded fairly.
However, are these bonuses mandatory? Bouchaib Serhani, CEO of Gesper services, specifies that "according to the labor code or the DOC, there is no obligation for the employer to pay a year-end bonus, except in cases where the employment contract, a collective bargaining agreement or internal regulations, therefore more favorable internal procedures, stipulate otherwise." For example, a collective bargaining agreement requires banks to pay their employees bonuses totaling the equivalent of 5 months' salary (see box).
Mr. Berbou goes further by adding that "the principle of a variable portion in everyone's compensation must be implemented voluntarily. In sectors or professions where variable pay is the rule, companies are obligated to give year-end bonuses at the risk of causing a high turnover of the best profiles to the competition."
Of course, not everyone is in the same situation. Salespeople and senior executives are often the best rewarded. To ensure salary supplements, it is advisable to negotiate them when signing the contract. Otherwise, you often fall into the collective system.
Thus, as a bonus, many companies are content with the 13th month, which, according to Bouchaib Serhani, has become "an unconditional salary supplement and therefore paid systematically regardless of the company's performance level. It is only questioned if the company is in crisis." In short, everyone is entitled to it. Aziz Taib, HR director in an industrial group, considers this practice an aberration. According to him, the year-end bonus does not meet well-founded criteria. "How can you encourage performance when non-performers, or even lazy people, are rewarded?" he wonders.
In any case, the bonus is apparently a source of discord and a real headache for some managers and HR professionals. However, the situation can be remedied by setting clear guidelines during evaluations. For many HR specialists, the ideal is to allow employees to self-evaluate in addition to their evaluation by their supervisor. Any discrepancies in ratings are then studied by a committee, which ultimately establishes the final grade. "This approach significantly reduces tensions at the end of the year," notes Aziz Taib. The problem is that few companies have an effective evaluation system. Therefore, in most cases, when one is aware of their strengths and confident in their performance, the only way to be fairly compensated is to have the courage to go and talk to their boss.
Example: 5 months' additional salary for bank employees
The banking sector is one of the few private sectors whose compensation policy, regarding operational personnel (classes 1 to 4) and management personnel (5 to 8), is governed by a collective bargaining agreement signed by the Groupement professionnel des banques du Maroc (GPBM) and the Union syndicale interbancaire (USIB). In addition to the base salary calculated according to a number of points determined by class, the aforementioned categories benefit from various bonuses whose amount and calculation method are set by the collective bargaining agreement. These are:
- Housing bonus: 380 DH;
- Transportation bonus (for non-commissioned officers or those with a rank lower than class 8): 600 DH;
- Seniority bonus (5% after two years, 10% after 5 years, and 15% after 12 years).
Until 1999, they received other bonuses paid during the year. These included:
- Performance bonus (end of fiscal year) equal to 100% of the monthly taxable salary;
- Semi-annual bonus (June) corresponding to 125% of the monthly taxable salary;
- Annual bonus in December equivalent to 1/12th of 125% of the annual taxable salary;
- Climate bonus representing 120% of the gross monthly salary + 1/12th of the June bonus (this bonus is paid at the employee's request, generally when they leave on vacation. If not claimed, some banks pay it by the end of November at the latest).
Since 2000, things have changed. Following an agreement dated February 4, 1999, the climate bonus, as well as the June and December bonuses, are now integrated into the base salary under the heading "conventional supplement."
In addition to these bonuses, employees receive a sheep bonus on the eve of Eid Al Adha. This is part of the special bonuses, a kind of small lump sum that is distributed occasionally.
The salary and bonuses of management personnel (not governed by the agreement) are set by management based on the salary strategy in effect in each establishment.
Posted on January 7, 2011
lavieeco.com
December is the month of gifts. For employees, year-end bonuses, whether in the form of various bonuses or a 13th month, are highly anticipated. Generally, there's no legal basis for these bonuses, but most employers are nonetheless obligated to provide them, making them a benefit for employees. "In terms of bonuses, our company only pays a 13th month. It's an old practice that all the successive directors have continued. For us, it's a right that can no longer be taken away. In the ten years I've worked for this company, we've only received a productivity bonus (a kind of 14th month) for two consecutive years," explains a manager at a service company.
A manager at a textile company emphasizes that in their company, "there are two types of bonuses: a year-end bonus and a performance bonus. The year-end bonus is generally granted to all personnel without exception, while the performance bonus is exclusively reserved for financial managers, as if they were the only ones contributing to the results. Without an evaluation system, the bonus is practically capped at 100% of the salary for most of the personnel. I think this system is flawed because this bonus is acquired anyway and doesn't actually reflect the individual's performance. It's a kind of laziness bonus."
In practice, the granting of a year-end bonus within a company can result from various sources: a collective bargaining agreement in the same sector (as for banks, for example), a collective bargaining agreement concluded within the company, especially for some large companies, the employment contract, the work regulations, or simply practices and customs.
How much is this bonus? Obviously, the crucial evaluation session, especially in well-organized companies, is the decisive step in determining the amount. Unfortunately, for many employees, the disappointment can be significant. Either because the amount received is considered insufficient relative to their contribution, or because it is reduced due to the company's situation, which may struggle to maintain a bonus distribution policy during a crisis.
For Amina Khajil, an administrative manager at a local bank, the year-end evaluation ritual remains, in most cases, an administrative hassle that needs to be completed just for form's sake. "Unfortunately, the rating still depends on the client's opinion. Consequently, the amount of some bonuses does too," she complains.
It's true that in terms of compensation, the trend is increasingly towards individualizing salaries, particularly in large, organized companies. According to HR surveys conducted locally, a majority of companies generally provide a variable portion in compensation. This evolution is undoubtedly the result of objective management that prioritizes performance. "Many companies today prefer to offer variable compensation or reversible salary supplements to strengthen the sense of belonging or reward individual and collective performance," notes Houcine Berbou, senior consultant at LMS-ORH.
The amount of certain bonuses is determined by the client's opinion
That said, managers know that a purely variable system has limits. Thus, even if the bonus rewarding the achievement or exceeding of objectives is generally granted individually, there is a team spirit bonus corresponding to the performance of the entity, a solidarity bonus corresponding to the collective performance or that of the company... Consequently, the employee may receive one or more bonuses representing the variable part of their compensation. In short, many good gestures to be rewarded fairly.
However, are these bonuses mandatory? Bouchaib Serhani, CEO of Gesper services, specifies that "according to the labor code or the DOC, there is no obligation for the employer to pay a year-end bonus, except in cases where the employment contract, a collective bargaining agreement or internal regulations, therefore more favorable internal procedures, stipulate otherwise." For example, a collective bargaining agreement requires banks to pay their employees bonuses totaling the equivalent of 5 months' salary (see box).
Mr. Berbou goes further by adding that "the principle of a variable portion in everyone's compensation must be implemented voluntarily. In sectors or professions where variable pay is the rule, companies are obligated to give year-end bonuses at the risk of causing a high turnover of the best profiles to the competition."
Of course, not everyone is in the same situation. Salespeople and senior executives are often the best rewarded. To ensure salary supplements, it is advisable to negotiate them when signing the contract. Otherwise, you often fall into the collective system.
Thus, as a bonus, many companies are content with the 13th month, which, according to Bouchaib Serhani, has become "an unconditional salary supplement and therefore paid systematically regardless of the company's performance level. It is only questioned if the company is in crisis." In short, everyone is entitled to it. Aziz Taib, HR director in an industrial group, considers this practice an aberration. According to him, the year-end bonus does not meet well-founded criteria. "How can you encourage performance when non-performers, or even lazy people, are rewarded?" he wonders.
In any case, the bonus is apparently a source of discord and a real headache for some managers and HR professionals. However, the situation can be remedied by setting clear guidelines during evaluations. For many HR specialists, the ideal is to allow employees to self-evaluate in addition to their evaluation by their supervisor. Any discrepancies in ratings are then studied by a committee, which ultimately establishes the final grade. "This approach significantly reduces tensions at the end of the year," notes Aziz Taib. The problem is that few companies have an effective evaluation system. Therefore, in most cases, when one is aware of their strengths and confident in their performance, the only way to be fairly compensated is to have the courage to go and talk to their boss.
Example: 5 months' additional salary for bank employees
The banking sector is one of the few private sectors whose compensation policy, regarding operational personnel (classes 1 to 4) and management personnel (5 to 8), is governed by a collective bargaining agreement signed by the Groupement professionnel des banques du Maroc (GPBM) and the Union syndicale interbancaire (USIB). In addition to the base salary calculated according to a number of points determined by class, the aforementioned categories benefit from various bonuses whose amount and calculation method are set by the collective bargaining agreement. These are:
- Housing bonus: 380 DH;
- Transportation bonus (for non-commissioned officers or those with a rank lower than class 8): 600 DH;
- Seniority bonus (5% after two years, 10% after 5 years, and 15% after 12 years).
Until 1999, they received other bonuses paid during the year. These included:
- Performance bonus (end of fiscal year) equal to 100% of the monthly taxable salary;
- Semi-annual bonus (June) corresponding to 125% of the monthly taxable salary;
- Annual bonus in December equivalent to 1/12th of 125% of the annual taxable salary;
- Climate bonus representing 120% of the gross monthly salary + 1/12th of the June bonus (this bonus is paid at the employee's request, generally when they leave on vacation. If not claimed, some banks pay it by the end of November at the latest).
Since 2000, things have changed. Following an agreement dated February 4, 1999, the climate bonus, as well as the June and December bonuses, are now integrated into the base salary under the heading "conventional supplement."
In addition to these bonuses, employees receive a sheep bonus on the eve of Eid Al Adha. This is part of the special bonuses, a kind of small lump sum that is distributed occasionally.
The salary and bonuses of management personnel (not governed by the agreement) are set by management based on the salary strategy in effect in each establishment.
Posted on January 7, 2011
lavieeco.com
