It’s so easy to use. Measurement is also based on quality of production. There is no greater impediment to productivity in this country than disgruntled employees. A 13th cheque is a payment you can expect with absolute certainty if it forms part of your employment contract, while a bonus is generally attached to individual performance and the businesses’ overall performance. Many South African companies now offer employees performance bonuses instead of thirteenth cheques. This means that line management and the shop foremen and even supervisors have to become much more closely involved with the monitoring of performance on the shop floor and careful records must be kept. 90 of 1989 provides in general terms that the central bank may organise and participate in a clearing system. This is evidenced by the fact that at job application interviews most applicants will ask "do you pay a 13th Cheque?”. Whatever the case, the method of calculation must be fair and equitable. The fuel price in South Africa generally consists out of 4 main elements. So it is possible that a bonus / 13th cheque would push you into a higher tax bracket,which would result in less income than expected. If an employer who presently does not pay bonuses of any sort wishes to continue on that route he can do so, without fear of being accused of unfair labour practice. Without further ado, let’s jump into it. In other words if the company has set a target for one particular employee or, for that matter, for a particular department to produce 100 widgets per hour, and the employee or department consistently produce 130 widgets per hour, then a production bonus would be justified. The 13th cheque is really an African thing, because many of the African countries also provide base salary plus add-on, and then a 13th cheque on top of that. Bonuses that are not stipulated in employment contracts do not give rise to a legal obligation, but may result in a constructive obligation. They want the payment of a 13th cheque to be incorporated as a condition of employment. “One source of confusion is that people often hear from friends in another company, or even their own company, that they in fact did receive a full double cheque,” explains Ms Webb. 38 Dover Street, Ferndale, Randburg, 2194. This would imply then that the employer should consult with employees if it is found that, for any legitimate reason or sound commercial rationale, the bonuses cannot be paid in a particular year, or if the amount of the bonus is to be to be less than the amount consistently paid in the past, or less than the contractual amount. Let’s assume for a second you are a digital marketing manager, working for a life insurance company. Please make use of our income tax calculator to work out the annual tax you will pay on your income. Bookmark the permalink. The more likely scenario is that your bonus will be performance related and based on how many new life insurance policies were sold on the back of your online marketing efforts. A performance bonus is normally paid for good performance and is tied back to some type of Key Performance Indicators (KPI) set out by management at the beginning of the financial year. In the case of Bargaining Council and Collective agreements employers will have to respect these agreements. However, over the years most employees have come to expect the payment of the 13th cheque as a right or entitlement, or as a condition of employment. We will deal with the three common types of bonus, namely the Christmas bonus or 13th cheque as it is known, the performance bonus and the production bonus. In Congo, historical practice dictates as many as 16 guaranteed monthly cheques, with extra ones coming in on an employee’s birthday month, the month he or she joined the company, 1 June and 1 December. It must be admitted that the additional production and the reduced rejection rate can only mean good management within the department, and it can only mean a genuine interest in the job by the employees, thus generating additional profits for the shareholders. However in the case of the employer who presently pays bonuses the situation is slightly different because those employees have now come to expect the payment of the bonus as a right or entitlement. He also acknowledged that employees were being paid the performance bonuses on top of their 13th cheques; although this did not necessary apply to management. 88 as basic salary before deduction This entry ... 2015 at 16:13 It will be added to your salary and taxed per the normal PAYE rates. How do I calculate PAYE on a 13th cheque. For more information contact emailProtector.addCloakedMailto("ep_c62a0f45", 1); 17 March 2021 (09:00 - 16:00) (Fully Booked), 18 March 2021 (09:00 - 16:00) (Fully Booked), POPIA: Protection of Personal Information Act, 19 March 2021 (09:00 - 12:00) (Fully Booked), 24, 25 & 26 March 2021 (08:30 - 16:00) (Fully Booked), Incident Investigation of Work-Related Injuries and Diseases Course, 26 March 2021 (09:00 - 12:00) (Fully Booked), 25 March 2021 (09:00 - 12:00) (Fully Booked), The OHS Act and the Responsibilities of Management, Strategic Human Resources Management (HRM) and - Business Partnering, Managing Day to Day Issues/ Problem Employees Full day workshop, The website is not compatible with this IE version,please upgrade to the latest version of Internet Explorer, It must be understood that Labour Law is silent on the question of, It is important to note that certain bargaining council agreements do make provision for the payment of, However in the case of the employer who presently pays, It is essential that in every employment contract, the terms and conditions applicable to the payment of, Therefore, those employers who now wish to change the status quo regarding payment of, In summary, be fair, be equitable and advise your employees in good time if there is to be a problem with the payment of, It is definitely unfair of the employer to decide unilaterally not to pay, Whilst the right of expectation does not actually afford the employee the absolute right to demand and to be paid the bonus, it certainly does afford him the right to be heard, This would imply then that the employer should consult with employees if it is found that, for any legitimate reason or sound commercial rationale, the, It cannot be accepted, by any stretch of the imagination, that an employer suddenly discovers only on shut-down day that Company profitability disallows the payment of, The message here is that the management of any company must surely be aware by the middle of the year whether or not profitability, staff performance, or whatever other criteria exist, may endanger or even prevent the payment of the relevant, It is the duty of management (and it is only fair) to consult with the staff at the earliest possible moment, to warn them of this possibility that, The reasoning of management that if the non-payment of, This would apply in the situation where all employees in a particular department are collectively responsible for above-average performance. The performance would be measured against laid down company standards, but the bonus would not be paid only for the occasional work done which exceeds company standards, but for. It is definitely unfair of the employer to decide unilaterally not to pay bonuses, and in addition to either not advise the employee at all, or advise the employee at the last possible minute. Many employers these days have done away with the payment of a 13th cheque and have incorporated the amount into the employee’s basic salary. The Basic Fuel Price (which includes freight and insurance costs, cargo dues, storage and financing) and 4. In a situation where the results achieved by a department depend entirely on the collective effort of all employees in the department, the amount of the bonus could be calculated on the basis of a percentage of profits achieved over and above what was budgeted for, or as a percentage of the total profits generated by the department and so on. We use cookies to give you the best possible experience on our website. 13th cheque and bonuses As a result, many companies have done away with a 13th cheque and prefer to work the payment into the employees overall basic salary (or cost to company). Salary Tax Calculator: calculate how tax changes will affect your pocket. The South African Reserve Bank Act, Act No. As soon as the costs of these four elements are calculated, we are left with what is known as the price per litre for fuel. 13th month pay is calculated based on either a single month salary, or four weeks salary, depending on how compensation and payroll are structured. If a monthly paid employee under 65 years old started working on 1 March 2018 and earned R10,000 in March and a sign-on bonus of R20,000, their tax would be calculated as follows: Tax on Regular Income. In most cases, the employee has a right to receive a 13th cheque or a performance based bonus as per the employment contract. Current Account vs Cheque Account Current Account. Additionally, remuneration packages also include a roster of cash What about a bonus? MoneyShop is SA’s largest loan and insurance finding service, helping over 200,000 clients per month. In South Africa, the more you earn, the higher the rate of tax that you pay. Re [31 October 2006] The sum of R30 507,65 being in respect of special leave, bonus and 13th cheque difference in pay, together with interest thereon calculated at the rate of 15,5% as from the 31st October 2006. This will result in a legal obligation. The bottom line is that if it ain’t in your employment contract, a 13th cheque isn’t guaranteed.