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Annual wage supplement (AWS)

We have entered the last month of 2022!

Besides the festive moods, leave clearance, getaways, etc., another looking forward factor for salaried employees (permanent placement or fixed term) is to receive a bonus. Bonus, in Singapore's context, comprises of

a) Annual wage supplement (AWS) or 13th month, and

b) variable bonus or performance bonus

There are some companies that pay bonuses around the Lunar New Year period.

We will focus on AWS In this post.

Brief History of AWS 💰

Historically, when the British moved from weekly to monthly wages, the 13th-month bonus was created to make up for the extra 4 weeks, which is why it’s more accurate if you call it the 13th-month pay instead.

Counting by weeks, there are 52 weeks a year but employees are only paid 12 months. Assuming each month has 4 weeks, employees are only paid for 48 weeks. This was how AWS or the 13th month came about.

AWS is usually the equivalent of one month's salary and is separate from performance bonuses which depend on the company's financial position and individual employee performance. The AWS is normally paid to employees except in difficult times when businesses need to reduce costs.

AWS is not compulsory under the law. The payment will depend on the terms in the employment letter/employee handbook/collective agreement (for unionized companies).

I have been receiving a number of queries on the payment of bonuses from friends and job seekers. Some have the intention to resign and want to ensure that they secure their bonus before they call an end to their service. Others want to ensure that the timing is looking out for job opportunities and that the estimated period to start a new job is in order.

The bottom line is: nobody wants to lose out, which is perfectly understandable. After all, this payout adds joy to the festive mood and helps people in financial planning.

Every organization has its own policies for bonus payments. May it be that you are a new employee or are on the verge of stepping out,

1) Check your employment letter/employee handbook

2) Ask colleagues about the usual practice of bonus payment

3) If you are unable to make references in 1 or 2, ask HR/Manager.

For new employees, it is a common practice to receive the pro-rated amount, according to the completed period in the onboarding year.

Most companies I know of do not pay AWS to resigned employees, not even a pro-rated amount. They will only pay employees who are still in service while not serving any notice.

While everyone is entitled to celebrate the receiving of his/her bonus payout, let us

1) be considerate towards people who may have been laid off and are in transition.

2) be vigilant with our spending. Save a good portion of the bonus for challenging times.

3) consider making donations to the less fortunate ones, if you can.

This is one way to spread joy.

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