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What Singapore Workers Should Know About the 13 Month Bonus / Pay (Annual Wage Supplement)

2019-10-01 , 6:00 am

Last Updated on 2024-08-03 , 9:55 pm

Every year, civil servants in Singapore anticipate the receipt of their 13th month bonus.

This bonus is a combination of an annual variable component and a Non-Pensionable Annual Allowance (NPAA).

Some individuals often refer to this bonus as the 13th month pay or AWS salary, but the most commonly accepted term is the annual wage supplement.

AWS Salary Meaning and the Misconception Around the 13th Month Bonus

People often confuse the 13th month bonus with the annual wage supplement (AWS), but it’s important to distinguish between the two.

Before we delve into a discussion about the AWS salary meaning or the question, “is 13th month bonus compulsory in Singapore?”, let’s try to understand if it qualifies as a bonus in the first place.

The Origin of the “13th Month Bonus” Phrase

Historically, the concept of a 13th month bonus arose when the British transitioned from weekly to monthly wages.

The extra bonus was designed to compensate for the additional four weeks in a year, hence leading to the more accurate term – the 13th month pay.

In essence, while there are 52 weeks in a year, employees typically receive pay for only 48 weeks (12 months with 4 weeks each). This calculation would hold true if we were paid weekly wages.

In Singapore, most companies offer a monthly salary, so the 13th month bonus is largely irrelevant today.

The civil service adopted this practice in the mid-70s to bridge the salary gap between public and private sector employees, thereby making public service careers more attractive.

Is It Compulsory in Singapore?

Contrary to popular belief, the 13th month bonus or annual wage supplement is not mandated by law in Singapore.

This payment, added to an employee’s total annual salary, is not compulsory unless stipulated in your employment contract.

Unionised companies, however, may have a legally binding document called the Collective Agreement that specifies employment conditions, potentially including an annual wage supplement.

Total Annual Payment Package

When considering your annual salary, it’s essential to look beyond just the annual wage supplement or 13th month bonus.

Your total annual payment package comprises the performance bonus, annual increment or salary adjustment, annual variable component (a bonus based on company performance and economic conditions), other bonuses, and the basic monthly salary.

For instance, if you had the option to choose between a monthly salary of $4,500 without AWS and $4,000 with AWS, which would you prefer?

The additional $500 per month in the first option translates to an extra $6,000 per year, surpassing the $4,000 from the 13th month pay.

Should the 13th Month Pay Be Compulsory for Low-Wage Workers?

Labour MP Zainal Sapari proposed making the 13th month bonus mandatory for low-wage workers, especially those in the cleaning, security, and landscape industries.

According to Sapari, these workers rarely receive annual increments or a 13th month bonus because employers aim to keep costs low.

A Final Word

If you are earning a decent salary, the absence of a 13th month bonus or annual wage supplement should not cause undue stress.

Instead, your focus should be on your total annual salary package.

And, of course, to sound more sophisticated, it’s always preferable to refer to it as the annual wage supplement rather than the 13th month bonus.

You can also watch this video to know more about AWS: