Annual Wage Supplement – Everything You Need to Know

It’s december, the time of the year to celebrate. Christmas is lurking around the corner, families go for holidays and employees look forward to their annual wage supplement (AWS), or more commonly known as the 13th month bonus.

History of the Annual Wage Supplement

The Annual Wage Supplement started when the British decided to move from weekly to monthly wages. As 4 weeks is generally considered to make up a month, wages for 12 months only adds up to 48 weeks. This was 4 weeks or a month short of 52 weeks. Thus, the annual wage supplement was born to compensate workers for this ‘extra’ 4 weeks.

Misconceptions

Before we start complaining about not receiving our annual wage supplement, we must first understand that it is not a bonus. It’s just a different way of packaging your salary. Some companies offer a higher monthly salary instead of the AWS and vice versa.

Secondly, AWS is not compulsory. Sometimes, when the business is poor, companies that usually award the AWS may lower the amount or not do so. However, if the AWS is instead weaved into the monthly salary, employees need not worry about receiving their AWS.

Should the annual wage supplement be implemented?

Many Singaporeans have come to expect the AWS to be part of their salary package. They may feel unhappy if they don’t get the supplement when their friends do. Afterall, who doesn’t like the idea of extra cash at the end of the year.

However, I urge you to focus on your overall yearly pay package. Companies often compensate not paying the AWS with an increased monthly pay which may even result in a higher yearly salary. Besides, if you think about the time value of money, isn’t it better to receive it earlier than waiting till december? It may also help you make better money decisions and not blow your extra cash on an expensive toy or meal.

Therefore, we encourage companies to either provide the AWS or a higher monthly salary to compensate. After all, rewarding your workforce fairly is key to increasing motivation, engagement and maintaining a happy workforce.

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