We are now nearing this time of the year where we all look forward to the payment of the end of year bonus, commonly and famously known as the ‘thirteenth month’. This statutory bonus has to be paid by the employer to the employee and is not discretionary to the employer. With the advent of the Workers’ Rights Act 2019, we have seen our labour laws being challenged in many ways in Mauritius. The calculation of the end of year bonus and the new definition given to the word ‘worker’ under the Workers’ Rights Act 2019 has quickly grasped our attention. We should, however, remember that when it comes to end of year bonus, the definition of a “worker” means a person drawing a monthly basic wage or salary of not more than MUR 100,000. It is, therefore, understood that the calculation of the end of year bonus for an employee earning a basic salary of more than MUR 100,000 will be catered for under the End of Year Gratuity Act 2001.
Which laws govern the end of year bonus?
- Workers’ Rights Act 2019 (“WRA”); and
- End of Year Gratuity Act 2001 (“EoYGA”).
Is there a deadline to make this payment?
- The WRA provides that where a worker remains in continuous employment with the same employer for the whole or part of a year as at the 31st of December of the year, the worker is entitled to the payment of a bonus equivalent to one twelfth of his earnings for that year. The law further provides that 75 per cent of the expected bonus under the WRA has to be paid to the worker not later than 5 clear working days before the 25th of December of that year. It is significant to note that whilst the requirement is that the worker should be in employment as at the 31st of December, yet the payment of the end of year bonus has to be made not later than 5 clear working days before the 25th of December of that year. The legislator, however, did take the pain to specify that only part of the end of year bonus, that is, only 75 percent of the expected bonus is to be paid by this deadline. The balance is to be paid to the employee at latest on the last working day of the same year.
- For employees under the EoYGA, that is, employees earning a monthly basic salary of more that MUR 100,000, the equivalent of the end of year bonus, known as, the “gratuity”, has to be paid on or before the 21st of December of every year. This gratuity has to be paid to every employee who is or has been in the continuous employment of the employer during the year.
How is the amount calculated and who are eligible to the end of year bonus/gratuity?
- For employees who have been in continuous employment for the whole of the year 2022 and eligible to the gratuity, that is, drawing a monthly basic salary of more than MUR 100,000, the gratuity payable is equivalent to the basic salary payable in the last month of employment, of the employee. In the event that the employee has been in employment for only part of the year, the gratuity shall be equivalent to at least one-twelfth of the monthly basic salary payable in the last month of employment multiplied by the number of months during which he has worked.
- As for employees eligible to the end of year bonus pursuant to the WRA, it is crucial to take into consideration the Communiqué dated the 15th of December 2022, issued by the Ministry of Labour, Human Resource Development & Training. According to this Communiqué, for employees who are in continuous employment with the employer, the end of year bonus would be equivalent to the greater amount between the basic salary of the employee as at the end of the year and the aggregate of the employee’s earnings for that year. The monthly aggregate of the employee’s earnings is calculated by dividing the yearly earnings of the employee by twelve (12). Should the employee’s last month salary for the year be of a higher amount than the monthly aggregate of the employee’s earnings, then the employee’s end of year bonus shall be equivalent to the last month’s basic salary for the year, as provided for under the EoYGA. Should the last month’s salary for the year not be less than the monthly aggregate of the employee’s earnings, then the end of year bonus shall be equivalent to one twelfth of the yearly earnings of the employee.
- It is important to note that “Earnings” includes basic wage, overtime, any sum of money, by whatever name called, including commission and any productivity payment, paid to a worker, in respect of any work performed by him, in addition to the basic wages agreed upon between him and the employer.
- Employees are also entitled to the end of year bonus if an employee resigns in the course of the year on or after having been in continuous employment for at least 8 months, retires in the course of the year or if his contract of employment comes to an end during the course of the year.
- When it comes to gratuity, it is essential to note that the EoYGA defines “Employee" as a person who works or has worked under a full-time or part-time contract of service or apprenticeship, whether the contract is express or implied, oral or in writing and whether the person is paid daily, weekly, monthly or otherwise. It also includes a person who has retired in the course of the year.
- Important endnote for employers - An employee is eligible to an end of year bonus if his employment is terminated in the course of the year for any reason. This would imply that an employer would have to pay an end of year bonus even in a case where the employee has been dismissed for poor performance or gross misconduct.