The Annual Wage Supplement (AWS), often referred to as the 13th-month bonus, is an additional payment provided by employers to their employees on top of their regular monthly wages. It is commonly practiced in countries like Singapore and Malaysia, among others, and is typically equivalent to one month’s salary.
Key Features of AWS:
- Purpose:
- The AWS is designed to reward employees for their contributions throughout the year and to provide them with additional financial support during the holiday season, usually around December.
- Calculation:
- The AWS is usually equal to one month’s basic salary, but the exact amount can vary depending on the company’s policy, employee performance, or the terms of the employment contract.
- Legal Requirement:
- In some countries, the AWS is mandatory and governed by labor laws. In Singapore, for example, the payment of AWS is not mandated by law but is commonly practiced, and companies often include it in employment contracts as a standard benefit.
- Timing:
- The AWS is typically paid at the end of the year, around December, but the exact timing can vary depending on the company’s policy or specific employment agreements.
- Taxation:
- The AWS is generally subject to income tax, just like regular wages. Employees should consider this when planning their finances.
Example:
If an employee’s monthly basic salary is $3,000, the AWS they receive would typically also be $3,000, making it a substantial bonus that effectively gives the employee 13 months of pay for the year.
The AWS is a significant component of overall compensation, particularly in regions where it is commonly practiced, and is a way for employers to recognize and reward their employees’ efforts over the year.
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