Year-end VS. holiday bonus – what, why, and do they work? How?

This article analyzes two common types of bonuses: the year-end bonus and the holiday bonus. They are offered at similar times and for similar reasons. Having said that, they have some differences in their assignments. 

We will describe them, compare them, and analyze who has the option to receive one and why. Moreover, we will discover how they benefit both employees and employers.

What exactly is a year-end bonus? And a holiday bonus?

They are a gift given by the employer to the employee during the holiday season. 

Similarities:

• Both bonuses are given when the year ends.
• Can be given in monetary and non-monetary forms (food baskets, tickets, vouchers…).
• They will be more generous if the year has been financially successful for the company.

Differences:

• Holiday bonuses are given equally to all employees: they usually range from 100€ to 500€.
• Meanwhile year-end bonuses are influenced by the employee’s base pay, years of service and performance.
• Year-end bonuses are twice as common as holiday bonuses. in fact, the frequency of giving holiday bonuses has decreased to a half in the last ten years.

Which companies typically provide them?

Both bonuses are common around the world. However, while holiday bonuses are more common in some countries (such as Ireland, Poland, or Mexico), year-end bonuses are more common in others (such as the Netherlands or Thailand).

The sectors offering those bonuses are different depending on the type. For example, the year-end bonus is mainly common in management, business, and finance. Both are widely spread in companies of the primary sector. 

These bonuses can benefit all workers, from low to middle-wage earners. Employees earning more than €65,00 per year, on the other hand, are less likely to receive these bonuses. 

And how are they helpful to companies?

They are mainly a way to show appreciation and recognition to employees. Offering a year-end bonus is just one way to demonstrate employees that their hard work matters and is important to the success of your business.

It is widely repeated, but feeling valued at work is a source of motivation. Even small bonuses can result in a boost in the productivity of its fleet. And giving bonuses is one way to improve staff retention rates.

Being clear about the “why” behind employee bonus pay is key. Even if the late motive is simply “foster goodwill with employees” or “promote a positive company culture”, employees need to keep this in mind when receiving the extra pay.

Studies prove that employees who received bonuses or other rewards were eight times more engaged than employees that did not. Moreover, compensation and pay have consistently been ranked among the top five most important factors of job satisfaction.

Furthermore, since bonuses are tax deductible, they may help companies reduce their tax liability.

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