5 types of year-end bonuses most expected by employees

Many workers and HR people often mistakenly think that year-end bonuses are cash and 13th month salary. However, reality shows that businesses have many different forms of bonuses, instead of just cash bonuses for employees. Year-end bonuses hold considerable value in the lives of employees, both materially and emotionally. When it comes to the preferred type of Tet bonus, employees have clear expectations. In this article, let’s take a look at the top 5 most practical and anticipated year-end award forms for employees with SMART SOLUTION FOR BUSINESS COMPANY LIMITED (S4B Vietnam).

1. First form: Bonus money

A survey conducted over two days by the reputable Facebook pages VTV24 News Center and VTV News showed a striking preference for monetary bonuses. Out of approximately 43.7 thousand votes, a whopping 37 thousand (around 85%) favored cash rewards. Money is the legal means of payment and the easiest to transact for everyone. That’s why most workers want to receive money so they can freely convert it in the way they want, especially when Tet comes and they need to spend a lot on shopping.

So from your and the business’s perspective, what are some advantages and disadvantages of giving monetary rewards?

1.1 Strength:

  • Suitable for the wishes of the majority of employees, especially those with low incomes who need to spend in cash
  • Can declare accurately and transparently in financial reports
  • Calculate the exact reward value for each employee (eg: 2,000,000 VND, 5,500,000 VND, 46,750,000 VND,…)

1.2 Weakness:

It is necessary to agree on a detailed and reasonable bonus calculation policy, otherwise there will be competition and rivalry. Some ways to reward Tet with money you can apply:

  • Put cash in your own personal lucky money bag/envelope and call each employee’s name to present the reward along with monthly/quarterly bonuses and certificates of merit and certificates (if any).
  • Hang all the lucky money envelopes on a peach tree and let the staff “draw for prizes”
  • Added directly to the employee’s monthly salary (including cash payment and bank card transfer)


“Money” is the most anticipated form of year-end reward for employees

2. Second form: ESOP stock bonus

ESOP (Employee Stock Ownership Plan) is a plan to issue shares according to an option program for employees in the company. ESOP shares are often issued at preferential prices with certain conditions such as not being allowed to be transferred for a period of 1-3 years, etc.

Normally, ESOPs are applied by businesses to employees who meet certain criteria such as talented people and top 1 achievements in the company, long-term seniority, key personnel, etc.

Strength:

  • ESOP shares do not need to be recorded in salary and bonus expenses, helping to significantly reduce corporate income tax and personal income tax.
  • Charter capital increases due to the increase in the number of shares, profits are retained for reinvestment

 


Year-end bonus with ESOP shares – a new form that can be referenced for businesses

>>>Personnel provision and human resource management services in Vietnam

Weakness:

  • Unable to meet the urgent spending needs of employees
  • If the number of shares increases too much, it will dilute the value of each shareholder, possibly leading to conflicts of interest between stock holders.

1.3. Third form: Rewards for products/services provided by the company

If you have read the objections of workers surrounding the new “bonus in kind” law, you must have immediately thought of the negativity in this form of Tet bonus, with concerns such as: “This is no different than discharging the warehouse and reselling it to the employees; I have no need to use those items!” and “This is helping the companies declare falsely. The reward is worth 1 million VND, for example, but actually converted to cash is only a few hundred thousand.”

1.4. Fourth form: Reward other items not available in the business

This form is said to be a blend of year-end rewards in cash and in products/services available in the business, so its advantages and disadvantages are also somewhat easy to compare and determine. Besides cash, many businesses choose to reward employees with other items

1.5. Fifth form: Combined bonus

Normally, businesses will choose to give year-end bonuses to employees with a flexible combination of the above types. There are two ways to combine rewards:

  • Each reward level corresponds to a type of reward: For example, level 1 employees are rewarded with goods available in the company, level 2 employees are rewarded in kind purchased from outside, level 3 employees are rewarded with cash, and ESOP shares are only for key personnel in the business at management level and above.
  • Each employee is given many different types of rewards, including one core type, and 1-2 other secondary rewards. For example: Each employee receives a different cash bonus, but they all receive a small gift basket including candies and fruits for Tet.

Hope you always grasp your employees’ aspirations and give them the rewards that meet your expectations. Satisfaction and trust in return for the business is also the most meaningful gift for you in this new year! Good luck!

SMART SOLUTION FOR BUSINESS COMPANY LIMITED (S4B Vietnam)

  • Address: Unit 602A, Tower A, Handi Resco Office Building. 521 Kim Ma Street, Ba Dinh District, Hanoi
  • Tel: + 84 24 3974 4181
  • Email: service@s4b.com.vn

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