Having recently spent a lot of time going through year-end and with it profit distribution calculations, I thought that I’d share some thoughts on one of the biggest myths that surround “bonus” payments – the so-called 13th check (sorry, I’m using American English from here on).
I stand ready to be corrected but I believe that this is a uniquely South African phenomenon. In other countries they may give a Christmas bonus or shopping vouchers but no other country tries to pass the idea of a 13th check as a bonus. There is probably a good reason for it as it is largely a con (by my definition, which is something that is mis-sold) as I’ll explain.
Many people are lead to believe that it is a bonus of some sort. That you receive your salary each month and then are paid an “extra” salary (importantly with it being described as a bonus) in December, hence the name 13th cheque. This perception is perpetuated by not only those companies that sell it as such, but also those that accept it.
What these employees don’t realize is that their total cost to company is being calculated by adding all the 13 checks together. Thus instead of being paid a larger amount each month, they are being paid a smaller amount each month and then receiving the balance at the end of the calendar year.
Example: cost to company = R240,000 per year. 13th check method = R18,461 for 11 months and R36,923 on the 12th month, OR you could get 20,000 for 12 months.
We offer to distribute their salary over 13 payments to everyone that joins Open Box (note the way in which we describe it). Not surprisingly, we haven’t had a single person go for this “13th check” concept – it just doesn’t make sense. We don’t “sell” as some sort of perk. While I’ll admit it is tempting to do so when so many companies around us do, it just doesn’t seem right to me. What do you think?
