What is a Year End Bonus

The concept of year end bonus is quite old. One can link it to the very starting of the corporate world. In the simplest terms, a year end bonus can be defined as the extra sum of money given to an employee by an employer at the end of a year. In many countries, this is also known as holiday bonus too.

The concept of holiday bonus or year end bonus is mainly popular in the western world. This is so because of the Christmas and the onset of the English New Year. But, in many other countries, the concept of such a year end bonus is completely absent. This practice is not seen in most of the companies, whether it’s a small business entity or a large corporate house. InIndia, the bonuses are given at the time of major festivals instead of the year end. Then, in some countries the year end bonus is replaced with extra money at times of local festivals or celebrations.

The money given as year end bonus is not free of taxes. This amount is taken as a part of the salary. So, you should plan accordingly and go for relevant tax deductions. Otherwise, you might require paying taxes at the end of the day. But, one shouldn’t calculate this money in advance. As the economy is shrinking these days, so chances are quite few that your employer will give you a year end bonus. At times, when companies are cutting corners to meet the budget deficits, it’s really impractical to expect any such bonus at the end of the year.

Some jobs come with inbuilt year end bonuses. These people are really lucky; I must say that. But, this criterion doesn’t apply to all of the people reading this article. So, it’s better to have a chat with the HR guy to free yourself from any false hopes.

If you are a marketing guy, then there is a possibility that you would get a percentage of your generated revenue during the stipulated period. On the other hand, if you are an admin guy, then there is maximum possibility that you would be gifted with a year end bonus calculated upon your total hours of work. At times, some generous companies give away a portion of their earned revenue as year end bonus to all the employees according to their ranks in a proportional manner.

In some countries, the year end bonus is given at the end of the fiscal year, not in the month of December. Moreover, this extra income falls in higher tax slab. As you can see, there’re a lot of pros and cons are associated with this bonus, so it’s better to not plan anything in advance with this money.

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