The Coveted 13th Month Bonus in Singapore

There’s been conspiracy theories out there about how companies in Singapore are out to cheat us of our salary by underpaying us, and calling the 13th month bonus not a bonus but our deserved share of pay. In fact, they’d go as far as claiming that even the so-called “bonus” is still a rip-off of at least 1 day of our pay. The reason is simple: the math appears to make sense.

The theories go that companies don’t want to overpay you, so what you are getting paid is only from the 1st to the 28th of each month (based on the shortest month in the year, February), and that “13th month bonus” is the payout of the additional days each month that you work. It doesn’t help that many companies’ payday is on the 28th as well.

So three additional days in January, none in February, three in March, two in April, three in May, two in June, three in July, three in August, two in September, three in October, two in November, and three in December. These total up to 29 days. Based on the theory above, since your monthly pay is only for 28 days, you are still ripped off of 1 day’s salary each year with the 13th month bonus. And if it’s a leap year, you are ripped off of 2 days.

But just because the math seems to add up, doesn’t mean it’s true. It’s kinda like the trick question:

You borrow $50 from mom and $50 from dad. You buy a shirt for $97 and get back $3 in change. You give $1 back to mom and $1 back to dad. You keep $1 for yourself. Now you owe each of your parents $49. $49+$49=$98 You still have $1. $98+$1=$99. What happened to the other dollar?

The math seems to add up, but it’s added incorrectly if you think about it.

I wonder what gave people the idea that they are paid on days they don’t work. Your monthly salary is supposed to cover only work days. This is why you are supposed to either get days off in lieu or overtime pay if you work on weekends and public holidays (yes, you are ripped off if you are not compensated for overtime work). So no, you are not paid for 28 days a month. This is a myth and at best interesting coffee shop talk. You are paid for between 20-24 work days a month.

And then we are back to square one if you start to wonder if we are overpaid on months with 21 work days or underpaid on months with 24 work days. To avoid such nonsensical discussion, Japanese companies always offer remuneration packages as annual salaries and the amount you get each month is simply the annual salary divided by 12. A mercenary might think that it is still based on the least amount of days you work. After all, why would a company risk paying you more for some months and then you leave after that?

Let’s take 2015 as an example: there are 123 work days in the first 6 months, and 130 days in the last 6 months in Singapore. What if you work for the first 6 months, get half your annual salary and leave? But 123 days isn’t even half the total number of work days. Is it possible? Why not?

It might help if you think about annual leave the same way. Say you get 12 days a year, but the company allows you to take it any time. What if you take all 12 days of leave in the first 6 months and resign? The company would’ve paid you additional 6 days since you only worked half the year. And this is totally acceptable. Otherwise, they would have to make you take only 1 day each month.

The contract with a company is a trade between you and the company. You offer the service and they pay you. If you’ve done freelance work for a good period of time, you would understand the negotiation that goes on. You can get a better rate per hour or per assignment if you are alright with the unstable volume of work that comes in. If you want a more stable volume of work from the client, you’d have to compromise by lowering your rate per hour or per assignment. Or you can even just tell them to pay you a fixed amount of money regardless of the amount of work each month. This way, the company can be guaranteed lower cost, and you are guaranteed income. So in months that you have fewer assignments, you are “overpaid.” And you notice at this point, it is pretty much the same as being an employee except for the freedom in time.

Life is hard if you’re bent on living on a victim mentality, so have your own thought and stop believing everything you read online just because they seem to make sense.

Don’t believe what I say either.

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