Sample Policy: Mid-Year and Year-End Bonus

1.Purpose

This policy covers both the compensation management and payroll administration for the Mid-Year Variable Bonus and Year-End Variable Bonus.

2.Operating Units and / or Locations Covered

All business units of COMPANY operating in Asia Pacific

3.Scope

This policy applies to all full time permanent and fixed term contract staff.

4.Responsibility

The Human Resource Department which manages the compensation plans and which administers the payroll is responsible for complying with the principles / procedures detailed in this policy.

5.Definitions

Term Definition
Nil

6. Forms

Form Title Form Number
Not Applicable

7. Eligibility

7.1       All permanent staff and staff newly hired or rehired on re-employment contract who have completed one
year of service as at 31 December of that year will be eligible for variable bonus for that year.

7.2       A staff whose length of service is less than 12 months be eligible for a pro-rated variable bonus.

7.3       Staff who have not successfully completed their probation are not eligible for a pro-rated
variable bonus.

7.4       A staff who is serving notice of termination of service in July or is no longer in service in July is
not eligible for the Mid-Year Variable Bonus.

7.5       A staff who is serving notice of termination of service in December or is no longer in service in
December is not eligible for the Year-End Variable Bonus.

7.6       A fixed term contract staff, other than a staff rehired on a re-employment is not eligible for Variable
Bonus. However, he or she may be paid a retention bonus, subject to Chief Executive Officer’s approval,
for example through the annual budget.

7.7       Where a staff changes his employment status from contract to permanent, the employment duration as a
fixed term contract staff shall not be considered for the pro-ration and payment of the Variable Bonus.

7.8       Where a staff changes his employment status from permanent full-time to permanent part-time or vice-
versa, the Variable Bonus will be calculated in 2 parts: One part for the duration when he is a part-time
staff and the other part for the duration when he is a permanent staff.

8.Authority to Pay Variable Bonus

8.1       Payment of the Mid-Year Variable Bonus and Year-End Variable Bonus is at the sole discretion of the
Company depending on the overall financial performance of the organization and the employee’s
performance.

8.2       Such sole discretion is exercised by the Compensation Panel.

9. Authority to Decide and Act Based on Fiscal Health

9.1       The Chief Executive Officer shall have the authority to withhold, defer, reduce quantum, pay in multiple
tranches or not pay either or both the mid-year and year-end variable bonuses in the light of distressed
financial performances and/or dwindling reserves.

10.Approval to Pay Mid-Year Variable Bonus

10.1    In June, the HR Department shall prepare and submit the recommendation paper for the Mid-Year Variable
Bonus through the Chief Executive Officer for approval by the Board of Directors of the payment of the Mid-
Year Bonus in the July payroll.

10.2    Any oral promises to pay bonuses made by any supervisory or management staff is not enforceable.

11. Approval to Pay Year End Variable Bonus

11.1    In September, the HR Department shall prepare and submit the recommendation paper for the Year-End Variable Bonus through the Chief Executive Officer for approval by the Board of Directors of the payment of the
Year-End Variable Bonus in the December payroll.

11.2    Any oral promises to pay bonuses made by any supervisory or management staff is not enforceable.

Budgeted Quantum

12.1    The total budgeted quantum for both the Mid-Year Variable Bonus and the Year End Variable Bonus is 2
months of basic salary.

12.2    The Company has the sole discretion to change this budgeted quantum and the actual payout quantum.

12.3    Such sole discretion is exercise by the Chief Executive Officer upon the recommendation of the Compensation
Panel.

12.4    The HR Department will submit the proposal through Chief Executive Officer for the Board of Director’s
approval.

Cut-Off Date

13.1    A staff who has successfully completed probation by and including 30 June and remains in service in July
shall be eligible for the Mid-Year Variable Bonus.

13.2    A staff who has successfully completed probation by and including 31 December and remains in service shall
be eligible for the Year-End Variable Bonus.

Date Bonus is Payable

14.1    The Mid-Year Variable Bonus, if any, is paid with the July payroll.

14.2    The Year-End Variable Bonus, if any, is paid with the December payroll.

Method of Proration of Mid-Year Variable Bonus 

15.1    Staff who has taken approved no-pay leave during the year shall be eligible to pro-rated Mid-Year Variable Bonus based on the period of active service.

15.2    The calculation of the Mid-Year Variable Bonus will be based on the period of active service in the first half of the calendar year.

15.3    The proration of the Mid-Year Variable Bonus is based on calendar days.

For example, if a staff joined on 1 February and the year has 366 days (a leap year), his Mid-Year Variable Bonus will be

29 (February) + 31 (March) + 30 (April) + 31 (May) + 30 (June) / 182 X monthly basic salary = 151 / 182 X monthly basic salary.

15.4    Rounding rule: The Year End Variable Bonus should be rounded up to the closest dollar.

15.5    In the case of permanent part-time staff, the proration would make use of the formula “Number of hours worked for first half of the year / (26 weeks X 40 hours a week)”. Rounding should be made up to the nearest half an hour.

Method of Proration of Year-End Variable Bonus

16.1    Staff who have taken approved no-pay leave during the year shall be eligible to pro-rated Year-End Variable Bonus based on the period of active service.

16.2    The calculation of the Year-End Variable Bonus will be based on the period of active service in the calendar year.

16.3    The proration of the Year End Variable Bonus is based on calendar days.

For example, if a staff joined on 1 June and the year has 365 days, his Year End Variable Bonus will be

30 (June) + 31 (July) +31 (August) + 30 (September) + 31 (October) + 30 (November) + 31 (December) / 365 X monthly basic salary

= 214 / 365 X monthly basic salary

16.4    Rounding rule: The Year End Variable Bonus should be rounded up to the closest dollar.

16.5    In the case of permanent part-time staff, the proration would make use of the formula “Number of hours
worked for the year / (52 weeks X 40 hours a week)”. Rounding should be made up to the nearest half an
hour.

17. Disciplinary Action

17.1    Staff found committing minor misconducts may have the payment of his or her Variable Bonus withheld or
deferred until the validity period of the warning notice is over or when the Performance Improvement Plan
is successfully completed. The maximum period of deferment is 3 calendar months.

17.2    Staff found committing multiple or repeated minor misconducts may have his or her performance ratings
downgraded either by the Department Head or the Chief Executive Officer to “performance below job
expectations” and receive a reduced Variable Bonus quantum.

17.3    Staff found committing a major or gross misconduct may not be paid either one or both the mid-Year and
Year-End Variable Bonus for that year. This matter is at the discretion of Chief Executive Officer.

18.Team and Individual Staff Performance

18.1    Both individual staff and work teams should be given the opportunity to be assessed and be rewarded through
the Variable Bonus on their contributions to the top line, the bottom line or operational effectiveness.

19. References

19.1    Nil

20. Process Map

20.1    Not Applicable

21. Revision History

Revision Date Description of Changes Requested By
0.0 TBC Initial Release
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