Private sector end of year bonuses hit record highs despite Covid challenges

Private sector end of year bonuses hit record highs despite Covid challenges
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A quarter of private-sector employees have or will receive a bonus this year with the average amount given rising to a record-high, despite many companies still struggling with the impact of the pandemic.

This is quite remarkable, according to a survey by HR service provider Acerta, as the bonuses that companies award are typically based on employees’ business results and/or performances of the previous financial year. In this case that is 2020, the year when the coronavirus crisis dealt the economy a massive and unexpected blow.

“Despite the economic downturn in 2020, we see that companies still pay out almost as many bonuses to their employees,” Ellen Roelants, a flexible compensation expert at Acerta Consult, said. The survey analysed data from 150,000 white-collar employees and 33,000 companies in the private sector.

Good times through bad times

Nearly a quarter (24%) of white-collar workers in the private sector will receive a bonus this year – almost the same number as in 2020 (25 %) and still higher than in 2019, before the coronavirus crisis, when this was around 21%.

The most popular bonus is and remains the non-recurrent bonus: a collective reward for employees if they achieve collective targets. in 2021, 12.7% of white-collar employees received one of these bonuses, worth €1,227 on average.

However, this type of bonus, which is the most advantageous for tax purposes, is gradually declining. The individual bonus has become more popular. More than 6% of white-collar workers in the private sector received a cash bonus – almost four times more than in 2020.

Not all bonuses are equal

“Individual bonuses are on the rise in the coronavirus crisis. In uncertain times, employers are more reluctant to immediately pay out collective bonuses (these payments have to be submitted by end of April) and are more likely to reward on the basis of personal commitment,” Roelants explained.

But this type of bonus is less beneficial to the employee since far less of the total sum is retained after taxes. But Roelants states that this is a way for employers to show appreciation to individual employees.

“They want to reward their employees for achieving concrete goals, but this time also to thank them for the difficult months in 2020. Nevertheless, the figures come as a surprise to us as well, especially since the average bonus amount paid out has increased and is now really at a peak.”

The average bonus amount was a record high at just over €5,300.

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