13th month or year-end bonus for your staff

What is a 13th month or year-end bonus?

A year-end bonus and 13th month are additional rewards for your employees. You can give these rewards to your employees once a year. Most employers pay the reward at the end of December on top of the salary.

The terms year-end bonus and 13th month are often used interchangeably, but they are different:

• A 13th month is an extra month’s wages.
• A year-end bonus is an amount that the employer determines. This is often a percentage of the gross annual salary.

Is a year-end bonus or 13th month compulsory?

A year-end bonus or 13th month is not regulated by law. But the CAO may state that you must pay your employee a 13th month or year-end bonus, and may also specify the amount. Is this not included in the CAO and do you want to offer this employment condition to your staff? Then include the agreement about this in the employment contract.

Calculating a 13th month or year-end bonus

A 13th month is a one-off extra payment equal to the gross monthly salary, without holiday allowance.

The end-of-year bonus is not fixed. You determine the amount or percentage of the gross annual salary yourself. The year-end bonus often depends on the company's profit. You can also agree on a 'base' with your staff. This is a fixed minimum amount that you pay your employees as a year-end bonus.

Calculating taxes

You must withhold wage tax and national insurance contributions over the 13th month or year-end bonus. You calculate these payroll taxes using the rates from a payroll tax table for special rewards (bijzondere beloningen). You choose that table with the tool for Payroll tax tables (in Dutch).

Who is entitled to a 13th month or year-end bonus?

Do you pay a 13th month or year-end bonus to your staff? Then you may not exclude any employees. This is due to the rules for equal treatment at work. So you may not only pay the bonus to employees with a permanent contract. Employees with a temporary contract or on-call contract are also entitled to a 13th month or year-end bonus.

Do you pay the 13th month when an employee resigns?

Employees who have resigned are entitled to part of the 13th month or year-end bonus in the year of resignation.

Payment of 13th month or year-end bonus

Most employees receive their bonus in December. When an employee is dismissed, you can pay out the bonus at another time. You then include the 13th month or year-end bonus in the final settlement.