Legal requirement for the 13th month pay suspended for 2021
Following consultations between the Ministry of Employment and Social Affairs and stakeholders, including employers and employees representatives, the cabinet of ministers has approved to suspend the current legal requirement for the 13th month pay for 2021 due to financial constraints.
In the meantime, a proposed Performance Based Bonus Scheme will be developed to be adopted nationally in 2022 for all workers in both the private and public sectors.
A performance bonus is compensation beyond normal wages and is typically awarded after a performance appraisal and analysis of projects completed by the employee over a specific period of time.
Executive director in the employment department, Veronique Bresson, made the declaration yesterday during a press conference where she gave details on the decision taken.
Also present were Comptroller General Irene Croisée and director general for economic planning within the Ministry of Finance, Economic Planning and Trade Lenny Palit.
Ms Bresson explained that the decision to suspend the current legal requirement for the 13th month pay for this year is based on the current state of the economy which she described as fragile.
She said the authority finds it more significant for the workers to maintain their employment, thus taking home a monthly salary, rather than imposing the 13th month pay on private companies which are still recuperating, especially after the phasing out of the Financial Assistance for Job Retention (FA4JR) in March this year.
Ms Bresson also explained that at present, the main focus is purely on job creation for everyone who is willing to work, while she noted that the level of redundancy has gone down.
She said the number of application for termination of employment has also gone down and in the attempt to keep the situation stable, the decision to suspend the current legal requirement was taken to prevent the current situation from reversing.
Like last year, for this year’s suspension to be implemented, the ministry will have to bring a bill before the National Assembly for approval.
As for private companies which have already budgeted for the 13th month pay for this year, Ms Bresson encouraged them to go ahead as planned despite the announcement of suspension and also informed them that exemption will still be available for those paying.
Regarding the proposed Performance Based Bonus Scheme, Ms Bresson explained that it will not be automatic, and will solely be based on merit.
Being the ministry that promotes the country’s productivity, Ms Bresson said the employment department is seeing the new scheme as an incentive to encourage workers to be productive and be responsible.
To properly implement the scheme, Ms Bresson explained that all relevant stakeholders would be consulted so that a common platform can be set for the process, thus creating an environment of equality and fairness among workers from all sectors.
Proper mechanisms would also be included to accommodate for employees’ grievance if necessary.
Regarding the rise in the cost of living, in relation to the suspension of the 13th month pay, Mr Palit explained that more money in circulation will increase the pressure on the exchange rates, resulting in the possibility of further raise in the prices of the commodities.
Mr Palit also noted that there is at the moment several issues, including freight cost and other tourism-related factors which are not necessarily their fault, while throwing more money into circulation is far from being the solution.