Amortising AWS

Does your company in Singapore pay an Annual Wage Supplement(AWS) or is it amortised into the monthly salary? If so, what’s the reason for doing so?

In Singapore, the Annual Wage Supplement (AWS) is also known as the 13th-month payment. It is a common practice among employers to provide a one-month bonus to their employees. This payment is typically made at the end of the year, in December, and is usually calculated based on the employee’s monthly salary.

One reason why AWS is popular in Singapore is that it helps to improve employee morale and motivation. Research has shown that providing employees with financial incentives can have a positive impact on their job satisfaction and productivity. Additionally, AWS can help to reduce employee turnover and attract new talent, as employees are more likely to stay with a company that values their contributions and rewards them accordingly.

Some employers choose to amortise the AWS into the monthly salary instead of providing it as a lump sum payment. This means that a portion of the AWS is included in the employee’s monthly salary throughout the year, rather than paid out as a separate bonus at the end of the year.

Moreover, the AWS can help to address income inequality and provide a more equitable distribution of wealth. By ensuring that all employees receive the same bonus, regardless of their position or seniority, companies can help to narrow the gap between high and low earners.

Reasons for amortising AWS

The reason for amortising the AWS into monthly salary is to provide a more stable income for employees. By spreading the bonus payment throughout the year, employees can have a more predictable cash flow and can better manage their finances. It also helps employers to manage their cash flow as they do not have to make a large payment at the end of the year.

Overall, whether an employer chooses to pay the AWS as a lump sum or amortised into the monthly salary, it is still a way to recognise and reward employees for their hard work and contribution to the organisation throughout the year.

In conclusion, AWS is a common practice in Singapore that provides a range of benefits for both employees and employers. By recognizing and rewarding employees’ contributions, improving morale and motivation, and addressing income inequality, AWS can help to create a more positive work environment and a more prosperous society.

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