The announcement of a 14th month bonus in Mauritius has sparked significant discussion among employers, employees, and policymakers. This article explores the history of the end-of-year bonus in Mauritius, the calculation of the 13th month bonus, the introduction of the 14th month bonus, and its implications for all stakeholders.

The End-of-Year Bonus in Mauritius: A Brief History

In Mauritius, the 13th month bonus—commonly referred to as the end-of-year bonus—was implemented in December 1975 after significant labour struggles. It was introduced to ensure workers received additional financial support during the festive season. Over time, it became a statutory requirement under Mauritian labour law, applicable to employees earning up to MUR 100,000 monthly. The Workers’ Rights Act (WRA) of 2019 further solidified this provision, ensuring that employees receive this bonus regardless of their employer’s discretion.

How the 13th Month Bonus is calculated ?

The 13th month bonus is calculated as one-twelfth of an employee’s annual earnings. It includes basic salary, overtime payments, and certain allowances. Employers are required to pay at least 75% of this amount five working days before Christmas, with the balance due by the last working day of December. This bonus is a vital part of annual compensation for employees and is often seen as a financial cushion during the holiday season.

The Introduction of the 14th Month Bonus

The concept of a 14th month bonus, also referred to as the “14th cheque,” gained traction during Mauritius’s 2024 election campaigns. Both ruling and opposition parties pledged this additional payment to employees in both public and private sectors. The proposal was officially approved during a Cabinet meeting on December 13, 2024. According to the announcement:

• The 14th month bonus will apply to employees earning a monthly basic salary of up to MUR 50,000.
• It will be disbursed in two installments: 50% in December 2024 and the remaining 50% in January 2025.
• Beneficiaries include public and private sector employees as well as pensioners.

Who Will Pay for the 14th Month Bonus?

The government has committed to providing financial support to small and medium enterprises (SMEs), export-oriented businesses, and companies facing financial difficulties to help them meet this additional expense. However, larger corporations are expected to absorb these costs independently.

Business Mauritius’s Perspective

Business Mauritius, representing over 1,200 companies, has raised concerns about the economic sustainability of this measure. They argue that imposing an additional mandatory payment could strain businesses already grappling with inflationary pressures and rising operational costs. Business Mauritius has suggested that any such initiative should be tied to productivity or profitability rather than being a blanket obligation.

Implications for Employers

• Financial Strain: Employers will face higher payroll costs, particularly SMEs with tighter budgets.

• Budget Adjustments: Companies may need to reduce other bonuses or benefits to accommodate this new expense.

• Workplace Dynamics: The uniform distribution of bonuses may demotivate high performers if performance-based incentives are reduced.

Implications for Employees

• Increased Income: Employees earning up to MUR 50,000 will benefit from an extra month’s salary, offering financial relief amid rising living costs.

• Workplace Morale: While many employees welcome this measure, it may inadvertently reduce motivation if bonuses are no longer tied to performance.

• Job Security Concerns: If businesses struggle financially due to this additional burden, layoffs or hiring freezes could follow.

Eligibility and Exclusions of the 14th Month Bonus

The special allowance, equivalent to one month’s basic salary, is intended for employees who have worked continuously for an employer throughout 2024 and are still employed on December 31, 2024

Specific provisions exist for those who worked only part of the year. Employees who left their job before year-end due to contract termination, resignation after at least eight months of employment, retirement, or death will receive a pro-rata payment based on months worked.

However, certain categories are excluded from this benefit:

• Independent contractors (job contractors)
• Consultants
• Self-employed individuals
• Participants in government or public-private training programs
• Employees with a monthly basic salary exceeding Rs 50,0001

Calculation and Payment of Pro-Rata Bonuses in Mauritius

The formula for calculating pro-rata bonuses in Mauritius for the 13th or 14th month bonus is based on the number of months effectively worked during the year 2024. The calculation is as follows:

Pro-rata bonus = (Number of months worked / 12) × Monthly basic salary

This formula applies to employees who have worked only part of the year and are eligible for the bonus. It includes those who left their job before the end of the year due to contract termination, resignation after at least eight months of employment, retirement, or death

For example, if an employee worked for 9 months in 2024 before retiring, their pro-rata bonus would be calculated as:

(9 / 12) × Monthly basic salary

Payment Modalities

The allowance will be paid in two equal instalments:

1. The first payment must be made by the last working day of December 2024
2. The second payment is due by the end of January 2025

Employers and employees can agree to spread the payment over four equal instalments, provided the first is made in December.

Financial Assistance for SMEs

A financial assistance scheme has been established for small and medium-sized enterprises (SMEs), export companies, and specific employer categories to help with the 14th month payment.

Eligibility criteria include:

• SMEs with an annual turnover not exceeding Rs 100 million for the 2023-2024 fiscal year
• Export companies as defined in the Export Enterprises (Remuneration) Regulations 20191

The assistance is structured in two tiers:

1. Full coverage for companies that recorded accounting losses in 2023-2024 or whose accounting profit would be reduced by more than 50% after deducting costs related to salary increases and the special allowance.
2. Partial coverage (50%) for companies whose accounting profit would decrease by more than 10% following the same deductions.

The aid is capped at Rs 50,000 per eligible employee

Conclusion

The introduction of a 14th month bonus marks a significant shift in Mauritius’s labour landscape. While it provides immediate financial benefits to employees, it raises critical questions about economic sustainability and workplace dynamics.

Employers must navigate these changes carefully, balancing compliance with financial viability. Policymakers should consider mechanisms that link such bonuses to productivity or profitability to ensure long-term economic stability. Ultimately, while the measure aims to support workers during challenging times, its success will depend on how well it is implemented and whether it aligns with broader economic realities in Mauritius.