Employee Bonuses Around the World: A Guide for Global Employers

Your engineering lead in Singapore just closed a major deal ahead of schedule. Your design team in Brazil launched a product feature that customers love. You want to reward them. But what counts as a generous employee bonus in one country might feel insulting in another. And in some places, bonuses are not just nice-to-haves. They’re legal requirements.

Employee bonuses are a core part of compensation strategies worldwide. They reward exceptional performance, motivate teams, and help companies compete for talent. But bonus expectations vary dramatically across borders. Greece mandates 13th- and 14th-month payments. Japan uses bonuses as standard retention tools. And figuring out how to pay holiday bonuses globally requires navigating different cultural norms around holiday pay and timing.

Employers building global teams need to balance three forces at once. You want competitive practices that attract top talent. You need to respect cultural expectations around compensation. And you have to stay compliant with local labor laws. This guide walks through the major types of bonuses, country-specific requirements, and practical frameworks for structuring bonus programs that work across multiple jurisdictions.

Types of employee bonuses

Not all bonuses work the same. Some reward results, some encourage loyalty, and others are mandated by law. Understanding the different categories helps employers design programs that align with both business goals and local expectations.

Here are the main types of bonuses employers use globally:

• Performance bonuses. These are tied to individual, team, or company KPIs like sales targets, project completion, or profitability metrics. Performance bonuses align employee efforts with strategic objectives and foster a results-driven culture.
• Sign-on bonuses. Offered as upfront payments to new hires, these bonuses are prevalent in competitive industries like technology, finance, and healthcare. They help attract top global talent and can offset costs like forfeited bonuses or relocation expenses from a previous employer.
• Retention or loyalty bonuses. These encourage employees to stay with the company for a specified period, particularly during high-turnover situations or critical business transitions like mergers. They can be paid as lump sums or in multiple installments to maximize their effectiveness.
• Referral bonuses. Companies offer these incentives to employees who recommend qualified candidates for open positions. Referral programs tap into employee networks and often result in higher-quality hires who fit the company culture.
• Holiday bonuses. These are typically paid during festive seasons or at year-end as tokens of appreciation. In some countries like Germany and China, holiday bonuses are culturally significant and widely expected, while in others, they remain discretionary.
• Mandatory or statutory bonuses. Certain countries legally require employers to pay bonuses at specific times of the year. Brazil mandates 13th-month pay distributed in two installments during November and December, while the Philippines requires all private-sector employees to receive a 13th-month salary before December 24th.

Country-specific bonus practices

Bonus expectations shift dramatically, depending on where your employees work. Understanding these regional differences helps you budget appropriately and avoid compliance issues while staying competitive in local talent markets.

United States

In the U.S., there’s no law forcing companies to pay bonuses. They’re entirely optional. But that hasn’t stopped nearly half (48%) of all American workers from having access to one.​

Performance bonuses dominate, especially in tech, finance, and professional services, where hitting targets directly impacts the bottom line. Signing bonuses help companies compete for talent in tight labor markets. And retention bonuses keep key people around during critical transitions.​

Holiday bonuses feel like a tradition, but they’re really just another discretionary perk. Some companies hand out generous year-end checks. Others offer nothing at all. The difference often comes down to industry norms and how well the business performed that year.​

United Kingdom

U.K. employers must clearly distinguish between discretionary and contractual bonuses in employment agreements. Performance-based bonuses and year-end bonuses are standard, especially in finance and technology sectors. There is no statutory requirement for holiday bonuses or 13th-month payments.

European Union

Bonus practices across Europe blend statutory requirements with cultural expectations shaped by collective bargaining agreements.

• Germany. Christmas bonuses (Weihnachtsgeld) are common but not legally mandated. Collective bargaining agreements often specify amounts and conditions, with bonuses varying by industry and region.
• France. Profit-sharing bonuses (intéressement) are voluntary but popular, with contributions typically tax-advantaged. Performance-based bonuses and holiday bonuses around summer and winter are commonly offered to help cover vacation expenses.
• Italy. The 13th-month salary (tredicesima mensilità) is customarily paid in December. Some industries also provide a 14th-month salary in July, though both are subject to collective bargaining agreements.
• Spain. Both 13th- and 14th-month salaries (pagas extraordinarias) are mandatory. Employment contracts or collective agreements stipulate payment timing, but they typically occur in July and December.
• Austria. Both 13th- and 14th-month salaries are legally required. The 13th-month is due in June, and the 14th-month at the end of November.
• Portugal. Employment law mandates both 13th- and 14th-month payments. The 14th-month is due by summer, and the 13th-month at Christmas.

Latin America

Most Latin American countries require mandatory year-end bonuses known as Aguinaldo.

• Mexico. Employers must pay a minimum of 15 days’ salary by December 20th, though many companies exceed this and pay a whole month. Employers often split Aguinaldo into multiple payments throughout the year.
• Brazil. The 13th-month salary is mandatory and distributed in two installments during November and December.
• Argentina. Aguinaldo amounts to one month’s salary divided into two equal payments. The first is due in June and the second in December.
• Colombia. Employers pay 50% of Aguinaldo in the first half of June and the remaining 50% within the first 20 days of December.
• Costa Rica. Aguinaldo equals one month’s basic salary and must be paid within the first 20 days of December.

Asia-Pacific

Asian bonus structures often align with cultural festivals and company performance cycles.

• China. Annual bonuses tied to Lunar New Year are culturally significant and widely expected, though not legally required. The bonus size often reflects the company’s financial performance and individual contributions.
• India. The Payment of Bonus Act requires certain employers to pay statutory annual bonuses. Festival bonuses during Diwali are also common across industries as a way to celebrate and reward employees.
• Japan. Summer and winter bonuses are standard practice, typically paid in June and December. These bonuses are often based on company performance and can represent a substantial portion of annual compensation.
• Philippines. All private-sector employees who have worked for at least one month are entitled to a 13th-month salary before December 24th by law. Some employees also receive a discretionary 14th-month salary.
• Singapore. The Annual Wage Supplement (AWS), essentially a 13th-month salary, is a common practice. The amount depends on employer performance and serves as a reward for positive contributions.
• Indonesia. The legally mandated 13th-month salary (Tunjangan Hari Raya or THR) is paid one week before an employee’s observed religious holiday. Given Indonesia’s religious diversity, payment dates vary by individual preference.

Middle East

Bonuses in Middle Eastern countries are often discretionary but widely practiced in key industries like oil, finance, and construction. Performance-based bonuses help attract and retain talent in competitive sectors. Some countries provide gratuity or end-of-service payments that function similarly to bonuses but are calculated based on years of service and paid upon employment termination.

How to determine employee bonuses globally

Building a bonus strategy that works across multiple countries requires more than just good intentions. You need a framework that balances legal requirements, business objectives, and cultural expectations. Here’s how to get it right.

• Consider local laws. Start by understanding which bonuses are legally mandated and which ones are discretionary in each country where you operate. Missing a statutory bonus payment in Brazil or the Philippines can trigger penalties and damage employee trust.
• Align with company goals. Use bonuses to drive the behaviors and outcomes that matter most to your business. Performance bonuses tied to clear KPIs motivate teams to hit targets, while retention bonuses keep critical talent around during transitions.
• Factor in cultural expectations. In some markets like China and Japan, year-end bonuses are so deeply embedded in workplace culture that skipping them feels like a breach of the employment relationship. Performance might not even enter the equation in these contexts.
• Stay transparent. Spell out bonus structures clearly in employment contracts and internal communications so employees know exactly what to expect. Ambiguity breeds resentment and makes it harder to defend your decisions when questions arise.
• Plan financially. Budget for mandatory 13th- and 14th-month payments well in advance so they don’t become cash flow surprises at year-end. These aren’t optional perks you can cut when times get tight, and they’re integral to maintaining global compliance.
• Leverage data. Benchmark against market norms in each region to ensure your bonus packages remain competitive with local peers. Tools that track compensation trends across countries help you stay current without manually researching every market.

Bonus administration best practices for global employers

Managing bonuses across multiple countries can feel like assembling a puzzle where the pieces keep changing shape. But companies that get it right use a few core principles to balance consistency with local compliance. Here’s what works.​

• Standardize where possible, but stay flexible. Build a baseline bonus philosophy that applies across all locations, then layer in country-specific adjustments for mandatory payments and cultural norms. This approach simplifies administration while ensuring you meet local legal requirements.​
• Partner with payroll and compliance experts. Bonus taxation, withholding rules, and payment timing vary dramatically by jurisdiction. Recruiting the help of international payroll providers or partnering with an Employer of Record helps you avoid costly mistakes and keeps you compliant as regulations change.​
• Use technology platforms to streamline administration. Manual bonus processing across different countries creates opportunities for errors and delays. Global payroll platforms centralize data, automate calculations, and ensure timely payments in local currencies.​
• Communicate clearly across regions. Employees need to understand how bonuses are calculated, when they’ll be paid, and what conditions apply. Transparency prevents confusion and builds trust, especially when bonus structures differ between locations.​
• Balance consistency with local expectations. Paying everyone the same bonus amount sounds fair, but it ignores cost-of-living differences and cultural norms. Benchmark against local market data to ensure your bonuses feel competitive in each region while maintaining an equitable overall approach.​

Reward your global workforce with confidence

Tracking mandatory bonuses across dozens of countries while staying compliant with constantly shifting regulations can overwhelm even the most experienced HR teams. Pebl handles the complexity for you, managing payroll, benefits, and bonus administration across 185+ countries so you can focus on building your business instead of decoding local labor laws.

Our platform centralizes everything from statutory 13th-month payments to performance bonuses, ensuring your global team gets paid accurately and on time while keeping you compliant everywhere you operate. Get in touch to learn more.

This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.

© 2025 Pebl, LLC. All rights reserved.