Glossary
What is a bonus in salary?
What a salary bonus is, how a contractual or statutory bonus differs from a discretionary one, and how it appears on the payslip.
Updated
In short
A bonus is a payment over and above regular salary, such as a year-end, holiday, performance or statutory bonus. In SimpleERP a Bonus line is paid in full regardless of loss of pay.
A bonus is a payment to an employee over and above regular salary. It can be discretionary, such as a year-end or performance bonus, promised in the employment contract, or required by law in some countries for covered employees. A bonus is normally taxable pay, subject to the same withholding as salary, and is added in the month it is paid.
Bonus: a worked example
Harbour Steel Furniture, a fictional business paying in US dollars, pays Sam K a year-end bonus of $800 with his December 2026 salary.
| Earnings | Amount | Deductions | Amount |
|---|---|---|---|
| Salary | $2,600 | Income tax withheld | $360 |
| Allowance | $400 | Social security (employee) | $180 |
| Bonus | $800 | Pension, 5% of gross | $190 |
| Gross pay | $3,800 | Total deductions | $730 |
FAQ
Questions, answered
Is a bonus mandatory?
Usually not. Most bonuses are at the employer's choice or set by the employment contract. A few countries require a statutory bonus for covered employees; in India, for example, it is set by the Code on Wages. Check the rules where you employ people.
Is a bonus taxed like salary?
In most countries, yes: a bonus is taxable pay and income tax and social security are withheld on it. A large bonus in one month can mean more tax withheld that month. This is not tax advice; ask your accountant.
Does a bonus change pension contributions?
It depends on how the pension is worked out. In SimpleERP, a deduction set as a percentage of gross includes the bonus, while one set as a percentage of basic salary does not. Check what your scheme counts as pensionable pay.
Can I pay a bonus to only some employees in SimpleERP?
A bonus can go to only some employees in SimpleERP. In the run review, open an employee's payslip and use Add line → Bonus for each person who gets one, with their own amount. The line is posted to salary expense with the rest of the run.
Related
Keep reading
Salary arrears
Pay owed for earlier months, usually from a back-dated raise, paid as a separate line in the current month.
Read morePayslip
The statement of paid days, each earning, each deduction and the net pay an employee receives for a period.
Read morePayroll
Salary structures, monthly runs and payslips with your earnings and deductions, posted to the books.
Read more
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