The year-end bonus: Who gets what in Canada?

December is a time when Canadian workers look forward to holiday parties and vacation time, and in some cases a bonus cheque.

However, a new survey shows less than half of us will receive a holiday pay bump this year, a sign of continued austerity across corporate Canada.

Only 42 per cent of Canadian employers say they plan to dish out a year-end bonus, according to the survey commissioned by staffing and recruitment firm Robert Half.

People who work in manufacturing and wholesale businesses are the most likely to receive extra pay this holiday season, while those in transportation and construction shouldn’t cross their fingers.

Corporate cutbacks in the wake of the 2008-09 global recession are largely to blame for robbing employees of their bonuses.

Still, some companies continue to use the payout as a way to attract and retain employees, and keep them motivated.

“The main point of it is to increase productivity,” says Vitaly Melnik, senior staffing manager, Accountemps, a division of Robert Half.

Among the 271 chief financial officers interviewed by Robert Half, 72 per cent in manufacturing said they planned to provide a staff bonus this holiday season, versus 58 per cent of wholesalers, 47 per cent of those in the finance industry and 41 per cent in retail. Only 28 per cent of construction industry workers can expect a holiday gift of extra money from their boss, and 25 per cent of those working in the transportation industry.

As for the size of the bonus, 62 per cent of executives across all sectors said they expect the sums to remain the same as last year, only 8 per cent plan to go higher and 12 per cent will cut the payout. About one-fifth hadn’t decided at the time the survey was done back in August.

In the banking industry, famous for its year-end bonuses that help to ring up sales in the restaurant and retail sectors during the holidays, there has been a reduction in this year’s payouts.

Bloomberg reports the Big Six Canadian banks collectively plan to pay about $10.8 billion in incentive compensation this year, 5 per cent more than 2012 but the lowest increase since 2010. Wealth management workers are expected to get more of an increase for helping boost profits to record highs, while investment bankers could see smaller bonuses this year due to a drop in M&A activity, Bloomberg says.

The holiday bonus dates back several decades when employers would give everything from turkeys to gold coins to staff as a way to show their appreciation for a job well done. That turned into cash payments in the banking industry around the turn of the century and continues as a tradition across a number of industries today. Some companies even continue to hand out turkeys at this time of year.

Still, the holiday bonus (or bird) is becoming more of a gift than an expectation, as companies cut perks to cope with a more challenging economic environment.

Ian Cullwick, vice president of human resources research at the Conference Board of Canada, says the traditional Christmas bonus is more of a small-and medium-sized company offering in today’s economy.

“These companies have more flexibility to do things on an informal basis,” says Cullwick.

That includes offering bonuses when times are good, but also holding back when they have a bad year.

Larger companies and governments tend to stick to more formal wage agreements, which means holiday perks are much less common.

“The concept of a Christmas reward or bonus is extremely rare,” in these organizations, he says.

A Conference Board of Canada compensation survey says the cost of short-term incentive pay plans, which can include year-end bonuses, averaged about 12 per cent of base pay spending in 2013. That number is expected to drop to about 11 per cent in 2014.

Who’s getting the bonus? Not surprisingly it’s the top performers. The Conference Board survey says those superstars are getting up to twice the amount of bonus pay as the satisfactory performers.

Robert Half’s Melnik says employers will continue to include year-end bonuses in compensation packages as both an enticement to a potential hire and a way to a way to motivate employees throughout the year.

“It provides a true incentive for people to go above and beyond,” says Melnik.