Paying end-of-year bonuses: in cash or via a cafeteria plan (flexible benefits scheme)?

December is traditionally the month of the end-of-year bonus. It is not only employees in large organisations who receive a bonus - often called the thirteenth month - during this period. Small and medium-sized enterprises (SMEs) also have the end-of-year bonus firmly on the agenda: according to the SME Work Barometer, 8 out of 10 SMEs award a year-end bonus.

But what are the rules exactly? And what choices do you have as an employer today? We list the most important points for you.

Is an end-of-year bonus mandatory?

Whether you are required to award an end-of-year bonus depends on sectoral rules and/or company agreements. If there is a sectoral obligation, you must respect the terms and agreements, such as:

• the calculation rules (e.g. which non-working periods count);
• the rules on entering and leaving employment during the reference period;
• and the amount to be awarded.

The sector may also decide which employees - such as flexible workers or student employees - are entitled to an end-of-year bonus. Moreover, in some sectors, the employer does not pay the premium directly, but it is administered through the sectoral fund.

Please note that even if a wage norm of 0% applies in 2025 and 2026, you are obliged to award an end-of-year bonus if you have done so in the past. It is not possible to increase the contribution during this period, as that would raise the average labour cost.

Cash, salary exchange or cafeteria plan (flexible benefits scheme)?

The sectoral or company scheme determines whether the end-of-year bonus should be paid in cash. In some cases, all or part of the premium can also be converted into an equivalent benefit.

The employee then chooses a benefit corresponding to the employer's cost of the end-of-year bonus. This can be done:

• through a one-to-one salary exchange, for example for a bicycle or additional leave;
• or within a cafeteria plan, where the employee chooses from a range of benefits.

The SME Work Barometer shows that, as of today, 89.9% of SMEs still pay the end-of-year bonus in cash. The other 10.1% use a cafeteria plan. This proportion could grow in the coming years, since 68.7% of SMEs are open to incorporating the end-of-year bonus into a cafeteria plan as a budget.

Please note that the employee can only convert the end-of-year bonus to which they are not yet entitled into a benefit.

If your sector provides an end-of-year bonus with a reference period of one calendar year, and you want an employee to convert the entire 2026 end-of-year bonus, that conversion must have been arranged before the end of December 2025.

How does an end-of-year bonus work in a cafeteria plan?

When an end-of-year bonus is integrated into a cafeteria plan, the employee is given the option to convert all or part of the bonus into alternative benefits. The sectoral or company scheme determines which benefits qualify. The options may be limited, for example, to sustainable mobility or wellness benefits, but can also be more broadly defined. 

The total labour cost for the employer remains unchanged, while the employee enjoys greater choice within their salary package. This way, the end-of-year bonus can be used not only correctly, but also strategically and as a motivational tool.