Mandatory and Optional Bonuses and Allowances

In addition to their base salary, employees may receive various bonuses and allowances. However, these two types of compensation do not serve the same purpose.

• A bonus generally rewards performance, results, length of service, or a specific situation.
• An allowance is primarily intended to compensate for an expense, a hardship, or a specific work-related condition.

In Mali, they can be classified into two categories:

• mandatory bonuses and allowances;
• optional bonuses and allowances.

1. Mandatory bonuses and allowances

A bonus or allowance is mandatory when it is provided for by:

• a law or regulation;
• a collective bargaining agreement;
• an establishment or company agreement;
• the employment contract;
• or a commitment that has become binding on the employer.

When the specified conditions are met, the employer is required to pay it.

Historical Compensation

Several older laws have established compensation benefits for employees in Mali.

The special allowance of 1973. Decree No. 17/PG-RM of February 7, 1973, provides for a special allowance in the amount of 1,000 FCFA per month.

The 1974 cost-of-living allowance. Decree No. 117/PG-RM of July 31, 1974, provides for an allowance equal to 10% of the base salary, with a minimum payment of 2,250 FCFA.

The 1982 special allowance. Law No. 82-38/AN-RM of February 16, 1982, provides for a lump-sum allowance of 1,000 FCFA for employees whose base salary is less than 25,000 FCFA.

The 1991 Solidarity Allowance. Ordinance No. 91-056/P-CTSP provides for the following amounts:

• 2,000 FCFA for managers;
• 5,000 CFA francs for senior technicians;
• 6,500 FCFA for other employees.

Important note: Given the age of these texts and changes in salary scales, their current applicability and alignment with collective bargaining agreements must be verified prior to publication.

2. The Seniority Bonus

The seniority bonus rewards an employee’s length of service with the same employer.

In accordance with Article L.97 of the Malian Labor Code, it is payable after three years of service, unless a collective bargaining agreement or employment contract provides for more favorable terms.

The rate is set as follows:

• 3% after 3 years of service;
• 5% after 5 years of service;
• then an additional 1% per year, up to a maximum of 15%.

It is calculated based on the minimum wage corresponding to the employee’s occupational category. These rates are always listed in the Labor Code published by the General Secretariat of the Government of Mali.

Practical Example

An employee has 8 years of service with the same employer. Their bonus rate is calculated as follows:

• 5% after 5 years;
• 1% for the 6th year;
• 1% for the 7th year;
• 1% for the 8th year.

The employee therefore receives a seniority bonus equal to 8% of the applicable calculation base.

**Note: Mandatory bonuses and allowances must appear on the pay stub.

**

3. Optional Bonuses and Allowances

Optional bonuses and allowances are established voluntarily by the employer. They may be used, in particular, to:

• reward performance;
• build employee loyalty;
• compensate for certain work-related hardships;
• cover work-related expenses;
• improve compensation packages.

However, the fact that a bonus is initially optional does not necessarily mean that the employer will always be free to eliminate it.

4. Allowances Subject to Special Tax Treatment

Decree No. 99-0892/MF-SG of May 18, 1999, sets forth the conditions under which certain bonuses and allowances may be deducted from the taxable base for the Tax on Wages and Salaries (ITS).

This decree does not automatically make these allowances mandatory. It primarily governs their tax treatment, subject to compliance with the specified conditions and limits.

The allowances in question include, in particular:

• the representation and liability allowance;
• the cashier and management allowance;
• the bonus for working under special conditions;
• equipment allowance;
• travel allowance;
• personal vehicle allowance;
• the transportation allowance;
• the relocation allowance.

The bonus for working under special conditions may apply, in particular, to work performed:

• underground;
• at heights;
• in dusty or muddy conditions;
• with pneumatic tools;
• or under other conditions involving special constraints.

The decree also addresses certain payments made in connection with personnel-related situations, such as:

• medical expenses;
• internship stipends;
• family allowances;
• certain severance payments;
• compensation for services rendered or retirement.

Please note: A payment is not automatically exempt from ITS simply because it has the same name as one of the payments listed in the decree.

To qualify for the corresponding tax treatment, it must meet the following criteria:

• its actual purpose;
• the conditions for awarding the payment;
• the required supporting documentation;
• the applicable limits or caps.

5. Bonuses Freely Established by the Employer

The employer may also establish bonuses intended to reward individual or team performance. In particular, the employer may provide for:

• a productivity bonus;
• a target bonus;
• a year-end bonus;
• a gratuity;
• an exceptional performance bonus;
• a project completion bonus.

These amounts are normally subject to the ITS unless they qualify for an exemption expressly provided for by tax regulations.

Practical Example

A company establishes an annual bonus equal to 5% of the annual salary when an employee meets the objectives defined in their performance review.

To avoid disputes, the decision establishing this bonus must specify:

• the employees concerned;
• the objectives to be achieved;
• the evaluation method;
• the amount or the method of calculation;
• the payment date;
• the consequences of an absence or joining the company during the year.

6. Can an optional bonus become mandatory?

Yes. A bonus initially granted on a voluntary basis may become mandatory when it results, in particular, from:

• the employment contract;
• a collective bargaining agreement;
• an establishment agreement;
• a written commitment by the employer;
• or an established company practice.

The regularity of the payment, its consistency, its recipients, and the methods used to calculate it may be examined to determine whether the bonus now constitutes a genuine component of compensation.

The employer must therefore clearly specify whether a bonus is:

• permanent or one-time;
• individual or collective;
• linked to a specific condition;
• renewable or not;
• subject to predetermined objectives.

7. Bonuses, Allowances, and Salary: What Is the Connection?

A mandatory bonus that directly compensates for work may constitute a component of wages.

However, not all allowances are automatically included in all calculation bases. A sum intended for the actual and justified reimbursement of business expenses is not necessarily considered part of wages.

The classification depends, in particular, on:

• the actual purpose of the payment;
• whether it is mandatory or exceptional;
• its frequency;
• the conditions for its award;
• the text establishing it;
• its social security and tax treatment.

Key Points

A bonus generally rewards performance, length of service, or a specific circumstance. An allowance primarily compensates for a work-related expense or hardship.

Whether a bonus is mandatory and whether it is tax-exempt are two separate issues: a payment may be optional while still qualifying for special tax treatment, or mandatory while remaining taxable.

Before processing payroll, the company must therefore precisely determine the nature, legal basis, recipients, and tax and social security treatment of each bonus or allowance.