IT is normal for many employers to pay a Christmas bonus to staff, typically in the final pay packet before Christmas. Generous employers will normally pay such bonuses purely on a goodwill basis rather than because there is any contractual right requiring them to do so.
It helps, however, to give some thought to the basis on which the bonus is calculated.
A Christmas bonus is not generally seen as an incentive, but as a reward or a thank-you for the employee's contribution over the previous year.
It may then not be appropriate to pay bonuses to employees with poor disciplinary records or whose level of absence is not acceptable.
Perhaps enhanced bonuses might be payable to those staff attaining the financial or other targets set for them or who have made some other positive contribution to the business's success.
It is also worth remembering that bonuses need not necessarily be financial. An additional day's holiday, or time off to hold a Christmas party, does not necessarily represent a hard cost to the business and is an ideal way of fostering goodwill among the workforce.
Where the bonus is financial, the employer will normally wish to keep the amount entirely discretionary.
That said, there is nothing wrong in pegging the bonus to the financial position of the business. Indeed, when times are hard, then discretionary bonuses of this nature will inevitably figure high on the employer's list of planned cutbacks.
Problems with Christmas bonuses rarely arise. Where they do, it is inevitably because employees have false expectations.
If the payment of a bonus is discretionary, then the workforce should know this rather than simply assuming that they are entitled to it as of right.
If payment is dependant upon certain conditions being satisfied then, again, these should be made clear.
The best way of avoiding confusion and bad feeling at this otherwise festive time is to commit the bonus scheme to writing and ensure that it is received and understood by all staff.
Stephen Elliott is a solicitor in the employment team of North-East law firm Ward Hadaway. He can be contacted on 0191-204 4000 or by email at stephen.elliott@wardhadaway.com
Published: 02/12/2003
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