Are you duty bound to dish out a bonus this Christmas?

Peninsula Team

November 30 2015

Christmas Bonuses – should you, can you, MUST you?! Christmas bonuses can improve employee engagement, boost morale and even attract the most talented applicants for a particular position – but tradition can turn into expectation, and if circumstances change and you can’t afford to pay up this year, do your employees have a claim against you for not coughing up the cash? The rules around Christmas bonus payments aren’t totally clear cut, but here are the most common scenarios and what they mean to you:
  • Contractual benefits – if bonuses are included as a benefit in employment T&Cs or in the employee handbook, employees have a right to expect them and you’re under obligation to pay – or risk a breach of contract claim.
  • Discretionary bonus systems – if you operate under these terms, you have much more flexibility in terms or amending or removing bonus payments. However, if you’ve consistently made this payment, it can be deemed a custom or tradition has been established by the employer, and therefore employees have a claim.
In order to protect yourself, you should ensure that all discretionary payments are clearly identified as such in all employee documents and also in any correspondence regarding the payment itself. If a difficult year has led to you making a change to your ‘usual’ discretionary bonuses, take the added precaution against potential claims of advising your employees with plenty of notice. Performance related bonuses If your employees are receiving a performance-based sum instead of an equal bonus, make sure that individual entitlement is calculated fairly against consistent and reasonable criteria... if you don’t, you could be at risk of unlawful discrimination claims. For more information, please call our Advice Service on 0800 028 2420.    

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