Solution to … the Christmas bonus

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Issue:

Christmas is a time of merriment, celebration and sharing. Yet these days sharing often comes with a hefty price tag: must-have toys, exclusive fashions, innovative gadgets and sparkling gifts for a loved one that go some way to compensating for all those late nights spent chained to the desk or days traveling back and forth between clients. Christmas is an expensive holiday and the cost of enjoyment often comes with the pressure to pay. This is why many employees rely on the annual Christmas bonus to help balance the bank account during this time. However not everyone is guaranteed a Christmas bonus, and to employers it is often a contentious issue, particularly at a time when companies are struggling to keep the business afloat.

The importance of money during Christmas time was highlighted recently with statistics showing that the majority of people in the UK (76%) would prefer that their work Christmas party was scrapped in return for a proportion of the cost of organising it.

Here is our advice for employers on handling the issue of the Christmas bonus.

Solution:

  • The employer is obligated to pay a Christmas bonus if the bonus is written into the employee’s contract, including a defined amount. If an employer withholds payment, they are in breach of the contract and liable for further punitive measures.
  • There is no obligation to pay a bonus if the payment is at the discretion of the employer, who is at liberty to determine whether any bonus will be given and the amount.
  • For discretionary bonuses where payments either wont be made or reduced from previous years, it is recommended that employers communicate with staff about the reasons, possibly explaining the decision making process. This transparency will help temper any employee disappointments.
  • For discretionary payments, it is crucial that any payments are consistent across all staff, otherwise employers leave themselves open to accusations of discrimination and equal pay disputes.
  • Employers wanting to offer a Christmas or seasonal bonus, but unconvinced by a blanket bonus across all staff, should consider a performance related bonus that is awarded to high achievers or employees offering productive and consistent service. Any performance related bonus will require clear criteria showing how the judgment was made in order to ensure transparency and fairness. For those companies who can afford it, the performance related bonus is a great tool for motivating staff and ensuring high standards.
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