On the tenth day of Christmas, my employee brought to me…No Christmas Bonus
It has been a tough year financially for many businesses and in this time of austerity, many are cutting their cloth accordingly. This includes reducing any bonus payments. If your business normally provides a Christmas bonus, before you consider whether you can save money by not paying out, check your terms and conditions of employment. If they make provision for a bonus payment, you must make the payment. Failure to comply with your contractual terms could give rise to a claim from your employees.
If you have discretionary bonus payments in place, then there is more scope to reduce the payment liability but, your reasons for reduced or non payment should be open and honest and not in bad faith.
If you choose to pay only some employees and not others, make sure you have sound reasons for the selection of individuals. Be wary of any potential discrimination issues that could fall out of your selection.
Be careful with non-contractual bonuses which you may have paid in previous years. There may be an argument that such payments form an implied term through custom and practice.
However, if the business is under performing or making far less profit than in previous years, you have to consider the cash flow and therefore should explain the situation openly and honestly so as to manage employee expectations.
Share your thoughts on Christmas Bonuses in the comments or tweet us @HPC_HRservices.