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Onus on Employers When Giving Out Bonuses

Published December 15, 2015 (last updated June 25, 2020) -
employers giving bonus

Reward staff with a bonus

Employers at this time of year may be contemplating whether or not to reward staff with a bonus. What happens if some of your staff are not as deserving as others?

Employsure can help you determine the appropriate way to reward staff with a bonus or in some cases how to deny a bonus.

Bonuses, in many industries, are deemed to be an important performance motivator and staff are often longing for the day their bonuses are handed out. Some employees may be actively working to the best of their abilities in order to receive their additional money. The time spent waiting and the focus given by employees can cause employment relations issues if an employee does not feel that they have been appropriately rewarded.

All that aside, employers are actually are not obliged to pay bonuses to employees unless predetermined. Employees have an obligation to perform their duties to the best of their ability at all times, and in return for their hard work they are provided with a salary or wage. Sometimes however the appropriateness of a bonus is considered.

Bonuses need to be issued in ways that do not expose you to any risks of discrimination or adverse action. To do this, employers really need to set out bonus eligibility criteria and have clear conditions around the details of any bonus scheme.

Top Tips

  • Ensure that all employees are aware that the provision of a bonus is at the discretion of the employer
  • Have the conditions of the payment in writing and clearly state the bonus can be withdrawn or amended at any time by the employer
  • Apply a measurable and objective criteria which needs to be met in order to be eligible
  • Frequently provide feedback to those who are not meeting their criteria so there is no shock if they do not receive a bonus
  • Avoid grievances. Do not give a bonus because of any particular character or personal attributes such as age, sex, race or family
  • Try to eliminate any surprise and/or the level of dissatisfaction that may be expressed in the event of non-payment
  • Due to the discretionary nature of bonuses it is a good idea to avoid having bonuses in your contractual agreements, instead written in a separate document

Employers who have successfully implemented criteria are then able to deny an employee a bonus if the employee has failed to meet this criteria. Key performance indicators, measurable profitability and the ability to meet company values are a few ways to measure an employees success and bonus eligibility.

If you are an employer who either does not have their bonus criteria clearly defined, or if you are struggling with how to appropriately exercise your bonus discretion, call Employsure on 1300 651 415.

About Employsure

Employsure is Australia’s largest workplace relations specialists. We take the complexity out of workplace laws to help small business employers protect their business and their people.

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