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Are employee bonuses compulsory?

by , 05 November 2014
A bonus is something you give or pay to your employee over and above his normal salary. It's usually a reward for a job well done.

There are three types of bonuses you can pay. You can pay a:

• Discretionary bonus;
• Performance bonus; and
• Guaranteed bonuses.

Now the big question is: Are employee bonuses compulsory?

Read on to find out the answer so you won't be guilty of an unfair labour practice or breach of contract.


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Here's the answer if you're not sure if it's compulsory to pay bonuses

 
The Labour Law for Managers Loose Leaf Service explains that if you've agreed to pay your employees a bonus in their employment contract, then you have to pay it. It's part of their terms and conditions of employment and you have to honour the terms.
 
If you don't pay your employees the bonus in this case, you could be guilty of an unfair labour practice or breach of contract.
 
Please note, that if you've agreed to pay performance based or discretionary bonuses but don't intend to pay them because of an employee's or the company's non-performance, you must tell your employees immediately.
 
You must:
 
  • Give affected staff advance notice in writing;
  • Give your employees time to consider the notice;
  • Consider the feedback; and
  • Communicate your final decision.
 
Check out this article. It contains a sample of the 'Notice of Intention Not to Pay Out Discretionary Bonuses'.
 
Knowing whether or not employee bonuses are compulsory will help ensure you comply and aren't guilty of an unfair labour practice or breach of contract.
 
PS: Since there's so much more you need to know about bonuses, we recommend you check out the Labour Law for Managers Loose Leaf Service for more information.
 


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