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If you can't afford to pay discretionary bonuses this year, use this notice to warn your staff in advance

by , 04 November 2014
If you've agreed to pay performance based or discretionary bonuses but don't intend to pay them this year because your company didn't do well, tell your employees immediately.

You must do this by giving them advance notice, in writing, and give them reasons for your decision.

If you don't, your employees could lodge an unfair labour practice claim against you.

Don't take that risk.

If you can't afford to pay bonuses this year, use this notice to warn your staff in advance...


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If you can't afford to pay discretionary bonuses, give affected staff advance notice in writing. Here's a sample of the notice you can use

 
Below, the experts behind the Labour Law for Managers Loose Leaf Service give you a sample of the 'Notice of Intention Not to Pay Out Discretionary Bonuses':
 
To: ...........................
 
Department: ..............................
 
You are hereby informed that the company is contemplating not paying out any bonuses for the period [insert period]. The reasons are as follows:
 
............................................................................................
............................................................................................
............................................................................................
............................................................................................
You are hereby given the opportunity to respond in writing and to make suggestions by [insert time] on [insert date]. You are requested to address any responses and suggestions to [insert name/title].
 
Any responses and suggestions will be considered by management and you will be informed of the final decision by no later than [insert date].
 
Issued by [insert name/title]: .........................................
 
Date: ............................................

 

What happens when you've given your staff notification that you can't afford to pay out bonuses?

 
After giving your affected staff notice, give them time to consider the notice.
In addition, you must consider their feedback and the feedback communicate your final decision.
 
Remember, many employees are dependent on their bonus, especially if you've paid it each year and they've come to expect it. Now that you know how to warn them in advance, be considerate and give them enough notice if you're not paying a bonus this year.
 
PS: For more information on how to handle bonuses effectively, check out the Labour Law for Managers Loose Leaf Service.


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