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Not paying bonuses to your employees? Here are five reasons to do it

by , 24 April 2015
When we talk about employee bonuses, we mean something that you, as an employer, give or pay over and above your employee's normal payment.

The bonus is, therefore, an incentive or reward above his salary.
And while it's not a legal requirements to pay bonuses, here are five reasons you should:

Whether you pay bonuses or not, you need to know there are some benefits to paying them


Some of the benefits include:

1. Motivating current employees;
2. Attracting potential employees to your company;
3. Making sure skilled and valuable employees don't resign;
4. Being competitive in terms of remuneration and benefits when it comes to other companies; and
5. Getting better results from employees by linking pay with performance.

Sounds good? Here are the three rules the law states about bonuses

1. Bonus payments are subject to income tax.

2. You must have all the details of all payments your employee's entitled to in writing. You're contravening the BCEA if you don't.  

3. If you guarantee a bonus, you can't just remove this guarantee from his contract and replace it with a discretionary bonus.


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Warning!

Pay attention to the fact that in case you guarantee a bonus in an employee's contract and then don't pay it, this represents a  breach of contract so the employee is entirely entitled to start civil action against you, claim payment for the amount he's entitled to and also take you to the CCMA!

Notice that you could be guilty of unfair discrimination if you treat employees in similar positions differently. This is extremely important because of the new equal pay for work of equal value rule in the  Employment Equity Act Amendments.

For example, paying bonuses to some employees and not to others. If this happens to coincide with differences in race, gender, or any other discriminatory ground, you may be guilty of unfair discrimination (Employment Equity Act, Act 55 of1998).

Ask yourself the following questions to make sure you're not discriminating when paying a bonus:

1. Did you pay some employees bonuses and not others?
2. If yes, what was your reason for this decision?
3. Can you justify your reasons? Ensure they:
•  Aren't because of race, gender or some other discriminatory ground; and
•  Based on an objective and justifiable grounds like non-performance.

Warning:
Even if you don't guarantee your employee a bonus, you could still be guilty of an unfair labour practice if you don't pay him. For example, if he meets all the requirements but you don't pay it, or you only pay part of it, without a valid reason.

If your employee claims an unfair practice, he'll be able to claim compensation at the CCMA. But he still needs to prove:

•  He's entitled to receive it; and
•  You acted unfairly by not paying or not fully paying the bonus in full.


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