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The four golden rules of paying bonuses

by , 03 November 2014
It's that time of the year again where bonuses are at the top of every conversation.

If your company pays out bonuses, you need to handle them correctly.

But how do you go about doing this?

Take a look below at the four golden rules of paying bonuses.


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Revealed: How to legally deduct money from your negligent employee's salary without landing up at the CCMA

As an employer there are deductions you can make and then there are deductions you can't. And it's your responsibility to follow the correct rules and procedures to make sure you get it right.

If you don't and your employee disputes this deduction, you'll land up at the CCMA. And you WILL lose!

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Here are the four golden rules the law states about paying bonuses

 
Rule 1: Bonus payments are subject to income tax.
 
According to SARS, income tax is normal tax, which is paid on your taxable income.
 
Rule 2: You must record in writing the details of all payments your employee is entitled to. If you don't, you're contravening the Basic Conditions of Employment Act (BCEA).
 
Rule 3: If you've guaranteed your employee's bonus, you can't simply remove this guarantee from his contract and replace it with a discretionary bonus.
 
The Labour Law for Managers Loose Leaf Service explains that if you guarantee a bonus in an employee contract and then don't pay it, it's breach of contract. This means your employee can institute a civil action in the CCMA against you.
 
If, for example, your employee's contracts state you'll pay out bonuses, but you don't tell them you can't afford to pay them this year, they could take you to the CCMA for unfair labour practice.
 
Can you imagine having a full blown dispute on your hands as you prepare to take a year-end break?
 
Rule 4: You mustn't discriminate when paying bonuses.
 
You could be guilty of unfair discrimination if you pay bonuses to some employees and not to others, without a valid reason.
 
Following these four rules will help you handle bonus payments correctly
 
PS: For more information about bonuses, check out the Labour Law for Managers Loose Leaf Service.


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