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Take these two measures if ever you're unable to pay performance bonuses

by , 05 May 2016
Let's say your company offers performance bonuses to all employees, and this is clearly stated in all your contracts of employment, but you go through a really tough year and can't afford to pay them. What then?

After all, you've already stated that you would pay them and now you can't. Not only do you feel like you've let your performing employees down, but you're also concerned about the legal implications.

Well, I'm here to say don't worry, because if you really can't pay your performance bonuses, then all you have to do is take these two measures...

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You must ensure that your reasons for not paying the bonus or for changing the ways you calculate performance are fair and reasonable.

After that, you must tell the relevant employees as soon as possible of the change or problem, along with the valid reasons.

For example, your company may have gone through a really bad year, and you literally can't afford to pay out bonuses without retrenching other employees. And of course the last thing you want to do is retrench others at the gain of others.

After all, everyone forms part of the greater whole, namely your company, and that means that everyone stands together through the ups and the downs.

TIP: When explaining these reasons, you need to be clear and unambiguous so as to ensure there's no confusion.


After you've let all the relevant employees know what's going on, you should give them an opportunity to make suggestions to you before enforcing the changes or confirming your decision not to pay them.

INTERESTING NOTE: By doing this, you'll allow each of those employees to feel part of the company, and that their voice is heard. What's more is that it'll help them to think as a collective, and not as individuals. They must realise that whatever they choose will have a ripple effect on the rest of the company. This is good as it can help them see things from your perspective.

Once they have made suggestions, you should seriously consider them and do your best to resolve any issues.

REMEMEBR: Openness is key!
*To learn more, page over to Chapter B 03: Bonuses in your Labour Law for Managers handbook, or click here to order your copy of this invaluable labour resource today. 

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