Bonus, to pay or not to pay?

 

It is that time of year again where your staff start wondering whether you will be paying them a 13th cheque or Christmas bonus. I am often asked by employers if this is a mandatory payment. The answer is NO. This is a discretionary payment and therefore not a statutory requirement in labour law.

 

Typically employees want some sort of commitment by employers that they do pay 13th cheques and request this to be included in their employment contracts.  If you have included 13th cheques in their employment contracts as an entitlement, ensure that the terms are specifically stated. If your business has had a bad year and are not in a position to pay bonuses and have consistently paid them in the past and this year you don’t pay bonuses it may be seen as a unilateral change in terms of and conditions of employment and or a breach of contract.  You have created an expectation that a bonus will be paid. It is therefore your duty consult your employees as soon as you become aware that the possibility exists that you may not be paying them bonuses or may be paying them a reduced bonus payment or that no bonuses will be paid. The employee has the right to be heard before the decision is made and communicated.

 

It not a good move to attach a letter to their December payslips informing them that bonuses were not paid this year or remain silent on the matter in the hopes that your employees will cool off over December and wont broach the subject in the new year.

 

If you intend not to pay bonuses, I do hope the CEO hasn’t taken his annual “Bali retreat” this year… that should ensure a disengaged workforce.

 

Mid- year financials should provide you with a good indication of profitability which may prevent you from paying bonuses at year end.

 

Always keep the lines of communication open. It doesn’t have to be a problem, unless you make it one. 

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