Giving a Christmas bonus is often a thorny issue, and in the run up to the holidays, one that may be weighing heavily on your mind. How much to give and indeed, whether to give a bonus at all? It's a bit of a minefield but before you make any decisions and start spreading the Christmas cheer, you need to consider a number of possible employment law issues and carry out some due diligence.
1. The terms of employment
Your first port of call must be your contracts of employment. They may include a specific term about the payment of Christmas bonuses and if they do, that pretty much makes it final. Your contract of employment may also include a discretionary Christmas bonus and describe the conditions to be met and the amount to be paid if they are. Or your terms of employment may include a mixture of the two. If any of those situations apply, how many lumps of coal you need to provide is probably (but not definitely) decided for you.
2. Check all other documentation
But of course, life isn’t always that simple and it’s also important to cross check any company policy handbooks, correspondence or other documentation that may have dealt with the question of giving a Christmas bonus. These may have given rise to an expectation or even an implied term. If they have, and you then don’t pay or pay too little, apart from damaging staff morale, you may find yourself facing a claim.
If you’re not familiar with what’s happened in previous years, you need to find out. If a large Christmas bonus has been paid every year for the last 15 years, it may now rightly be considered an implied term of the contract. However, sporadic payments of varying sizes make it much more likely that you don’t have a specific obligation about the amount.
4. Implement a policy
If you’ve checked all the above (and if you’re in any doubt it’s really important to take professional advice as early as possible) and there’s no clear guidance or specific terms on giving out a Christmas bonus, where does it leave you?
Any bonus you decide to give should be fair and judged on a clear and transparent basis for all concerned, including those who you don’t pay a bonus to or who you pay a smaller amount. Take into account achievement and targets. And remember that a lump of coal is unlikely to do much towards helping employee morale in increasingly stressful financial times.
5. An important last word of caution
Before you make any payments, you really need to take professional advice. You do not want to set a precedent by badly worded correspondence or find yourself facing claims of discrimination. And even if this year’s Christmas bonus is only meant to be a one off, the next thing on your to do list needs to be consulting on and putting in place a Christmas bonus policy well in advance of next year.
Giving a Christmas bonus is always a delicate issue and can give rise to a number of pitfalls. Don’t fall victim to your own generosity by failing to take advice about the legal consequences. The savings you make by failing to do so, may in fact end up costing you dear.