As an employer, you may be looking for ways to improve employee retention. One way to ensure your staff remain with your business in the long-term is by incentivising them with bonuses. However, while you may want to pay your employees a bonus, different rules apply to different types of bonuses. Above all, you must ensure that you pay bonuses fairly or else you could face a claim for unlawful deduction of wages. This article will explain what you need to know about bonuses in England.<\/p>\n\n\n\n
A bonus is typically a form of monetary compensation that you pay your employees in addition to their regular wage or salary. However, bonuses can be in the form of a reward other than a cash payment. In saying that, the two main types are:<\/p>\n\n\n\n
A contractual bonus is also known as a non-discretionary bonus. It is an amount that you and your employee agree to in their employment contract<\/a>. That is to say, you guarantee your employees that you will pay them a bonus. <\/p>\n\n\n\n You may decide, for example, to pay your employee an agreed amount each time they make a sale over their monthly target. However, while the bonus is guaranteed, providing your employee meets the criteria, you do not have to guarantee the reward amount. <\/p>\n\n\n\n A discretionary bonus is a bonus that your employee will not automatically expect and will have no idea what the amount may be if they receive it. For example, discretionary bonuses usually concern performance over a year. <\/p>\n\n\n\n You might set criteria for paying a discretionary bonus if your employees meet business targets. However, if you regularly pay discretionary bonuses, the bonus may become an implied term<\/a> in your employees\u2019 employment contracts. This is because your payment of discretionary bonuses has become the custom and practice\u2019 of your business.<\/p>\n\n\n\n As an employer, you may pay your employees a bonus on top of their regular pay or commission as part of their pay structure. A bonus might be something you or your employee negotiate as part of the recruitment process. <\/p>\n\n\n\n As a bonus concerns the performance of either your employee or your business, you may decide to pay these to encourage your staff to work well to achieve specific targets within your company. A bonus can, therefore:<\/p>\n\n\n\n You may also choose to pay your employees a bonus rather than committing to a salary raise. <\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\nDiscretionary Bonus<\/h3>\n\n\n\n
Why Pay Bonuses?<\/h2>\n\n\n\n