Bonuses are a key tool used by employers to incentivise and reward employees and as such employers need to take care they are handled correctly. In this alert we look at important questions concerning bonuses including:
In our alert we explore these questions in relation to the following jurisdictions:
Yes, employers are permitted to award discretionary bonuses. A bonus scheme may provide for the employer to have absolute discretion or partial discretion as to whether to consider an employee for a bonus and the amount of any bonus. The discretion may include a number of elements, for example whether the scheme will operate at all, the calculation and/or quantum of any awards, performance targets, relevant time periods for assessing performance and payment of any award.
There has been a substantial amount of case law surrounding discretionary bonuses and the duties concerning exercise of an employer’s discretion. These include the duty:
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