Call us on:  0808 172 93 22

On the 10th Day of Christmas…

10th Day of ChristmasOn the 10th day of Christmas my employee asked me…. “Why am I not getting a Christmas bonus this year when you’ve paid me one every other year?”

As a gesture of goodwill many employers pay their employees bonuses at Christmas; these payments often fall outside the scope of any formal bonus scheme.

An employer may however decide one year not to pay a Christmas bonus. In coming to that difficult decision, there are a number of factors which the employer needs to consider:

Paying Christmas bonuses every year can create legal rights even if not intended. Given this, an employer who wants to be able to vary the bonus amount or withdraw the entitlement should ensure that this has been clearly communicated to employees to avoid costly disputes in future years.

Contact Details

For more details about the issues in this article please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.

Updated: by FG Solicitors
Call us on:  0808 172 93 22

ON THE 10TH DAY OF CHRISTMAS…

10th Day of ChristmasOn the 10th day of Christmas my employee asked me…. “Why am I not getting a Christmas bonus this year when you’ve paid me one every other year?”

As a gesture of goodwill many employers pay their employees bonuses at Christmas; these payments often fall outside the scope of any formal bonus scheme.

An employer may however decide one year not to pay a Christmas bonus. In coming to that difficult decision, there are a number of factors which the employer needs to consider:

  • Whilst it is unlikely that there will be an express contractual right entitling the employee to a Christmas bonus; contracts of employment, any bonus scheme and other related policies should be reviewed to ensure no automatic entitlement has been created. If there has, the non-payment could be an unlawful deduction of wages.
  • Employers cannot usually unilaterally vary contractual rights without something more in the contract providing for this; employee consent may therefore be essential. Depending on the number of affected employees collective consultation may also need to be considered.
  • The absence of a written bonus agreement may not be fatal to the employee’s cause. If payments have been made over several years without fail, the employees may have acquired contractual rights by custom and practice.
  • Any communication to staff that Christmas bonus payments do not guarantee payments in future year; this may give the employer more flexibility.
  • The exclusion of only certain individuals and/or groups should be justified. Any discretion the employer has must not be exercised in a perverse or irrational way; and must be free from discrimination. Particular care should be taken if those to be excluded are on or have been on long term sick or maternity leave. Depending on the nature of the bonus agency workers could also have an entitlement.

Paying Christmas bonuses every year can create legal rights even if not intended. Given this, an employer who wants to be able to vary the bonus amount or withdraw the entitlement should ensure that this has been clearly communicated to employees to avoid costly disputes in future years.

Contact Details

For more details about the issues in this article please contact:

fgmedia@fgsolicitors.co.uk

+44 (0) 808 172 93 22

This update is for general guidance only and does not constitute definitive advice.