Employee Bonus can be a two-edged sword, with both positive and negative fallouts for the organizations. The positive effects are the recognition and rewarding of the performance of the employees, boosting up their morale, motivating others to tread their path, and increasing the overall productivity of the organization. However, on the other hand, there can be negative fallouts as well. If these are not used judiciously, these can dampen their morale and motivation levels, thus adversely affecting the organizational growth and profitability.
Bonus is usually given to reward the performance. It can be given to individuals as well as teams; in cash or in kind; by way of gifts or holiday time. It is better for the companies to give the employee bonus sparingly, and the employees shall be informed that these will be given solely at the discretion of the company and when it thinks it fit to do so. If it is discretionary on the part of the employer, then it is not considered a contract. However, where these have been promised expressly as a part of the contract between the employer and the employee, the former is legally bound to pay the same. The law requires this to be included in the hourly rate when calculating the overtime premium of the workers.
What are the most likely conditions that may require the companies to dole out employee bonuses? Some of the conditions are:
1.Where the employee retention is important due to specialized skills and knowledge of the employee. That employee may be offered a special package to match what he will get outside.
2.Where there has been extensive training imparted to the employee and the company wants to get the benefits of this training.
3.Where there is a need to resolve the pay disparity arising from making the payment to the new employees at equal or higher rates than the current employee.
4.When the employee performs consistently well and the company wants to reward him.
