Extra cash during the festive period is always welcomed by employees, but should companies pay a Christmas bonus? Are they obligated to and how much?

A nationwide study by Hawk Incentives found that 33% of British workers have never been given a Christmas bonus by their employer. And nearly three quarters (73 per cent) are not expecting a financial boost this year, with 7 in 10 believing the Christmas bonus will soon be a thing of the past. This particular subject can create a minefield of moral and legal responsibility which we would like to discuss.

Whilst job satisfaction plays an important role in our careers, it would be naive of us to think that financial incentives are not what drives us also and makes us feel appreciated in our roles.  With the Christmas period bringing added pressure on our bank balances, a bonus could be just the thing to ease our minds and help with the stress and motivate all staff for the coming year.

Are you obligated?

Well, that depends on the contract of employment. If the contract of employment states that a bonus will be paid at Christmas then it’s safe to assume that the employer must follow the terms of the contract, as both the employer and employee are bound by the contract. If the contract doesn’t mention a Christmas bonus then the next step could be to look at the employee handbook. This could state that bonuses will only be paid dependant on individual performances or reaching company targets as a whole.

How much to pay?

You can carry this out in a couple of different ways by either providing one flat amount across the board or working off a percentage of each individual employee’s salary.  Another option is based on individual performances, but communication is key here and you must be prepared to back this up with facts and figures to avoid disgruntled staff feeling undervalued. Some companies also choose to pay a bonus dependant on loyalty and time served with them.

What if your company hasn’t had the year it was hoping for?

What if a Christmas bonus would put the company under financial pressure? There are other ways in which you can show your appreciation to your staff that do not cost a fortune – for example, a small gift accompanied by a handwritten note, giving staff extra time off or implementing flexible hours or working arrangements over the holiday period.  All of these ideas (and these are just a few) can help your staff feel valued, appreciated and invested in your business.

For more information and help on incentivising your workforce please contact us here.