Is Santa Coming to Your Workplace? Bonuses and Christmas Gifts for Employees

xmasbonus

Perhaps no one is openly talking about it, but employees at all levels are surely thinking about it – what will this year’s Christmas gift or bonus be?

Whether it’s a holiday-season gift or a bonus, employee expectations may be high for 2016. However, I think it would be interesting to witness what the consequences would be if, one year, employers decided to bypass gifts and bonuses altogether – what do you think?

Is there a chance that your own employer might be feeling that their past generosity has become more similar to an obligation or simply an employee expectation, regardless of performance levels?

BONUSES

Types of Bonuses

A bonus paid to an employee is of course, over and above his or her regular salary, and can take many forms.

First of all, year after year, an employer might offer an automatic bonus of a fixed amount that is not subject to the performance of the employee, or of the employer’s business. A bonus can also be paid on a purely discretionary basis as the employer sees fit.

Lastly, the parameters for payment of the bonus may be predetermined according to criteria established by the employer, with or without the participation of its employees. However, employees are aware of the criteria, which is usually related to the operating results of the business, or to the employee’s individual performance.

Legal Framework

There is no set legislation on bonuses although, depending on the circumstances, they may be considered part of an employee’s overall compensation. They are instead governed by the contractual framework. Their amounts, criteria, and the recurrence of payment may constitute employment conditions in an individual employment contract or in a collective agreement. A company policy may also establish the bonus framework for all employees, or for different classes of employees. Finally, a constant and recurring bonus mechanism known to all employees may also be considered to be a legal framework.

Modification or Termination of the Bonus

An employer may, for a variety of reasons, wish to curtail the distribution of bonuses during the holiday season. Its right to do so directly depends on the legal framework governing their distribution, as noted above.

Therefore, if the granting of a bonus is provided for in an individual employment contract, it may be deemed as an essential condition of the contract, depending of course on the amount. In such cases, the principles of constructive dismissal may eventually come into play. Before modifying the bonus criteria, or doing away with the bonus altogether, the employer should notify the employees concerned. The length of the prior notice period will depend on the circumstances, the characteristics, and the number of years of service of the affected employee(s).

This reasoning may also apply where the bonus is provided for in a company policy. Close examination of the terms of that policy will be necessary, however, as often the employer will have already provided for the possibility of unilaterally making changes to the bonus. Even so, depending on the amounts involved, this latitude on the part of the employer cannot, however, go so far as to constitute an abuse of right.

On the other hand, if the payment of and the criteria for the bonus are provided for in a collective agreement, the employer will not be able to make changes unilaterally, unless of course the collective agreement or another union agreement gives it permission to do so.

Bonuses and Termination of Employment

Can a dismissed employee claim his or her Christmas bonus then?

The answer to this question depends on the type of bonus involved, and on whether or not the dismissal was justified. If it was justified, the employee cannot claim the bonus given to the other employees following his or her dismissal.

Conversely, in certain circumstances, an employee dismissed without cause may be entitled to such a bonus. For example, if the bonus is clearly provided for in the employment contract and its payment is automatic, the dismissed employee can include it in his or her claim for payment in lieu of reasonable prior notice.

However, the dismissed employee will normally not be entitled to a bonus if the payment of it was purely discretionary. Moreover, the employee will have no such entitlement where the evidence shows that the bonus payment criterion was not met.

CHRISTMAS GIFTS

The kinds of gifts employers can give employees during the holiday season, from the traditional Christmas card to a more lavish frozen turkey, are limited only by their imagination.

And whether this generosity on the employer’s part is new, or solidly entrenched in company tradition, can the employer randomly decide one year to be less generous?

In a non-unionized context, generally speaking, a Christmas gift from an employer is seen as a gesture of gratitude, offered on a discretionary basis, without producing any obligation on the part of the employer.

Handing out bonuses, and/or gifts during the holiday season is a generous gesture on the part of an employer, and most certainly, appreciated by its employees. The benefits are far from negligible insofar as human capital management is concerned, as it tends to foster a sense of belonging among employees, with what could be described as a bonding effect at this special time of year. Having said that, close attention should be given to such an act of generosity. After all, employers should not feel an irrevocable obligation to give either but rather, have this action remain a genuine token of appreciation for staff efforts, versus the perception that it is, or has become, some kind of binding duty.

 

Supporting Article Research Sources: Langlois Lawyers, LLP, Mondaq

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