Contract bonus pay wording.

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James @ Purewash

Free Member
Oct 24, 2014
50
1
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Hello, I've been making a new contract for an employee. We have agreed to add a bonus in pay to the contract.

Can anyone help me with the wording of the paragraph?

9.1. A weekly increase in pay to £xxx per hour (xxx) will be paid using a bonus scheme.
The employer may withhold this increase in pay at any time. Information regarding how to obtain the bonus pay will be in writing and the requirements can change at any time.
 

Sarah from LoatesHR

Free Member
Jul 17, 2015
21
1
Hi James

I would suggest that you make the bonus scheme discretionary. You could try the following (please note that this assumes there is a probationary period within the contract):

Following successful completion of your probationary period you will be entitled to participate in the Company’s Bonus Scheme. The Company operates a discretionary bonus system, based on INSERT DETAILS. Any payments made under the Scheme will be at the sole discretion of the Company. The Company reserves the right to vary the amount of bonus paid or to modify or withdraw the Bonus Scheme at any time without compensation. You will not be eligible to receive a bonus unless you are employed by the Company and not under notice of termination of employment (whether the notice is given by you or the Company) on the date the bonus is payable.
Further details of the Bonus Scheme are available from your line manager.

I would also ask what is your objective in terms of introducing the scheme? and whether you have worked out different scenarios in terms of the cost of the scheme based on employees meeting the targets.

I hope this helps.

Sarah
 
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The paragraph introducing the term of the bonus scheme is the least important aspect of a bonus. Lack of clarity can mean bonus payments can become part of salary and so what is needed is to work on the scheme and commit all to a well drafted policy then get that checked over by an employment law and HR specialist. This is an area even the larger companies have got badly wrong so it pays to get it sorted from the start so you are not building in problems for the future.
 
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