No bonuses this year: Do we need to give notice? — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

No bonuses this year: Do we need to give notice?

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in Employee Benefits Program,HR Management,Human Resources

Q. Our employees have come to expect a holiday bonus every December. We need to end that practice this year due to the economy. Are we legally obligated to give some kind of notice? — D.Y., Missouri

A. Unfortunately, I’d need a bit more information to provide a definitive answer. I will, however, cover both possibilities:

If your holiday bonus is truly an expectation—that is, an informal annual custom—then you are free to end it at any time, with or without notice. I would advise, however, that good HR practices and continued positive employee relations dictate some formal announcement that holiday bonuses will not be paid this year because of the bad economy. (Have you considered a holiday turkey, gift card or some other token to let employees know you appreciate them even if you can’t afford a year-end check?)

However, if those bonuses are part of formal, written plan or policy, then your employees may have earned it by their work, making it harder not to pay the bonuses this year. Depending on the written terms, you may be limited to terminating the bonus plan starting the beginning of next year.

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