How do you deal with an employee who demands a bonus in these times?

Our company is struggling to survive. One of our employees has demanded an increase in the bonus that we have traditionally paid in the past. We don’t know we will be able to afford bonuses this year, and we have spoken to him about the situation. Now he insists on bringing in a third person to negotiate on his behalf. He asked to see the company’s financials, which the president agreed to show him this week. He says his negotiator—who, it turns out, is his girlfriend—“has coached many executives and companies in our exact situation.” He refuses to understand that the money is not there. He has a two-year contract that will expire in November 2009. How should we handle this situation?—MA



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