Should Employers Give A Christmas Bonus?

To Pay or Not Pay a Christmas Bonus -

Should employers give a Christmas Bonus to their staff

To encourage loyalty, to increase productivity, to say thank you. Whatever your reasons for wanting to pay out Christmas bonus, you should probably check if you even have a choice.

Check the terms of each staff member’s employment. If they are entitled to a Christmas bonus, it will be stated in the terms and conditions. If it’s there, you’ll have to make like Santa Claus and pay it out whether you can afford it or not. And unlike Santa Claus, you can’t even decide to give it only to the good boys and girls. It’s arbitrary.

But if Christmas bonuses aren’t mentioned in your employee terms and conditions, you’re not out of the water. What happens if you’ve been paying out Christmas bonuses, either consistently or not? An employee could claim that the paying of the bonus is an implied condition by dint of it being paid consistently over a number of years.

For that reason, it is advisable to either state that they are not payable, or that they are payable strictly at the discretion of the company. Either condition should be adequate defence against implied contractual agreements.

Why would you pay bonuses anyway?

The most important asset for any business is its staff. And as with any asset it is important to invest in your staff in order to ensure you get the most out of them. Does that include paying a Christmas bonus?

Loyalty

Is the Christmas bonus your silver bullet in the war for talent as the economy picks up again?
In reality, a really good person is not going to stay with you on the strength of a Christmas bonus alone. There are other ways to encourage loyalty. Keeping your employees engaged, for example, or investing in training and development so they can learn new skills, are just two ways in which you can keep good people.
Besides, isn’t loyalty more about performance and commitment than length of tenure? Wouldn’t you rather have an employee who gives 100% while they’re with you than someone who gives 60% but stays for ten years?

Productivity

Does it really help productivity to pay everyone a Christmas bonus every year? It ceases to be a motivating factor if it is standard and expected. One of the most common reasons for companies opting out of Christmas bonuses is that it becomes an expectation, with no link to performance.
The truth is that, important though they are, money and perks alone aren’t enough to motivate employees and don’t necessarily equate to better performance. There are definitely ways to say thank you at Christmas with a motivating effect.

Example

One company I know flew its entire team to Paris for its tenth birthday celebration. In a luxurious hotel just off the Champs Élysées, they were split into teams and chose a song, wrote new lyrics to reflect their company beliefs, worked with choreographers to learn a dance and the whole thing culminated in a hilarious X Factor-style show, preceded by an exquisite banquet. Nobody expected it and it did wonders for the employees’ loyalty and productivity.
That’s more expensive than giving Christmas bonuses, I hear you cry! Maybe, but it’s not an expense that will occur every year and the company was not in the practice of paying Christmas bonuses. There are much simpler ways to reward and motivate individuals – tailor the reward to the individual’s interests; take a team out of a fancy lunch, or a pamper day (which can have positive team-building effects too); even giving people an extra day’s annual leave has a perceived value.

A simple “Thank you”

In fact, it could be cheaper and perhaps more effective just to say thank you!
A recent report by One4All revealed that business leaders who say thank you have more motivated staff, higher rates of staff retention, find it easier to recruit and have better reputations. 68% of employees are more loyal to employers who regularly thank them for their efforts. One in three respondents said they would be less likely to actively look elsewhere for a job if they were thanked regularly. Just 3% of workers are thanked each day in Ireland, so we could really improve our performance in this area.

What not to do

If you have been paying a Christmas bonus and decide not to this year, don’t sweep it under the carpet and hope nobody will notice. They will! Better to grasp the nettle and fully explain why bonuses are not being paid, or are only being paid to some employees this year. By doing this, you can build a strong and open relationship with your employees. When they know the reasons, they can work with you to improve the company’s performance. That sounds like motivated staff to me.

Find out more about what benefits really matter here