Can an employer withdraw the Christmas bonus and not give the traditional staff presents?
Due to the cost of living crisis, there is a real prospect of employers and employees facing a bleak Christmas this year. Traditionally, many employers have paid out an annual Christmas bonus and/or gifted staff with presents. However, due to the ongoing financial crisis, many employers may choose to forgo their annual Christmas bonus, and not provide customary gifts to their employees.
Breach of Contract
Bonus schemes can either be contractual or discretionary. Employers should first check if the right to the bonus is contractual. If the right is contractual the employee can argue that the non-payment of the bonus is a breach of contract and an unlawful deduction of wages. Employers facing tough financial difficulties should speak their employees and try and agree a variation of the agreement as this will avoid a legal claim against them.
Fair and Reasonable
If the bonus scheme is discretionary the employer may decide not to pay their employees, but the discretion must be exercised in a fair and reasonable manner to avoid grievances and allegations of discrimination from their employees. Examples of discrimination cases would be when an employer decides to pay only full-time staff in preference to employees working part time. Excluding employees on maternity leave would potentially amount to sex discrimination and excluding employees who are off due to long term sickness can amount to potential disability discrimination.
Gifts
When employees are provided with gifts every year it is possible to argued that the custom and practice has resulted in a contractual obligation from the employer. To confirm if the gift is contractual or discretionary, employers should read the exact wording of their employees’ contract or employee handbooks on the issue of gifts made by the company.
If the employer is unable to provide the gift this year it is best practice to speak to the employees to explain the difficult financial issues faced by the company. You can as an alternative consider providing less expensive gifts as an indication of your continuing appreciation of your staff in these very difficult and financially challenge times.
Quest can assist you if you face these difficult situations. Please call out advice line and speak to one of our experienced advisors on 01455 852028.
