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Have we fallen out of love with the bonus?

As RBS Chief Executive Stephen Hester opts to forego his £1 million bonus this year, has the financial crisis put paid to the bonus?

In spite of the recent financial crisis and economic downturn, recent research byUnum and Personnel Todayshows that 55% of employers are still continuing to operate bonus schemes. Bonuses and other incentive schemes are still a strong weapon in the reward armoury and can be very effective in attracting the best talent and motivating employees in difficult times. However, such schemes do need to be carefully managed and the terms of bonus entitlement need to be made very clear.

Many employers prefer to make bonuses discretionary to avoid having to pay out if their business doesn't make a sufficient profit - particularly in today's uncertain economic climate. Non-payment of a bonus to which an employee felt they were contractually entitled can lead to tribunal claims for unlawful deduction of wages, or for breach of contract, either at tribunal or in the civil courts. Civil court action can be particularly costly for employers, as while there is a £25,000 cap on such awards at tribunal, there is no such limit in the civil courts and awards can be significantly higher.

Acas can visit yourorganisationto help you understand what needs to be done to address a wide range of issues related to pay and reward and then work with you to develop practical solutions.

Visit the Acas training and business solutions area for more information.

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