non-contractual or discretionary bonus scheme
Discussion
You would need to read your contract.
It is probably as the others have said - vapourware.
Most decent firms will set measurable objectives and a definitive result if you hit those objectives.
Really decent firms put a lot of thought and effort into their reward schemes in order to reward high performers.
Less decent ones will use a hand-waving "discretionary bonus" because they can't be bothered to even think about the payments or triggers.
Even decent firms can play the figures to avoid payouts ... so imagine what the less decent ones do.
It is probably as the others have said - vapourware.
Most decent firms will set measurable objectives and a definitive result if you hit those objectives.
Really decent firms put a lot of thought and effort into their reward schemes in order to reward high performers.
Less decent ones will use a hand-waving "discretionary bonus" because they can't be bothered to even think about the payments or triggers.
Even decent firms can play the figures to avoid payouts ... so imagine what the less decent ones do.
I believe many / most bonus schemes are like this - unless you're in a more senior role where you may get a guaranteed year 1 bonus (especially to tempt you from an existing employer). I've been in financial services for 15 years and all the bonus schemes I've come across have been discretionary.
I'm sure you'll have people with some other good examples, but in my experience they haven't been a phantom carrot for high performers. You could ask what % bonus someone would get if they met / exceeded expectations, and if they've come knocking for you - perhaps they'll guarantee your first years bonus?
I'm sure you'll have people with some other good examples, but in my experience they haven't been a phantom carrot for high performers. You could ask what % bonus someone would get if they met / exceeded expectations, and if they've come knocking for you - perhaps they'll guarantee your first years bonus?
Most Bonus schemes aren't in the formal employment contract and are discretionary.
Could be a number of reasons, you personally hit target, but the company over all makes a whacking loss ?
Or if the sales team have contractual bonuses, they might be awarded something, but no one else (eg development) get nothing, yet withour development there is nothing to sell - etc
In my experience, as long as they provide employees with a written guide to performance bonus, and you ask them what average payouts have been in the last few years and they can answer - then all is usually fine.
Usually it is a technicality, since the company are also trying to avoid a situation where bonuses are paid every year for say five years, then one year no bonus... employees have tried to claim at tribunal that it in fact was part of standard compensation....
IME experience they usually pay in full on year one, then invent ever complex calculations and obscure reasons why they can't pay you the full bonus for the subsequent years, hence why its common in a number of sectors for resignations to come in once the bonus's have hit their accounts.
Its frustrating, I have lost some fantastic staff over the years due to companies stiffing people, always seems so short sighted to me, especially when its a number under 5k.
Its frustrating, I have lost some fantastic staff over the years due to companies stiffing people, always seems so short sighted to me, especially when its a number under 5k.
Gargamel said:
Most Bonus schemes aren't in the formal employment contract and are discretionary.
Could be a number of reasons, you personally hit target, but the company over all makes a whacking loss ?
Or if the sales team have contractual bonuses, they might be awarded something, but no one else (eg development) get nothing, yet withour development there is nothing to sell - etc
In my experience, as long as they provide employees with a written guide to performance bonus, and you ask them what average payouts have been in the last few years and they can answer - then all is usually fine.
Usually it is a technicality, since the company are also trying to avoid a situation where bonuses are paid every year for say five years, then one year no bonus... employees have tried to claim at tribunal that it in fact was part of standard compensation....
Interesting. My experience has generally been that the contract would make reference to operation of a "bonus scheme" ["incentive scheme"; "profit share"; "performance related pay" etc.] with the specifics for each year's scheme to be defined in the handbook/briefing/performance review/whatever. Could be a number of reasons, you personally hit target, but the company over all makes a whacking loss ?
Or if the sales team have contractual bonuses, they might be awarded something, but no one else (eg development) get nothing, yet withour development there is nothing to sell - etc
In my experience, as long as they provide employees with a written guide to performance bonus, and you ask them what average payouts have been in the last few years and they can answer - then all is usually fine.
Usually it is a technicality, since the company are also trying to avoid a situation where bonuses are paid every year for say five years, then one year no bonus... employees have tried to claim at tribunal that it in fact was part of standard compensation....
All the decent employers I had set out up front what was required to get the bonus - whether that was company wide profit; department P&L; team hitting chargeability targets etc.
When there is just a nebulous mention to "discretionary bonus" I get worried - I think it depends on whether the OP has asked the right questions at interview.
Flooble said:
Interesting. My experience has generally been that the contract would make reference to operation of a "bonus scheme" ["incentive scheme"; "profit share"; "performance related pay" etc.] with the specifics for each year's scheme to be defined in the handbook/briefing/performance review/whatever.
All the decent employers I had set out up front what was required to get the bonus - whether that was company wide profit; department P&L; team hitting chargeability targets etc.
When there is just a nebulous mention to "discretionary bonus" I get worried - I think it depends on whether the OP has asked the right questions at interview.
Agreed, all ways best to have something in writing about how it works, what the targets are, how they are scored, when it's paid etc etcAll the decent employers I had set out up front what was required to get the bonus - whether that was company wide profit; department P&L; team hitting chargeability targets etc.
When there is just a nebulous mention to "discretionary bonus" I get worried - I think it depends on whether the OP has asked the right questions at interview.
Plus look at the staff turnover, and always ask why they are hiring !
Companies get the employees they deserve.
^^^ What he said, most bonus schemes I've seen are "discretionary" or similar so that if a company had a bad year and lost money they would have the option of not paying bonuses. This is especially common where the bonus structure has a high element of personal performance but isn't always directly linked to the companies bottom line.
Different story sometimes for commission payments which are often contractual.
Different story sometimes for commission payments which are often contractual.
Having been an employer in this situation I would always make bonuses discretionary apart from sales commission. Fundamentally the company needs to be in a position to pay a bonus. So long as the rules are clear and fairly applied there should be no issue. I would always ask about previous years pay outs and whether the company is on target in the current period. I can't see why a company wouldn't want to be in a position to pay out unless they were unscrupulous. I once worked in a large that missed it's profit targets but everyone on variable comp qualified for their bonuses. There was massive investigation and many heads rolled!
Our bonus scheme is based on
1. Performance against certain defined targets
2. Overall company performance
3. A behaviours/accountability section
Although the bonus scheme is considered discretionary 1 & 2 are very clearly defined (and monitored through the year) so it would be hard to give/refuse a bonus on those categories. 3 is a bit less tangible and is based on 360-feedback from colleagues and managers. It's designed to address the issue that somebody could be brilliant at their job but a complete ar$e to work with.
1. Performance against certain defined targets
2. Overall company performance
3. A behaviours/accountability section
Although the bonus scheme is considered discretionary 1 & 2 are very clearly defined (and monitored through the year) so it would be hard to give/refuse a bonus on those categories. 3 is a bit less tangible and is based on 360-feedback from colleagues and managers. It's designed to address the issue that somebody could be brilliant at their job but a complete ar$e to work with.
Countdown said:
Our bonus scheme is based on
1. Performance against certain defined targets
2. Overall company performance
3. A behaviours/accountability section
Although the bonus scheme is considered discretionary 1 & 2 are very clearly defined (and monitored through the year) so it would be hard to give/refuse a bonus on those categories. 3 is a bit less tangible and is based on 360-feedback from colleagues and managers. It's designed to address the issue that somebody could be brilliant at their job but a complete ar$e to work with.
Point 3 is also helpful where the person make a real contribution but is a poor self-promoter. 1. Performance against certain defined targets
2. Overall company performance
3. A behaviours/accountability section
Although the bonus scheme is considered discretionary 1 & 2 are very clearly defined (and monitored through the year) so it would be hard to give/refuse a bonus on those categories. 3 is a bit less tangible and is based on 360-feedback from colleagues and managers. It's designed to address the issue that somebody could be brilliant at their job but a complete ar$e to work with.
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