Is the employer legally obliged to pay bonuses?
The answer is NO. According to I.R. there is no law in our land that states that bonuses have to paid to staff come year end. The decision to pay bonuses is the prerogative of the employer and the terms and conditions of employment with the employee.
Having said this, employers have to pay bonuses in the following circumstances:
• It is made provision for in the employee’s employment contract;
• The employer has a policy in place that states that bonuses will be paid;
• The employer has created the expectation of bonuses being paid, through past practice;
• It is stipulated as a condition of employment by means of a sectoral determination.
Should an employer choose not to pay bonuses in the above four scenarios, it may be deemed to be an unfair labour practice, or even a breach of the employment contract by the employer.