Christmas bonus for leavers your choice
When staff leave make sure you take the time to check the terms and conditions of their employment. Their employment agreement should have the details relating to resignations, notice periods and connected to what is required to be paid out as their final pay.
Considerations for inclusion in their final pay are; holiday pay, allowances, reimbursements to the employer and any house rental payments (rental arrears or advance payments received).
You should also carry out a property inspection and seek sign off by both the employee and you as the owner.
If not documented, any perceived prior promise from the employer by the employee for a bonus or a beast for Christmas, can be, and often is, a difficult issue to resolve.
Be well prepared, fair but concise, as to what the outcome will be.
The now ex-employee may claim there was a promise of a bonus of $500 or a beast for Christmas and now that they are leaving they want this pro rata in their final pay.
The employer on the other hand, believes that any promise offered was made with the understanding that the employee would still be working for them, and related to the season being on track and possibly only if production was above target.
These arguments can easily escalate and head quickly towards mediation as the only means to resolving the issue. This gobbles up time and money and usually these costs exceed the value of what was originally being disputed.
To avoid this situation, discuss any bonus offerings prior to employing someone and ensure you as the employer, record the agreed terms and conditions in the employment agreement, which the employee then signs.
If you want a formal bonus in the agreement you can link it to the production of XYZ kg/ms with the bonus being paid at the end of the season and subject to the employee still being employed at this time.
Other measures could be animal condition scores, empty rates and pasture cover and management.
This could mitigate the risk for the conditions of the bonus being met, at the expense of health and wellbeing of the farm.
I prefer to keep bonuses separate from the employment package, believing bonuses are extras not something to take for granted, they are earned not simply expected. And that is what the good employer wants a bonus to be, something recognising extra work.
It can be a one off, some extra cash over Christmas as a bonus to say thanks for the good season’s work. It could be paid two years running if the results and on farm performance warrant it. But it is the employer’s choice, not a demand or expectation.
John Brosnan is a human relations adviser at CooperAitken Accountants, Morrinsville, Matamata and Thames, DDI 07 889 8838 or email john@cooperaitken.co.nz.