Bonus and reward - differences between the components of remuneration

Service

Bonus and reward are additional remuneration components that the employer uses to appreciate and motivate their employees to perform their duties better and better. However, it is worth remembering that these are components that are voluntary, i.e. those that the employer is not obliged to grant. Bonuses and rewards are often confused in practice. How are they different?

Bonus and reward

Article 105 of the Labor Code regulates the concept and principles of awarding awards to employees. However, the code does not explain the bonus, therefore, in accordance with its Art. 78, it should be included in the other (additional) components of remuneration. Of course, the bonus and reward depend on the will of the employer, which makes them very similar, because they have a common feature - no obligation to pay them, which results from the lack of regulation in the applicable regulations. Correctly defining a bonus and reward as a salary component affects the basis for calculating sick pay, holiday pay, severance pay and other pay components.

Terms of payment of the bonus

The bonus is a component of the remuneration that is awarded by the employer after the employee meets certain criteria. The rules of awarding them should be clearly and specifically defined in the regulations in force in the company, e.g. in the regulations or in the employment contract. According to the judgment of the SA in Poznań of August 19, 2015, file ref. Act III APa 26/14, after the employee meets the conditions for the bonus, the employee may claim its payment regardless of the will of the employer. It should be noted that in the case of a bonus, a purposive interpretation is applicable (Judgment of the Supreme Court of 22 November 2001, file reference number I PKN 691/00, OSNAPiUS 2003, No. 21, item 513, p. 981). This means that if an employee completes a task late for which he is entitled to a bonus according to the law, he retains the right to it. In this case, the employer has the right to reduce the value of the bonus, not to refuse it.

Attention!

The payment of the bonus is subject to the fulfillment of a specific and verifiable condition.

Awards

Pursuant to Art. 105 of the Labor Code, awards should be granted when employees perform their duties in an exemplary manner, show initiative and increase work efficiency, and thus its quality, i.e. in a special way contribute to the performance of the tasks of the workplace. In the judgment of 5 December 2016 (file No. III PK 30/16), the Supreme Court emphasized that awards are granted to employees who perform their work above average. Thus, they cannot apply to all or most of the company's employees and be systematic. The award cannot be considered as ordinary remuneration for work, but as a benefit under the employment relationship, which is exceptional and granted for what goes beyond the employee's duties. It is assumed that it should be granted in writing, and a copy of the notification is placed in the employee's files. However, the award of the prize without a written form is also binding.

Attention!

The award is a discretionary benefit to which the acquisition of the right is not regulated by generally applicable and internal regulations. It is not a claim benefit.

Discretionary bonus

Discretionary bonus in accordance with the judgment of the Supreme Court of January 13, 2005, file ref. no. II PK 115/04, has the character of an award and does not constitute an element of remuneration. Its granting depends solely on the employer's decision and there are no provisions stipulated for this. It is a voluntary benefit, i.e. it is not a claim, unless it has been granted, but its payment has been suspended.The Supreme Court in the judgment of 20 July 2000 (I PKN 17/00, OSNP 2002/3/77) decided that the so-called discretionary bonus, not of a claim nature, is not a component of remuneration for work, i.e. it is not included in the holiday pay. and may not be included in the amount of compensation for defective termination of employment.

Regulatory bonus

The purchase of the regulatory bonus is determined by internal regulations, such as the remuneration or bonus regulations. It is a claim benefit, which means that for meeting certain and specific conditions, the employee may apply for the payment of this bonus. It is considered a component of remuneration, which means that it is subject to protection in the same way as the base remuneration. Such protection concerns, inter alia, the time of payment, the possibility of making deductions and the enforcement of the regulatory bonus in court.

Attention!

The conditions for granting the regulatory bonus may be positively formulated (situations for which it is granted) or negative (situations reducing the amount of the bonus).

Example 1.

The employer announced that he had suspended the right to monthly sales bonuses until further notice. The employee - sales representative - demands the payment of the bonus because he fulfilled the sales plan in 100%, i.e. he met the conditions for its purchase, which are specified in the remuneration regulations. The employer, however, refuses to pay, because the regulations call the bonus discretionary, which means that he has the freedom to grant it. In this situation, the employer's attitude is wrong, the employee has the right to a bonus, because the regulations define the conditions for which it is granted, i.e. it is a statutory bonus.