Bonus, gratification, year-end bonus... The names used by the parties are diverse and sometimes erroneous. Depending on the circumstances, the bonus will be described as an agreed bonus or as a variable salary, without the terms used by the parties being decisive. The right to payment of the bonus and the consequences of a termination of the employment contract will depend on the qualification of the bonus.
By definition, a bonus depends at least partly on the goodwill of the employer. It is a bonus when the employer is free to decide on the payment and the amount of the bonus. The employee has no right to such a payment.
A bonus is considered to be an agreed bonus if it is promised in principle, but the amount depends on the employer's discretion. The employer is obliged to pay such a bonus but has some leeway as to the amount.
The bonus becomes part of the salary when the parties have agreed on the principle of payment and its amount is determined in advance or depends on predetermined objective criteria.
The difference between discretionary bonus and salary is of great importance. When the bonus is considered as salary, it must be considered in the payment of overtime or when the employee requests an advance. It is also due in the event of termination of the employment relationship or release from the obligation to work during the leave period.
Loss of discretionary character
An incentive may become part of the salary if the employer pays it for several years without reservation or if he pays it systematically, even though he had good reasons not to do so in certain years.
When granting the bonus, the employer may not treat employees of the opposite sex differently, without objective reasons. Nor may an employee be put at a disadvantage compared to a large number of colleagues without good reason.
The bonus is a special payment granted on certain occasions. It must be of secondary importance in the employee's remuneration. A very large amount in comparison to the annual salary may be reclassified as salary, even if the employer has expressed reservations about its optional nature.
On the other hand, when the employee receives a very high salary, contractual freedom prevails. The bonus will remain optional, even if the amount is very high in comparison to the salary.
Burn-out is a feeling of professional exhaustion. The employee feels that he/she can no longer cope with his/her obligations and responsibilities. When the race for bonuses is too strong and the employer's demands are too high, the risk of burn-out is very real. The employer is obliged to prevent this type of situation in order to protect the personality of its employees.
Termination of the employment relationship
If the employment relationship is terminated prior to the occasion on which the bonus is paid, the employee is only entitled to a proportionate share of the bonus if the contract so provides. Otherwise, the employer is not obliged to pay a bonus to the employee.
If the bonus is part of the salary, it will be paid in proportion to the duration of the employment relationship for the year in question.
Release from the obligation to work
When the employer releases his employee from his obligation to work. During the period of leave, the employee may not be able to achieve the planned objectives or may no longer be working when the bonus is paid. The type of bonus will determine whether the employee is entitled to the bonus.
In most cases, the bonus is not due when the employment contract ends before the date on which the bonus is usually paid. The employer may be tempted to terminate the employee before this date to avoid paying the bonus. This is an abuse of the law that could be construed as an unfair dismissal.