How to... avoid disputes over bonuses

As the economy shrinks and companies’ profits plunge, bonuses are becoming a source of growing contention. Although the Office for National Statistics has suggested that cash bonuses are still rising faster than inflation, the inevitable downward pressure on these payments is likely to continue to fuel disputes between employers and employees. So what can employers do to prevent the squeeze on bonuses leading to litigation?

Draft contracts with care
There are many reasons why disputes over bonuses occur; one of which is that contracts of employment are not sufficiently clear about how bonuses are awarded. It is essential, therefore, that employers decide exactly what they expect employees to do to earn their bonuses, and ensure that these demands are clearly set out within employment contracts.