Bonuses policy template
Use this policy to detail how the employee / company bonus scheme works, including eligibility and payments.
- 2 pages / 568 words.
- Last updated 28/02/2023.
- Designed for United Kingdom use.
- Suitable for use in other territories; check local laws first.
- Instantly download as Word / PDF / plain text, or send by email.
- Includes 12 months’ access, with all updates to this page provided free of charge and notified to you.
Bonuses policy
1 Overview
1.1 The purpose of this policy is to detail company / employee bonuses.
2 Scope
2.1 This policy is applicable to all employees of [company name].
3 General principles
3.1 The objectives of [Company]'s bonus scheme are to motivate employees by rewarding additional effort or exceptional performance, and to attract and retain talented staff.
3.2 However, the scheme is entirely discretionary and does not form part of your contract of employment. The rules of the scheme may be varied from time to time at [Company]'s discretion, and [Company] reserves an absolute discretion to terminate or vary the bonus arrangements without notice at any time or to exclude employees from participating in the bonus arrangements.
3.3 The payment of a bonus to an employee in any bonus payment period is no guarantee that he/she will receive a bonus payment in the future and is no indication of the level of bonus that he/she might receive in any future bonus payment period.
4 Eligibility
[All employees] are eligible to be considered for a bonus. [Employees are not eligible for a bonus
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A bonuses policy is a document that outlines an organisation's approach to providing bonuses or incentive pay to its employees. The policy typically covers various aspects of bonuses, including eligibility, criteria for awarding bonuses, calculation methods, and payment timing.
The purpose of a bonuses policy is to provide a framework for the fair and consistent distribution of bonuses across the organisation. It helps to ensure that employees understand what is required of them to receive a bonus, and that bonuses are awarded in a transparent and objective manner.
Some common elements that may be included in a bonuses policy are:
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Eligibility criteria: This outlines the specific job roles or employee groups that are eligible for bonuses, and any performance or other requirements that must be met to qualify.
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Bonus calculation methods: This outlines the formulas or other methods used to determine the size of a bonus, and any factors that may be considered in the calculation (e.g. individual performance, team performance, company profitability, etc.).
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Payment timing: This outlines when bonuses will be paid (e.g. annually, quarterly, etc.) and any conditions that must be met in order to receive the bonus.
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Discretionary bonuses: This outlines any bonuses that may be awarded at the discretion of management, outside of the regular bonus program.
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Communication: This outlines how bonuses will be communicated to employees, including any details about the bonus program that employees need to be aware of.
A well-designed bonuses policy can help to motivate employees and reinforce desired behaviours, while also providing a clear framework for the distribution of bonuses across the organisation.
Send to appropriate internal recipients such as employees, workers, contractors etc. and request confirmation that is has been read and understood.
Issue during onboarding / after changes / planned refresher.
Frequently Asked Questions
Frequently Asked Questions
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Can I use this template in my small business?
Yes. The Bonuses policy template is designed to be flexible and suitable for organisations of all sizes, including small businesses and charities. It follows UK employment law best practice, so even if you don't have an in-house HR team, you can confidently apply it.
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Is this template compliant with 2025 UK employment law?
Absolutely. All of our templates are drafted with the latest ACAS guidance and UK employment legislation in mind. We review and update them regularly, so you can be confident they remain compliant.
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Can I customise it for my organisation?
Yes, we highlight the areas that you need to update with your own details, and where you need to make decisions to suit your situation. This saves you time and ensures that you meet best practice.
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Do I get instant access?
Yes. Once purchased, you'll be able to download it instantly. Templates are provided in editable Word or Excel format so you can customise them easily, and in PDF format for easy sharing.
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What if I need more help, not just this template?
If you're looking for broader support, we also offer toolkits and library bundles that include this template, along with other HR templates and policies for fully managing your situation. These may be more cost-effective if you need deeper advice.
