Non-Discretionary Bonus

A non-discretionary bonus is a type of bonus that is predetermined and is typically included in an employee's contract or collective bargaining agreement. It is also known as a contractual bonus, guaranteed bonus, or a performance bonus.

Unlike a discretionary bonus, which is given at the employer's discretion and is not promised to the employee, a non-discretionary bonus is a set amount that the employee is entitled to receive if certain conditions are met. These conditions may include reaching certain performance goals, meeting specific sales targets, or achieving company-wide objectives.

Non-discretionary bonuses are often used as a way to incentivize employees to work harder and achieve specific goals. They can also help to improve morale and job satisfaction among employees who feel that their efforts are being recognized and rewarded.

It is important for both employers and employees to understand the terms of non-discretionary bonuses, including the conditions that must be met to receive the bonus and any taxes or deductions that may apply. Employers should ensure that the bonus is included in the employee's contract or agreement, and that the conditions for receiving the bonus are clearly defined. Employees should be aware of their entitlement to the bonus and should understand what they need to do to meet the conditions for receiving it.