Should staff on sick leave still be eligible for a bonus?
Now that’s a tricky one, and even more problematic because there’s no definitive answer. Shades of grey can be a tribunal case waiting to happen as the Land Registry v Houghton highlighted.
The starting point is to look at what your contract of employment specifies. Great if it spells out bonus payments will continue irrespective of the extent or frequency of sick leave, but what if your bonus terms are discretionary, what do you then?
Well, there are a number of options but be warned they all come with a ‘health’ warning.
If you continue with the bonus payments throughout spells of sick leave then how does that affect staff morale for those who are rarely, or never absent? Resentment can be a powerful player in undermining team harmony, and if there’s no incentive to attend then why not take just a few more days off to ensure a full recovery?
On the surface, it would seem a pro rata approach would make sense, but hang on a minute, that too is fraught with potential litigation challenges. For a start, it presumes a direct relationship between time spent in the office and output, and we all know that’s not always the case. And then how do we pro rata it? If there are 253 working days in a year, do you deduct 1/253rds as soon as one day is taken or once an employee exceeds a particular number of days? Do you communicate this to staff and run the risk they will treat the period beneath this threshold as ‘freebies,’ and what happens if an employee has a disability, which impacts on their absence level?
Discretion is a great cover-all word for small print but in reality, it creates more problems than it solves. To exercise such with one employee sets a precedent and that causes strife, which you can live without if the same discretion is not applied in a similar case. Of course, staff shouldn’t be privy to the specifics of each other’s pay packets, but we all know people talk amongst themselves, and before you know where you are, there’s a stack of grievances to resolve.
The most draconian approach, although unlikely to be popular with administrators and employees alike, is to suspend bonus payments if an employee is sick. It may improve attendance levels, which is a ‘bonus’ in itself but not great as a morale-boosting exercise.
So, what can we conclude from this? Well for a start there’s no right or wrong way to approach the relationship between discretionary bonus payments while sick. Firms with existing bonus schemes will already be informed by their wording, customs and practice. Those employers thinking to incentivize productivity with discretionary bonus schemes would be well advised to weigh up the pros and cons of any approach before they launch it, mindful that what seemed like a good idea could just prove to be a legal minefield.
