Not every enterprise has in its documentation a Regulation on bonuses for employees, which relates to internal regulations. As a rule, it is mainly found in government and budgetary structures, as well as in large commercial companies with a large number of structural divisions and full-time employees. Small businesses do without it, which is quite acceptable, since the law does not oblige organizations to use such a document.
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Why do you need a Bonus Regulation?
Each enterprise has the right to independently develop a bonus system for its employees. The only condition for this is that it fully complies with the framework of the current legislation of the Russian Federation.
Generally speaking, the Regulations establish which employees, for what services and under what circumstances can receive financial incentives from the company’s management.
Thus, by developing the Regulations on bonuses, the enterprise administration usually achieves several goals at once:
- increased labor productivity and employee efficiency,
- the quality of products improves,
- labor discipline is strengthened,
- general prospects are expanding.
In some cases, in the future, the Regulations may become a legally significant document that has evidentiary force in court - for example, when resolving labor disputes and disagreements regarding the payment of wages and other material incentives to an employee. That is why its preparation should be treated with the utmost care, taking into account all the subtleties and nuances of the enterprise.
About bonuses for employees
The terms of remuneration (including the size of the employee's tariff rate or salary, additional payments, allowances and incentive payments) must be reflected in the employment contract with the employee (Part 2 of Article 57 of the Labor Code of the Russian Federation). However, this does not mean that all employers must provide bonuses. Specific terms of remuneration are the result of an agreement between the employer and the employee. And they may include, for example, solely paying the employee a salary. If the terms of remuneration also provide for the payment of bonuses to the employee, then only in this case information about this should be included in the employment contract. In this case, the procedure and conditions for paying bonuses can be specified in detail in the employment contract itself. For example, “the employee is given a monthly bonus in the amount of 30% of the official salary.” Or the payment of the bonus may be made dependent on the presence or absence of disciplinary sanctions, but the size of the bonus is also clearly defined.
Or you can indicate in the employment contract that the bonus is accrued and paid to the employee on the terms and in the manner prescribed by local regulations. Such a local act will be the Regulation on Bonuses. And its approval with such wording in the employment contract is mandatory.
Please note that a document disclosing the procedure for paying bonuses to employees may be part of a general local regulatory act. For example, the Regulations on remuneration and bonuses for workers. Or it could be an independent document devoted exclusively to issues of bonuses for employees. An example of the Regulations on bonuses for employees (sample 2018) is given below.
Who draws up the Regulations
The responsibility for developing this document on bonuses for employees usually falls within the competence of the company's lawyer, personnel officer, and less often - the secretary or the manager himself. In any case, this must be a person who has the necessary theoretical knowledge in the field of labor and civil legislation and the skills to write such documents. And regardless of who is directly involved in this work, the final version of the regulation must be submitted for approval to the director of the organization.
In what form and how is the provision drawn up?
In large organizations where employees work in several departments, in which work processes are structured differently, it is advisable to develop several provisions for each department. In small companies, drawing up one document is enough.
It is permissible to include the text of the provision in a local act regulating the procedure for remuneration for work. This may be advisable when there is no desire to approve a significant number of internal documents and complicate paperwork.
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Of course, depending on the legal form of the company (or institution), the documents will differ. Thus, a sample provision on bonuses for employees of an LLC may differ significantly from the same provision in a PJSC or in a budgetary educational organization, but in essence, these are very similar documents.
Is it necessary to familiarize employees with the Regulations?
Theoretically (and often practically) the Regulation applies to every employee of the enterprise, so all employees must be familiar with it. As a rule, the document is studied directly during employment or, if the document was developed during the period of active work of the organization, at any stage of its activities.
Typically, companies have special journals in which employees sign that they are familiar with the company’s internal regulations, including the Regulations on Bonuses.
Why is a separate document needed?
Remuneration systems, including tariff rates, salaries (official salaries), additional payments and allowances of a compensatory nature, including for work in conditions deviating from normal, systems of additional payments and incentive allowances and bonus systems are established by collective agreements, agreements, local regulations acts in accordance with labor legislation and other regulatory legal acts containing labor law norms (Article 135 of the Labor Code of the Russian Federation).
As we can see, labor legislation makes it possible to include bonus issues in the text of the collective agreement. But in this case, certain difficulties arise for the employer: this section will be subject to the rules for concluding and amending a collective agreement. Thus, it will become mandatory for representatives of the workforce to participate in the consideration of issues regarding the conditions for the appointment and payment of bonuses. In addition, it will be necessary to take into account the opinion of the elected body to which the right to develop a collective agreement has been transferred. And this is extremely inconvenient for the employer.
Please note : if the employment contract contains a reference to a provision on bonuses for employees and the organization has approved it, the company has the right to include bonuses as part of the labor costs taken into account when determining the tax base for income tax.
It is much easier to instruct a responsible person from the accounting or human resources department (or perhaps a working group) to formalize a proposal for bonus payments to employees in a local regulatory act. Remember that before approval by the manager, this document must be agreed upon with a lawyer and all interested parties: accounting and heads of structural divisions. Moreover, Art. 8 of the Labor Code of the Russian Federation gives the right to employers (with the exception of employers - individuals who are not individual entrepreneurs) to adopt local regulations containing labor law standards in accordance with labor legislation and other regulations, collective agreements, and agreements.
However, in Art. 135 of the Labor Code of the Russian Federation there is a rule that local regulations establishing remuneration systems are adopted by the employer taking into account the opinion of the representative body of employees. Wouldn't it turn out that even a separate provision on bonuses for employees would still have to be agreed upon with the representative body of employees? The answer to this question depends on the content of the regulation on wages or the collective agreement: if they establish that local regulations defining the wage system are subject to agreement with the elected body of the primary trade union organization, the draft regulation must be agreed upon in the established Art. 372 of the Labor Code of the Russian Federation is in order. If such a condition is absent, this local regulatory act can be approved by the employer without taking into account the opinion of employee representatives by issuing an order.
Rules and example of drawing up Regulations on bonuses
There is no standard, unified, one-size-fits-all form of this document, so organizations can develop the Regulations in free form. The main condition is that it contains:
- name of company,
- creation date
- and the signature of the manager.
It is recommended to note a number of information that it is desirable to include in the document, these are:
- conditions for awarding the award,
- its size
- and payment terms.
It is also advisable to note that bonuses are solely the initiative of the employer - this, if anything happens, will help avoid unreasonable demands from subordinates.
Example of the content of a provision on the payment of bonus payments
The structure of the document can be absolutely anything. It all depends on what goals the document is being drawn up and what provisions are planned to be included in it.
In general, the structure might look like this:
- General information, including about the organization, its structural divisions, the remuneration system, etc.
- List of types of bonus payments that can be accrued to company employees.
- The procedure according to which bonuses will be calculated. Here you can enter various efficiency coefficients, formulas, take into account different labor indicators, etc.
- A list of reasons on which the bonus amount may be reduced, for example the presence of disciplinary violations, etc.
- List of grounds for refusal to pay bonuses.
This structure is only an illustration, since the head of the organization has significant freedom in shaping the structure of the bonus provision. The law does not prohibit introducing additional elements into the content of the document and establishing additional rules.
General provisions
In this section, in addition to the above information, you can additionally touch upon the goals for which bonuses are awarded to employees. In particular, these may include motivating employees, improving work performance, increasing productivity, and improving efficiency.
Here you can indicate which specific employees are covered by the document. This could be all employees, employees of individual structural divisions, or individual employees. Additionally, you can indicate that only full-time employees receive bonuses.
List of types of bonus payments
This section reflects various types of awards. They can be:
- Annual, quarterly, monthly.
- Current, one-time.
- Targeted and non-targeted.
- Specific, for example, for completing a work plan for a month, or abstract, for example, for good work, quality service, etc. It is recommended to indicate the reasons for payments as specifically as possible.
Procedure for calculating and paying bonuses
You can specify what documents employees must provide in order for bonuses to be accrued. In addition, you can assign responsible employees for the calculation and payment of bonuses. As a rule, these are accounting employees.
The size of the bonus can be determined in various ways and can be:
- fixed;
- as a percentage of salary or wages;
- as a proportion of salary or wages.
Grounds for reducing the size of the premium or depriving of bonus payments
This section, as a rule, indicates violations, if committed by employees, the amount of bonus payments is reduced. For example, this could be various kinds of disciplinary sanctions, failure to fulfill the plan, lack of material assets, etc. In addition, the grounds may include violations in the field of labor protection, non-compliance with labor regulations, failure to comply with management orders, damage to property and material assets belonging to the employer.
Rules for document execution
The document can be drawn up on a simple blank A4 sheet or the organization’s letterhead - this does not matter, just like whether it is written by hand or printed on a computer. The only rule is that it must have the signature of the head of the company or another person responsible for the approval of such employee documents. It is not necessary to certify the document with a seal, since from 2021 legal entities, as previously and individual entrepreneurs, have the right not to use seals and stamps to endorse their documentation.
The regulation is usually drawn up in a single copy , registered in the company's accounting policies, and then contained together with other internal regulations in a certain order. After losing its relevance, it is transferred for storage to the archive of the enterprise, where it remains exactly as much as is established by law. After the expiration of this period, the Regulation can be disposed of.
How to approve a position
The regulation on the payment of bonuses is a local act, and accordingly, the procedure for its approval corresponds to the procedure for approving any local act.
The employer approves the document. If the company has a trade union (which is rare in Russian realities), then it is necessary to take into account the opinion of this body, even if it consists of a small number of employees.
The form of the document is written. It should be familiarized to the performers who are appointed responsible (for example, accounting employees), as well as to the employees who are affected by the position (actually, those receiving bonuses).
Thus, if desired, the organization can adopt a Regulation on bonuses. This is not a mandatory document, but it is recommended that it be drawn up if you plan to clearly systematize the procedure for awarding bonuses to employees. A sample bonus clause can be downloaded from the link below.
