BONUS POLICY

1. INTRODUCTION
   1. This Bonus Policy explains how the [INSERT THE NAME OF THE COMPANY] distributes bonuses to employees. We want to reward employees whenever possible, since we all contribute to our company’s success with our hard work. This Plan clarifies how we choose which employees to reward and how we calculate bonus amounts.
2. SCOPE
   1. This Policy applies to the employees of [INSERT THE NAME OF THE COMPANY]. This Policy applies to all regular full-time and part-time employees and employees with contracts of [INSERT THE DURATION OF CONTRACT WITH EMPLOYEES I.E. ONE YEAR OR MORE] Seasonal employees, interns and temporary employees with a contract of less than [INSERT THE DURATION OF CONTRACT WITH SEASONAL EMPLOYEES I.E. ONE YEAR] are not eligible for bonuses.
   2. We may modify this Policy and our bonus plans at any time without notice. Only written promises of bonuses will be considered valid. If the manager or another executive verbally promises an employee a bonus, they cannot follow through unless they put it in writing and HR approves it.
   3. Bonuses can be either discretionary or nondiscretionary. Discretionary bonuses are determined at our company’s sole discretion. They aren’t promised to employees and we can’t guarantee anyone will receive them. For example, we may pay a bonus to reward an employee who showed exemplary performance at a particular time.
   4. Nondiscretionary bonuses are promised or announced to employees and guaranteed to those who meet our established criteria for the bonus. For example, we may promise to pay non-discretionary bonuses to reward teams for meeting specific targets.
3. POLICY ELEMENTS
   1. Our company rewards employees for outstanding individual performance, as well as their contributions that help us achieve company goals. For this reason, we award bonuses in three forms, Lump sum bonus, Year-end bonus and Incentive plans.
   2. Our company may award lump-sum bonuses (one-time bonus payments) to employees who show exemplary performance. We define “exemplary performance” as exceeding goals, either financial or nonfinancial, performing additional duties from what is expected, Serving as a good example of professional behavior to other employees (e.g. teamwork, ethics, leadership).
   3. When managers know their team member deserves a bonus, they should send a formal written recommendation to their Department Head and HR, explaining how their team member showed exemplary performance.
   4. The Human Resources Department will review and approve recommendations with the input of Department Heads based on available budget. Lump-sum bonuses cannot exceed [INSERT PERCENTAGE % OF BASE SALARY TO CALCULATE LUMP-SUM BONUSES]. Bonuses [INSERT BONUSES FOR EXECUTIVES/ EXCEED AMOUNT] need to be approved and signed by [INSERT CEO/PRESIDENT OF THE COMPANY]
   5. The Manager shall send a formal letter to the team member who showed exemplary performance congratulating them and informing them that they will receive a bonus.
   6. Our company’s Plan gives the executive team the ability to decide on year-end bonuses for all employees if certain conditions are fulfilled. Our company should have exceeded its annual financial goals and the board of directors must approve the bonuses.
   7. Employees who were employed by our company for the entire year will receive a year-end bonus payment of [INSERT THE PERCENTAGE FOR YEAR END BONUS PAYMENT] % of their annual salary. Employees who are employed for at least [INSERT THE MINIMUM NO. OF MONTHS TO CLAIM PRORATED AMOUNT] months will receive a prorated amount. Employees who are employed for fewer than [INSERT THE MINIMUM NO. OF MONTHS TO CLAIM PRORATED AMOUNT] will receive a [INSERT THE PERCENTAGE FOR YEAR END BONUS PAYMENT] % bonus.
4. BONUS INCENTIVE PLAN
   1. Incentive bonuses to encourage employees to achieve annual company financial goals. These are company-wide bonuses that may be announced at the beginning of the year by senior leaders.
   2. Incentive bonuses for achieving or exceeding individual and team targets. Department Heads are responsible for formulating these plans and setting specific goals. For example, they may decide to pay a quarterly bonus (a percentage of individual sales) to sales teams that exceed their sales or revenue targets. Department Heads should submit their plan to HR and the CEO for approval
   3. Bonuses are subject to taxation [INSERT THE LOCAL/STATE/FEDERAL TAXES WHICH WILL APPLY ON BONUSES]
5. UPDATES
   1. The Company reserves the right to modify, suspend, change, or terminate this Policy at any time, in accordance with local law. This Policy does not create any contractual rights or obligations, whether expressed or implied. Subject to local law, the English-language version will prevail.
6. CONTACT
   1. Any questions about this policy should be referred to [INSERT THE POINT OF CONTACT].

COMPANY

[INSERT THE NAME OF THE COMPANY]

Authorized Signature

Print Name and Title

[INSERT THE NAME OF SIGNING AUTHORITY AND/OR DESIGNATION]