Bonus

It is a sum of money paid over and above the regular salary for good performance, project achievement, or other reasons depending on the company’s payroll policy. In most companies, the employees receive different bonuses on special occasions like festivals. In some companies, the Bonus structure is based on employee performance. Employees are rewarded based on their performance levels in the organization. This helps employees increase sales, market share, and productivity levels and creates a great team spirit. By linking pay to performance, the employee-centric approach ensures that every team member is driven to deliver the best.

The concept of a bonus is a monetary benefit or incentive paid to employees in addition to their regular salary. The word has its origin in Latin word Bonus. It can be given for special skills, risk-taking, extra work, promotions, setting an example for others, etc. There can be many other reasons for paying bonuses. In India, it is common among private and foreign companies when they are doing well.

Types of bonuses:

• The bonuses can be discretionary or nondiscretionary, depending upon the situation.
• Discretionary bonus: A discretionary bonus payment is a type of payment given to an employee in addition to their usual salary because of their performance or sale of the product.
• Nondiscretionary bonus: A nondiscretionary bonus is a type of payment given as promised in the offer letter.