Perspective | Controversial Focus and Case Analysis on Employers Distributing Bonuses
Published:
2024-11-11
In our country, the Labor Law and the Labor Contract Law do not provide detailed regulations regarding bonuses. The definition of bonuses is mainly reflected in the "Regulations on the Composition of Total Wages" issued by the National Bureau of Statistics, which states that bonuses refer to the excess labor remuneration and the labor remuneration for increased income and cost savings paid to employees, and are part of the total wages. In the absence of legal regulations specifying the conditions for issuing bonuses, in practice, employers mainly issue bonuses based on their own business conditions and the performance of employees. Typically, employers establish relevant systems or stipulate the issuance of bonuses in labor contracts. Some employers, although lacking institutional and contractual basis, have formed a practice of issuing bonuses, leading employees to have certain expectations regarding the issuance of bonuses. Consequently, disputes regarding the issuance of bonuses have been increasing. This article will analyze the focal points of disputes over bonus issuance based on relevant legal provisions and related cases, and provide suggestions for risk prevention in bonus issuance.
My country's Labor Law and Labor Contract Law do not provide detailed regulations on bonuses. The definition of bonuses is mainly reflected in the "Regulations on the Composition of Total Wages" issued by the National Bureau of Statistics, which states that bonuses refer to the excess labor remuneration and the labor remuneration for increased income and cost savings paid to employees, and are part of the total wages.
In the absence of legal regulations on the conditions for issuing bonuses, employers mainly issue bonuses based on their own operating conditions and the performance of employees. Typically, employers establish relevant systems or stipulate the issuance of bonuses in labor contracts. Some employers, although lacking a system or contractual basis, have formed a practice of issuing bonuses, leading employees to have certain expectations regarding the issuance of bonuses. Consequently, disputes regarding bonus issuance are increasing. This article will analyze the focal points of disputes over bonus issuance based on relevant legal provisions and related cases, and provide suggestions for risk prevention in bonus issuance.
1. Do employers have a mandatory obligation to issue bonuses?
The law does not stipulate that employers must issue bonuses to employees; therefore, the issuance of bonuses falls within the scope of employers' autonomous decision-making and is not a legal obligation. However, if employers have established standards and conditions for bonus issuance through rules or labor contracts, they should perform according to the agreement. At this point, employees' expectations for bonuses have legal effect, and if employers violate relevant regulations, they may face legal liability.
2. Is the issuance of bonuses prioritized by agreement?
As mentioned above, bonuses are not a legal obligation for employers; they have the autonomy to decide on bonuses. If the employer's rules or the labor contract do not stipulate the issuance of bonuses, the employer is not required to issue bonuses to employees. It is important to note that if the employer's rules or the labor contract stipulate the issuance of bonuses but do not specify the conditions or standards for issuance, courts often refer to the labor contract, the employer's rules, and the actual performance of both parties to comprehensively judge the issuance of bonuses.
Case: (2020) Yue Min Shen 3738
The court believes:In the labor contract signed between J and K Company, there was no stipulation for a year-end bonus. The evidence submitted by J was also insufficient to prove that there was an agreement between the two parties regarding the issuance and standards of the year-end bonus. Therefore, K can autonomously decide the amount of the year-end bonus based on the employee's personal performance and the specific situation of the company.
3. Can employees claim bonuses based on past practices?
Although past practices do not have legal binding force, if an employer has long established a stable practice of issuing bonuses, and employees have reasonable expectations regarding this, the court may regard it as an implied contractual term. For employees' claims, the burden of proof lies with the employees to demonstrate the existence of a bonus issuance practice. If employees cannot prove the existence of relevant regulations or practices regarding bonuses, their claims for bonuses will not be supported. If employees can prove that the employer has a practice of issuing bonuses, the employer must bear the burden of proof regarding the conditions, timing, and standards for bonus issuance. If the employer cannot prove that the employee did not meet the assessment standards or did not meet the conditions for bonus issuance, they should bear the legal consequences of failing to provide evidence. The following are two cases supporting and rejecting the issuance of bonuses:
Case 1: (2019) Shan 01 Min Zhong 6923
The court believes:Regarding whether to pay Q a year-end bonus for 2017. Although there was no written agreement for the year-end bonus, Q claimed that from the time of joining the company in 2013 to 2016, L Company issued a year-end bonus every year, and L Company also acknowledged the fact that it issued a year-end bonus to Q from 2015 to 2016. However, regarding whether to issue a year-end bonus for the other years, the company stated that the data was not saved. L Company acknowledged in the second instance that some employees indeed received year-end bonuses in 2017. The email sent to Q by the company indicated that Q's year-end bonus for 2017 was 0, but the company did not provide a basis for determining that Q's year-end bonus for 2017 was 0 and did not make a reasonable explanation. Since the year-end bonus is a type of bonus and falls within the category of labor remuneration, the employer should bear the burden of proof for reducing labor remuneration. Therefore, the company's claim that the issuance of the year-end bonus is at the employer's discretion is actually an infringement of the employee's rights. This appeal reason cannot be established, and the original judgment ordering the company to pay Q the year-end bonus for 2017 is not improper and should be upheld.
Case 2: (2020) Hu 0107 Min Chu 14265
The court believes thatWages are the labor remuneration directly paid to employees in monetary form by employers based on national regulations or the agreements in labor contracts. According to the method of determining wages, wages can be divided into hourly wages, piecework wages, bonuses, allowances, and subsidies. Among them, bonuses are excess labor remuneration and labor remuneration for increased income and cost savings paid by enterprises to incentivize employees based on enterprise performance and employee performance, in addition to fixed compensation. The Labor Law stipulates that employers have the right to autonomously determine their wage distribution plan and wage level according to the production and operation characteristics and economic benefits of their units. Therefore, for the issuance of bonuses, it should first be based on the agreements in the labor contract; if there is no agreement in the labor contract, it should be determined according to the rules or compensation system established by the employer; if there are neither contractual agreements nor system regulations regarding bonuses, the employer has corresponding autonomy regarding whether to issue bonuses and the specific standards and conditions for issuance. In this case, according to the written labor contract signed by both parties, there is no stipulation for a year-end double salary bonus, and Z also did not provide evidence to prove that H Company has a corresponding bonus issuance system. Therefore, H Company's argument that it decided to cancel Z's year-end bonus for 2019 due to Z's work-from-home status since June 2019 and the actual situation of the company affected by the COVID-19 pandemic is not inappropriate. This decision falls within the scope of the employer's autonomy in employment and should be supported.
In summary, for employers, establishing a clear and transparent bonus issuance mechanism is crucial. This not only helps reduce legal risks but also enhances employees' work enthusiasm. In this process, employers should fully consider the contributions of employees and ensure that the distribution of bonuses is fair and reasonable. To avoid disputes, employers should clearly define the calculation methods, issuance times, conditions, etc., in the bonus issuance system, publicize them to employees, and provide detailed explanations. In addition, employers should regularly evaluate the bonus system to ensure it aligns with the development of the enterprise and market changes, thereby creating a stable and fair working environment for employees. On this basis, employees should also enhance their awareness of protecting their rights and actively participate in the improvement and implementation of the bonus system to jointly promote harmonious development of the enterprise.
(Given that labor dispute cases have significant regional characteristics and there are obvious differences in judicial opinions across regions, the views in this article are for reference only.)
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