Discretionary Bonuses – Problematic Clauses In Employment Contracts

South African Labour Law does not provide for compulsory payment of bonuses unless the employer falls within the ambit of a specific Bargaining Council or if a particular company policy makes such a provision. Therefore, without a Policy or Bargaining Council regulating a particular industry, an employee has no automatic right to a bonus.

The employment contract is of utmost importance in establishing whether there is an agreement between the employer and employee on the payment of bonuses. Employees must be aware that certain factors, i.e. absence, disciplinary records, etc., may affect their bonuses. Should the employment contract stipulate that the payment of a bonus is "the sole discretion of the employer", there should be no expectation from the employees to receive such a bonus, and they will not have a guaranteed right.