Bonus pay is extra pay given to employees, often as a reward or to increase morale and productivity. Bonus pay can refer to a number of different things depending on the company by which one is employed, but it is often directly related to the business's income throughout the fiscal year. Some companies let their employees know ahead of time whether or not they will be receiving bonuses, while others wait until the end of the year to make this announcement.
There are many reasons that an employee might receive bonus pay. Excellent performance on the job that goes above and beyond expectations is one of the most common reasons, and this type of bonus is usually determined by one's superiors. This type of bonus is referred to as merit-based pay, or it may also be referred to as reward pay for a job well done. Holiday pay is another type of bonus pay, where one is paid for a full day's work, but is given the day off.
In some companies, particularly where employees work in sales, employees may receive bonuses for exceeding sales goals. Though most employees in sales positions receive commissions based on a percentage of the value of the goods they sell, the bonuses may go to those employees who have sold more than is required of them. This is a fairly common practice among companies such as auto dealerships, for example.
Other businesses may offer a hiring bonus to new hires once they have worked in a company for a specified period of time. This type of bonus pay is less common, and typically requires the new employee to hold the job for at least a year before they are entitled to receive their hiring bonus. Finally, if a business as a whole exceeds its income goals for a period of time, the business may offer a bonus to all the employees as a show of appreciation.
Many companies use bonus pay as a way to improve morale and increase productivity among their employees, as well as to show appreciation for hard work and a job well done. It can be a great way to encourage employees to come to work on time and be ready to do their best throughout the day. If one is receiving a bonus, keep in mind that bonus pay is taxed the same way as regular income, even if a separate check is received.