In casual language nomenclature, the terms “reward”, “regulatory bonus” and “award” are often used interchangeably, which in practice can lead to confusion regarding employee settlements, the obligations binding on the employer or the consequences that an employee may draw from their provision. It is worth noting that these are different categories of benefits, with different legal and tax implications. Understanding these differences is key for employers who want to effectively motivate their employees and avoid potential legal issues.
Regulatory bonus – motivation through additional remuneration
Regulatory bonus is a type of salary supplement that an employee receives for additional efforts made at work. It is usually a form of salary supplement dependent on the achievement of results or specific targets that are measurable according to objective criteria. Organisations often use the regulatory bonus system as a motivation for employees in order to increase their commitment to achieving certain business targets.
In legal terms, the regulatory bonus, its amount and the conditions for receiving it should be set out in the employees’ employment contract or remuneration regulations. The amount of the regulatory bonus may depend on various factors, such as:
- the employee’s contribution to the financial performance of the organisation as a whole;
- the employee’s contribution to the financial performance of a particular team of the organisation;
- the employee’s individual performance as measured against objectively established criteria;
- the employee’s achievement of specific project objectives, set early on.
Award – recognising exceptional performance
An award differs from a regulatory bonus mainly in its nature. It is a form of honouring or recognising an employee for exceptional performance, attitude, or commitment. Unlike a regulatory bonus, the conditions for receiving an award or its amount are not predetermined in the employment contract or other internal employer acts, and its granting is at the decision of the employer or the management team.
An award can take many forms, such as a financial bonus, vouchers for services, gifts or extra days off. It is a tool designed to highlight and recognise an employee’s exceptional contributions to the company.
Crucial differences between an award and a regulatory bonus
The main difference between a regulatory bonus and an award is the way in which they are regulated, determined, and paid. A regulatory bonus is regulated by specific, verifiable, and objective conditions or criteria that the employee must meet in order to receive it. In this case, it is important that the employee and other members of the organisation – based on the employer’s regulations – are independently able to verify whether, in what amount and when the regulatory bonus may be paid to them. The award, on the other hand, has a unique, occasional character and is granted based on the employer’s subjective judgment, which should be based on the employee’s exemplary fulfilment of their duties or display of initiative at work.
The regulatory bonus is claimable in nature, which means that an employee has the right to claim it in court if they have met the conditions specified by the employer for receiving it as set out in the employer’s intracompany act, while an employee’s claim for the award in court is only possible if, having previously granted the award, the employer subsequently refuses to grant it without objective reasons.
The anniversary reward – an honourable recognition of length of seniority
In the context of employee benefits, it is also worth mentioning the anniversary reward, which is a unique form of recognition of an employee’s long seniority to the organisation. The anniversary reward is granted on the occasion of the employee’s anniversary with the company, thus highlighting the importance of the employee’s long-term commitment.
An anniversary reward is not based on the achievement of goals or results, but on the passage of a certain period of time, usually the passage of many years of service in an organisation. It is a symbolic reward, granted in the form of a financial benefit payment.
The rules for granting the jubilee award are not regulated in the Polish Labour Code – for budget employees they are regulated in separate acts, and for other employee groups they depend solely on the employer’s discretion, which should be expressed through provisions in the remuneration regulations or other internal documents.
Summary
All the benefits described above are important motivational tools in the process of hiring employees. Implementing such solutions in your organisation can have a significant impact on the productivity of your employees and the atmosphere in your workplace.
If you decide to use any of the above solutions, it is worth considering carefully which factors will determine the payment of additional benefits and whether they should be permanent or occasional. Properly naming the benefits to which employees are entitled and regulating them correctly in the company’s internal regulations will help avoid unnecessary conflicts and possible legal claims on the part of the employee.
Our team encourages you to take advantage of the above solutions, which will help you turn employee satisfaction and motivation into measurable work results that work to the benefit of your organisation. We will be happy to support you in the selection of appropriate additional benefits and in the preparation of effective internal records.
Author:
Zofia Kwiatkowska, Legal assistant
