business

Corporate finance can assist companies with keeping their promises

The holiday season brings with it a lot of joy as families come together but it’s a costly time of year too. Financially you can feel the pressure and strain of making your income stretch to cover gifts, food, holidays out of town and the like. Companies that offer a traditional Christmas bonus are in good favour with their employees and this can ensure loyalty, employee satisfaction and a consistent level of productivity and good work ethic. But not every company feels they can afford to do this unless they look into making use of corporate finance.

Bonuses are a straightforward contractual agreement

The specifics around benefits and thirteenth cheques are included in many employment contracts nowadays. There’s no mystery – you either can expect it or be made aware that it’s not within company policy. South African law says that either the bonus or thirteenth cheque must be stipulated in the employee’s contract. If neither is offered that must be outlined too. If the bonus is performance based then the employee performance metrics must be listed so that the staff is aware of what’s expected of them. What’s more, if the bonus or thirteenth cheque will not be paid at the end of the year then the company needs to inform their employees of this as early as six months ahead of time. If this doesn’t happen then the employer could land themselves in trouble for unfair labour practice. Corporate finance can assist a company who feels that they won’t be able to pay their promised end of year bonuses and the loaned amount can be paid back in the new year.

Bonuses generally come about as an incentive

Employees are expected to perform for this bonus money and it is considered to be an additional compensation for the employee. How much bonus is awarded is determined by the employee’s manager and the defined goals which have been allocated. By definition this is monies received beyond a normal salary commitment and is therefore substantiated as a reward for achieving a variety of pre-determined goals. Bonuses are a private issue of the company. The South African Labour Law has very little to say about bonuses and therefore companies who don’t offer bonus structures are not foregoing any obligation and there won’t be any repercussions. However, once bonuses are promised an employer cannot back out of the deal. They will come under fire from their staff members unless their contract stipulates that a bonus may or may not happen.

If a bonus is promised then it must be made good on

Ultimately, companies who historically offer their employees a bonus need to continue with their tradition. Employees work hard for the bonus at the end of the year because this is an expensive time of year. If a company comes under financial strain and can ill afford to hand out their promised bonuses then the option of corporate finance is available to assist.