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Discretion without discrimination – an employer’s guide to giving at Christmas

The cost of living crisis and high energy prices appear set to cause problems for some employees over the Christmas period, and many directors and managers will be looking for ways to give a helping hand to their workforce.

Discretionary bonuses could be a good way to provide this extra support, however, it is important to understand how to introduce these properly, without inadvertently discriminating against other sections of the workforce.

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Company bonuses are often contractual and tend to be paid out once specific targets are hit, affording an employer little flexibility.

A discretionary bonus, however, is one over which the employer has complete control, including amount and provision, potentially granting the bonus in one year, but not the next, with no right of action, claim or recourse from the employee, should one not be received.

It is the flexible nature of the discretionary bonus that has brought it to the attention of many senior managers as they try to assist their employees over the Christmas period, as it allows for help to be provided quickly and discreetly, should the need arise.

However, whilst a discretionary bonus may seem like a sensible solution to many directors or managers, it is vital that bonuses are granted fairly and given to those employees who need it most.

To ensure this, communication is key, and the more a director knows about their staff, the easier it will be when it comes to assessing who, if any, will require help.

Directors should also harness the expertise of their line managers to pick up on hints as to whether employees are facing difficult times. These could be caused by a range of issues, from marital break-ups to boiler malfunctions. It is important to understand the make-up of your workforce to be able to predict who may need further support.

Communication is vital in understanding who may be struggling, however, discretion is also key – and directors and managers should take care to keep any conversations about personal circumstances confidential, whilst ensuring that the reasons for the decisions made are recorded and securely stored away from the wider team.

These confidential conversations tend to be the best way to approach sensitive subjects such as personal finances and extra support, as they provide a safe space for the employee to be honest about their situation whilst not othering them or broadcasting their struggles in front of the rest of the workforce.

Another method that may encourage staff to come forward on their own initiative would be for directors to send a company-wide email to promote the extra support that is available to employees, such as crisis loans, for example, that have an agreed repayment arrangement.

However, it is important not to rely on employees putting themselves forward, and to approach those suspected of struggling directly, with empathy and kindness, rather than as a manager speaking to a subordinate.

When considering discretionary bonuses, maintaining fairness towards all employees is vital. There is a risk that a decision maker fails to approach groups that they perceive to be doing well, therefore potentially missing someone who may be hiding their struggles.

Forming a bonus committee to reduce the risk of unconscious bias will equally allow a director to make more informed decisions when setting the criteria employees must fulfil to be considered for a discretionary bonus, utilising knowledge from across the business to ensure fairness.

It is pertinent to bear in mind that these bonuses will by nature be exclusionary, and it is appropriate to be able to demonstrate the reasoning behind the decisions, should any queries about fairness arise.

By sense checking decisions in this way, directors will reduce the chances of unconscious bias, and ensure that help reaches every employee that needs it.

Discretionary bonuses might go a long way to help struggling employees, however, they are not the only method of assistance available. Directors may want to consider whether they are able to provide short-term crisis loans that could then be paid back over 6-12 months through salary deductions, and where possible, reasonable salary increases should be explored.

For businesses which are unable to provide salary increases, a one-time discretionary bonus could seem like the best way forward, however, it is important for directors to ensure that they have addressed factors such as fairness, unconscious bias and how to ensure the support will remain confidential before they go ahead and set up any schemes, and that they seek professional advice where necessary.

Most directors and managers want to do the right thing for their employees as the cost-of-living crisis deepens, and with some clear thinking it is entirely possible to build a comprehensive programme of support as we head towards winter and the Christmas period.

Nick Jones is employment partner at law firm Shakespeare Martineau