Everyone loves getting a bonus payment; I mean, who doesn't love getting extra money?
Bonus payments are payments made to employees in addition to their base salary.
Sometimes they can be used as incentives for employees to reach their KPIs, or they can be paid simply as a reward for when the company has done better than expected. A typical example of the latter would be year-end holiday bonuses.
Be aware that it's crucial to choose the correct "Bonus Type" when making any bonus payments to employees.
In Humi, you can classify bonuses under two types:
When determining which "Bonus Type" to choose, the critical decision factor depends on why the employee was given the bonus.
Choosing the correct bonus type is very important because the CRA can have severe consequences.
Also, based on the "Bonus Type" that you've chosen, you'll receive specific "Reporting Recommendations."
Bonus Type Definitions:
- Work-related - A "Work-Related" bonus is based on previously set standards that must be met in order to receive the bonus payment. These requirements are determined at the outset of the payment period.
For example, if employees will only receive a bonus payment if they have completed a project by a specified date.
- Discretionary - A "discretionary" bonus is made at the sole discretion of the employer. The amount, the requirements, and the timing are not disclosed in advance.
An example of a "Discretionary" bonus is if you choose to give your employees a holiday bonus.
How to make a "Bonus" payment
- In Payroll, when you are preparing to run payroll, you can add the "bonus" payment on the "Edit Payroll" page.
- In the "Extra Pay" column, select "+ Bonus."
- You'll then get this pop-up where you'll enter the "Bonus" amount in either the "Bonus Work-related" or "Bonus Discretionary" field.
- Enter the "Bonus" amount in the correct field and click "Save."
You'll now see that the "Gross pay" now includes the "Bonus" amount.
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