How do you set up a bonus system in a small company?

What is a bonus?

Most of the time, it's an exceptional bonus, awarded at the employer's discretion. The bonus is neither a right for the employee nor an obligation for the employer. It is a liberality that depends solely on the entrepreneur's will, and for which he or she generally defines conditions, such as the achievement of precise objectives.

The company is not obliged to pay a bonus regularly and repeatedly over time, and the employee is not in a position to claim it.

Good to know : you must ensure that the bonus does not become a customary practice, i.e. that it does not meet the three cumulative criteria of constancy, generality (bonus paid to all or a category of your employees) and fixity (in its principle and the determination of its amount).

How do you set up a bonus plan for a small company?

Defining objectives

In a small company, it is often advisable to set up a bonus system that benefits all employees, in order to maintain the team's spirit of cohesion. In this case, you'll need to think about objectives that correspond to each person's mission (technician, administrative, sales, etc.).

You can set goals based on the SMART method (specific, measurable, achievable, realistic and temporarily defined). You need to :

• your employees fully understand what you expect of them
• you can objectively determine whether the objectives have been achieved
• your expectations are in line with the performance already achieved by your teams
• your objectives are set within limits with a clearly defined deadline

For example:

• for sales representatives, it could be a sales target or the signing of new contracts
• for administrative staff, you can rely on changes in working methods, such as better use of software, savings in the purchase of supplies, etc.

The definition of objectives is personal to each company, since it consists in prioritizing the actions that will be most beneficial (acquisition of new customers, improvement of after-sales follow-up, customer satisfaction rate...). The important thing is to ensure that the effort required to obtain bonuses is carefully measured, so that none of your employees is discouraged. The use of a tiered bonus scheme is one way of achieving this without difficulty.

Set budget limits

This is an essential step in allocating the sums you can devote to your bonuses, without neglecting any of your employees. As the bonus amounts per employee and per level are fixed, you can be sure that you will not exceed your financial limits in the course of the year. What's more, if certain thresholds are not reached by all your employees, you'll be able to save the corresponding sums to help you secure periods of higher performance.

Bonus system regulations

Bonuses take the form of remuneration in addition to base salary. However, they are not considered a salary component, since they are not mandatory.

As bonuses do not constitute a duty for the employer, they are considered a discretionary bonus. However, even if the bonus is left to the company's discretion, it must not derogate from the principle of equal treatment, as expressed in article L.3321-2 of the French Labor Code. This means that you can only grant special benefits if all your company's employees who are in an identical situation can benefit from them, and if the conditions of this benefit are perfectly defined and controllable.

According to a ruling handed down by the Cour de cassation civile, social division, on April 30, 2009, "the employer cannot use his discretionary power to avoid his obligation to justify a difference in remuneration in an objective and relevant manner".

It is therefore essential that you are particularly vigilant when setting up your bonus system within your company, to avoid any subsequent challenge from one of your employees.