Bonus payments: discretionary vs non-discretionary

Some payrolls have a Bonus and Bonus ND (Non-Discretionary) code set up.

Discretionary Bonuses

Awarded at the discretion of the employer, usually without criteria in place for awarding the bonus. It is a form of additional compensation that an employer may decide to give to an employee. The employee does not expect it.

Example:

  • An employer wants to surprise an employee with a holiday bonus

  • An employee goes above and beyond their job duties

  • A team overcame a challenging day with high volumes of work

Non-Discretionary Bonuses

Awarded in addition to an employee’s regular wages, and most often tied to employee performance. May be part of an employee’s work contract. The employee expects it.

Example:

  • Hiring bonuses

  • Production bonuses

  • Bonuses for reaching sales goals

Note: Review your labour standards requirements to confirm if non-discretionary bonuses must be included in vacation accumulator calculations.