How the company ‘Christmas bonus’ is screwing workers.

theObserver@hotmail.com

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Yearly bonuses to workers are twisted into a cheep form of overtime which is only paid under certain conditions. In some cases, companies are hiding behind abstract notions of equality and fairness in order to justify paying less to the workers while the senior managers walk away with bonuses bigger than an average workers yearly salary.

To understand this complete shafting of the worker, a little history of the Christmas Bonus is needed :

It's traditional to give gifts at Christmas. In the workplace workers were given small gifts like a turkey or some candy, and by the early 20th century the practice of giving a cash bonus, around 10% of the workers yearly wage, became standard among banks and similar non-labouring professions.

While this appears generous, a cash bonus is actually a very useful tool for employers because it provided a means to encourage productivity. Why pay expensive overtime throughout the year if the workers will instead accept 10% of their wages in cash at year end ? Woolworth’s first cash ‘bonus’ was paid to compete with higher wages among competitors and to avoid a strike. Famously in 1910, a 25-year-old saleswoman working in a New York department store told a National Consumers’ League investigator that in the week before Christmas “she worked standing over fourteen hours every day… so painful to the feet becomes the act of standing for these long periods that some of the girls forgo eating at noon in order to give themselves ..a foot-bath.” For this overtime the store gave her $20 “presented to her, not as payment, but as a Christmas gift.

So from it’s outset the practice of paying staff Christmas bonuses was useful to avoid paying overtime and in encouraging productivity. Even better this so called bonus would only be paid if certain conditions were met, the most common being the company profit margin. Now workers found themselves doing additional hours for which they would only receive payment if the company made a big enough profit.

But the practice started to backfire on employers. Workers began viewing the cash bonus not a gift but as a right. If the company made it’s profit targets, the workers expected their cash bonus for their yearly work. In America following workers strike action over non-payment, the National Labor Relations Board ruled that the Christmas bonus could no longer be considered an employer’s discretionary gift but an expected and negotiable component of a worker’s wage.

Now employers had a problem. It is reasonable to expect a company not to pay cash bonuses if they company was not performing well. Fair enough. But employers still want to encourage extra work for no overtime and now workers expect the bonus as an automatic gift. The poor darlings had caught themselves in their own trap.

So what was the solution? Well instead of automatically paying bonuses to everyone, isn’t it reasonable to pay a bigger bonus to those who worked harder than everyone else? Most people would agree and so the average payment dropped. Some workers got above average, some got less, most got less on average. But how to decide which workers got what? Well, let’s allow the managers to decide.

But now we have another problem: favourism. Some workers may feel their managers are unfairly privileging other workers with higher and undeserved bonuses. And that leads to an unhappy workforce and even legal action.

The solution is to measure a worker productivity, and this is the genius part, to set additional work targets over and on top of their regular work load AND then set their managers bonus objectives to ensure the workers meet their bonus target ! Brilliant !

So now a worker has his manager ‘encouraging’ him to meet this ‘bonus target’ via extra hours and weekend work for which he will only receive a payment if the company makes X millions instead of Y millions and he will only find out if he will receive that payment at year end.

A final twist though: to prevent workers from rushing their bonus objectives at year end and producing half-assed work, the objectives are spread through out the year to ensure quality.

If you think about it, it’s pure genius on the part of employers. Complete shafting of the workers and if they complain, HR can hide behind fairness and equality. If they opt out, their managers will miss their bonus objectives so no opt out allowed. Extra work for less payment.

Therefore I call shenanigans over the Christmas bonus !

But sure, aren’t we in a recession and aren’t the workers lucky to have a job? Yes and yes but it’s traditional in recessional times for the existing workforce to get increasingly shafted through less pay and more working hours. But the above outline has been happening for decades and people buy into the rhetoric of equality and fairness when it really means more overtime for less money.
 


Watcher2

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Life is not fair. There will always be inequality. There will always be the big bad employer just like there will always be the little trouble maker among the ranks.
 

Barnacle

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The practice of withholding overtime to be paid as a bonus at Christmas, whether the rate is the overtime rate or a lesser rate, is not only disgraceful, it is illegal. The employer can benefit substantially from this in the form of tax savings, or to be more precise PRSI saving. It is rather stupid of employers to act in this manner as the penalties if caught can be quite hefty but it does happen unfortunately.
 
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typical

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Jul 8, 2010
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Oh the hardship of the salaried worker!! The poor pets, they're terribly hard done by.

There's advantages and disadvantages to every type of pay system, a salary is the cushiest system, by far, but it means you get shafted if you do OT. Such is life.
 

Socratus O' Pericles

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As my friends in the public service say, Christmans bonus what thef*** is that?
 

edor

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Sep 1, 2009
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I wish I was hard done by enough to get a Christmas bonus. Oh well.
 

Barnacle

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You can explain to them that it's cheep mandatory overtime justified by nonsence about fairness.
In some cases the employee can actually be worse off than if the payment had been made when it was earned and the employer is quids in. I saw one case where the employees were working 37.5 hours but being paid for 35 and the 2.5 was added up at the end of the year. For someone in this scenario earning say €10 per hour, the employer saves €500 per year and the employee gets about €50 less. This has the effect for the employer of actually reducing the hourly rate.
 


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