Not to know how much Christmas bonus to give

[Firstworlddilemma]

I am a sole trader with 3 members of staff. In line with most small businesses it has been a difficult year. I had to furlough all 3 staff between April and July. One staff member came back in each of July , August and September. The business is now doing OK. I had a good (perhaps even slightly better than normal) September/ October / November, but things are horribly quiet in December. The phone just isn’t ringing.

Staff member 1 has been with me a year but is the most valuable member of staff. She works hard , brings in money for the business and I would hate to lose her. Her family is financially comfortable.

Staff member 2 has been with me 2 years. I am paying for very expensive training. This is a massive opportunity that they would not get elsewhere. Single and financially unstable.

Staff member 3 older, been with me the longest. Reliable but slow. Financially fine.

2 and 3 are easily replaceable but I like them very much and don’t want to!

So to my AIBU. I will give each person a Christmas gift with a value of around £30. I also want to give them a cash ‘bonus’ in their pay packets but have no idea how much to give. I don’t want to make them feel insulted or undervalued - it has been a tough year - but I am anxious that the business isn’t out of the woods yet and I need to be careful to make sure I can keep trading through the first three months of 2021.

I have a ‘pot’ of around £750. I was a not able to do the usual Christmas meal.

1. Should I treat them all equally, if not how should I divide the ‘pot’,
2. Is the pot too small that I risk insulting them so increase their gift to around £50 (max I believe the tax man allows) and set budget aside for next year.

Any advice appreciated.

To be honest I would do the second option, give them all an equal gift under £50 and set the rest aside. Not because the bonus amounts are insultingly small, but because it sounds like you aren't out of the woods yet, and they will understand. Can you give vouchers for gifts?

£250 each.
In this case it is a bit like wills & children.

The other justifiable method would be to give in proportion to their salaries (which should lead to #1 getting most, shouldn't it?).

I would split the money equally. Nothing would cause upset in a small team like differentiated bonuses! Their personal financial situation isn't relevant to this I don't think.

Gift plus £100 each. And think about e.g. extra day or half day off closer to Xmas, it’ll cost nowt but might be very appreciated.

Let financially precarious person know she can approach you if she needs extra help over Xmas.

Tell person 1 how much you value her contribution and that if business is good in 2021 you’ll look to promote/give pay rise or commission.

Start a long service award in 2021 to show you value longevity. Talk to person 3 about it.

If you don't have performance related pay you should give them all the same. I would do normal gift and £100 each, setting aside the remainder for next year.

Just give them the same. It’s kind of you to consider a bonus in these times and they should be grateful, but they won’t be if you start playing ‘mum’ and trying to divvy up the money based on their personal lives.

I'm quite sure they will be grateful for any sort of bonus in the current climate. I think everyone I know has written off any hope of a Christmas bonus this year.

That said, I think being equal is important, as well as acknowledging that it's been a difficult year for them too.

I've never received a bonus in any job I've worked (publishing), and for a small firm in a tricky year would not expect it. I would just give them a nice gift and put aside the rest. If you insist amount should be given by seniority of role.

Is this pot your safety net if things continue to be slow in January / February?

I'd rather have no Christmas bonus than no job in a couple of months because my boss had no money when things got tight.

I usually get a 6 monthly bonus based on the whole company hitting targets didn't get ours Mays pay due to the covid situation. Work tailed off & no idea how long it would last.
We are now hitting target in quite a few departments but I'm not expecting any Christmas bonus this year not even the cost of the Christmas party that's usually paid for.
Its kind of annoying as we are working our butt's off but I didn't get made redundant in October so... I'm OK about it.

In the current climate, when staff know that it's really tough, do you really think people would resign over not receiving a Christmas Bonus?
I would be tempted to go small, say you value them but it's been a tough year - December is tough and you don't know what next year will bring.
If things are really quiet and you're team are salaried rather than hourly paid (and fixed hours), an additional day off may be appreciated.

There's plenty for whom Christmas bonus will be a P45.

www.hawsons.co.uk/christmas-tax-guide/

You sound like such a thoughtful person as well as boss.
I agree with others that they will understand it’s been a difficult year. Do what you feel comfortable with but absolutely gift the same, or you could cause massive problems within the team. Maybe a private chat with each of them to go with it, where you can speak openly about how much you value them individually without anyone overhearing and taking offence.

Actually...don’t give them a cash bonus. It’s gonna be taxed and meh.

Buy them all vouchers

Did they get a bonus last year?

Vouchers or M&S hampers for £50 as they seem quite an impressive gift to give. The save the cash for 2021 because it's going to be a bumpy ride post Brexit.

What did you do last year?
For me personally I would he happy with just a gift this year.
Maybe use the money to give an extra days paid holiday next year , if things improve.

Probably an unpopular view but I don’t think you should be giving big bonuses When you’ve been claiming government money for furlough

Thanks for all your thoughts.

I don’t think any of the three would resign. We are in quite a deprived part of the U.K. and jobs are hard to come by. Person 2 and 3 would not be able to find similar jobs locally and whilst person 1 might be able to get another job they have got their ‘perfect’ hours with me that they would be unlikely to get elsewhere.

As we were not able to have our usual Christmas meal (when we usually close for half a day) I have agreed to close a day early so everyone is having an extra days leave paid. They seem happy with this.

Last year I gave £150 of vouchers each and then got into trouble with my accountant so that’s a no go. £50 is the max gift I can give without tax implications.

The money I have set aside is ‘extra’ and is for the staff. I have been very careful in the good months we’ve had recently to make sure I’ve saved enough to be able to pay all overheads for the next quarter.

Thanks for all of your opinions. They are really helpful.

100 gift card each
Dont give in wage as tax man takes it

I'd do the £50 each, then have something delivered to them (bouquet and hamper) worth another £50 each.

Keep the remainder back and, if Lockdown rules relax in the new year, do some January drinks as a team.

I think it’s a very good gesture you are doing. I would give £250 each, preferably cash or vouchers. Whatever you do, you will be wrong in some people’s eyes, but keep it simple.

@Christmasfairy2020

100 gift card each Dont give in wage as tax man takes it

They can't do this, as they've explained already.

Sorry just saw the Accountant bit, £50 each and extra couple of days extra holiday.

My DH runs a medium size business and every member of staff gets the same bonus at Christmas. The partners donate the money from their drawings and therefore they pay the tax on the bonus not the recipients.

100 gift card each Dont give in wage as tax man takes it

Its taxable whatever form it takes if its above the HMRC limit (assuming UK)

That has crossed my mind. Had I not furloughed in the early days the business would have collapsed and all three would have lost their jobs. As soon as work picked up members of staff were brought back.

I could have managed without person number 3 throughout the autumn and pocketed the money I would have saved had she been on furlough myself but didn’t as I could afford to pay her.

I have chosen not to furlough in December even though we are all twiddling our thumbs as I feel I would be taking advantage of a system I don’t ‘need’ right now. I have saved enough that I do not need to furlough between now and March as I believe that’s the right thing to do.

I believe that I have used furlough as it was intended and it has saved 3 jobs (as well as my business - I know I am fortunate).