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The award of bonuses and incentive payments continues to raise questions for employers, particularly when reviewing or amending existing incentive schemes.
In an article published in RH Magazine, Carolina Hecker, Principal Associate in the Labour practice area at CCA Law Firm, analyses the criteria that distinguish a variable incentive payment from remuneration and the risks associated with the possible recharacterisation of such payments.
In this context, she notes that “the distinction between remuneration and a genuine bonus does not depend solely on the designation given by the employer.”
The article highlights the importance of establishing clear eligibility and award criteria to avoid incentive payments being reclassified as remuneration and, consequently, becoming subject to the principle of salary irreducibility.
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- RH MAGAZINE