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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE
- A bonus is a gratuity or act of liberality of the giver which the recipient has no right to demand as a matter of right.
- The grant of a bonus is basically a management prerogative which cannot be forced upon the employer who may not be obliged to assume the onerous burden of granting bonuses or other benefits aside from the employee’s basic salaries or wages.
- A bonus becomes a demandable or enforceable obligation when it is a part of the wage or salary or compensation of the employee.
Whether or not a bonus forms part of wages depends upon the circumstances and conditions for its payment. If it is additional compensation which the employer promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is achieved, it cannot be considered part of the wage. Where it is not payable to all but only to some employees and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage. (Eastern Telecommunications Philippines, Inc. v. Eastern Telecoms Employees Union, G.R. No. 185665, February 08, 2012)
What is a bonus?
Jurisprudence says:
By definition, a “bonus” is a gratuity or act of liberality of the giver. It is something given in addition to what is ordinarily received by or strictly due the recipient. A bonus is granted and paid to an employee for his industry and loyalty which contributed to the success of the employer’s business and made possible the realization of profits. (Lepanto Ceramics, Inc. v. Lepanto Ceramics Employees Association, G.R. No. 180866, March 02, 2010)
Based on this definition, the grant of a bonus is basically a management prerogative. As such, it cannot be forced upon the employer, and the employer cannot be obliged to assume an onerous burden of granting bonuses or other benefits aside from the employee’s basic salaries and wages.
When does a bonus become demandable?
A bonus becomes demandable if it forms part of the wage, salary or compensation, making them enforceable obligations.
In the case of Eastern Telecommunications Philippines, Inc. v. Eastern Telecoms Employees Union (G.R. No. 185665, February 08, 2012), the Supreme Court held that whether or not a bonus forms part of the wages depends upon the circumstances and conditions of its payment.
Jurisprudence says:
“If it is additional compensation which the employer promised and agreed to give without any conditions imposed for its payment, such as success of business or greater production or output, then it is part of the wage. But if it is paid only if profits are realized or if a certain level of productivity is achieved, it cannot be considered part of the wage.” (Eastern Telecommunications Philippines, Inc. v. Eastern Telecoms Employees Union, G.R. No. 185665, February 08, 2012)
Further, the Supreme Court ruled that:
Where it is not payable to all but only to some employees and only when their labor becomes more efficient or more productive, it is only an inducement for efficiency, a prize therefore, not a part of the wage. (Eastern Telecommunications Philippines, Inc. v. Eastern Telecoms Employees Union, G.R. No. 185665, February 08, 2012)
On another note, the rule is settled that any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer. The principle of non-diminution of benefits is founded on the constitutional mandate to protect the rights of workers and to promote their welfare and to afford labor full protection.
Related article: Is Bonus a Demandable Right of an Employee?
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