Christmas Bonus: Ultimate Guide To Rewarding Employees

A Rolex watch. A nicely padded check. An all-expenses-paid trip. 

Those are examples of Christmas gifts of yesteryear, especially for employees at big companies. 

These days, business isn’t always booming. Affording those kinds of elaborate Christmas bonus ideas for your employees is simply not possible. 

You may wonder whether you even have to give a holiday bonus at all. And if you can afford to give something to show appreciation to your team, what is acceptable?  

We have all the information you need right here in this ultimate guide to rewarding your employees around the holiday period. Let’s get started.   

What Is A Christmas Bonus?

A Christmas bonus is also called a holiday bonus, which is more politically correct since not everyone celebrates Christmas. An employer gives this bonus to employees during the holiday season. 

A holiday bonus can be a physical gift, it can be in the form of extra days off (paid leave), or it can be cash. 

This kind of bonus is different from a year-end bonus. A bonus is given equally to all employees. This means every employee gets the same “gift.” It is a “thank you” to your employees. 

On the other hand, year-end bonuses are based on various factors, including the employee’s performance, their base pay, or how long they’ve worked at the company. 

What Is The Average Christmas Bonus?

It isn’t easy to give a definitive answer for what the average Christmas bonus is. How much an employer can give to all their staff as a bonus depends heavily on the company’s budget. 

Some businesses may choose to give a percentage of the employee’s salary as their bonus. Others prefer to pay a fixed amount, whether it is $50 or $150. 

Interestingly, in 2019, a real estate company in Maryland surprised its 198 employees with a massive bonus that totaled $10 million. 

An average employee received $50,000. However, the company based the bonus on how long each employee worked at the company. 

Of course, this is an extraordinary case. But, the point is that Christmas bonuses vary from company to company and industry to industry.

How To Give A Good Christmas Bonus for Employees?

To make sure that you’re giving a good holiday bonus to your employees, ensure the gift fits the SSMART acronym: 

• Support - the holiday gift needs to support your company value and goals.

• Sincere - besides meaning to thank everyone, it should also be simple. 

• Meaningful - the bonus needs to have some value to your employees; it can’t simply be a random gift. 

• Adaptable - you don’t have to give the same bonus every year; it needs to adapt to what you can afford and what you think is best for your employees. 

• Relevant - the bonus should be relevant to your employees, company, and culture, as well as the time of year. 

• Timely - a bonus can’t be given to your employees in January. The end of November or mid-December is a good time.

What Kind Of Bonus Should Your Company Give?

There are three different types of bonuses you could choose from to give to your employees:  

Cash Bonuses

Employees like receiving cash. With a cash bonus, they can do whatever they want or get anything they need with the money. 

When deciding on a cash bonus, you can base this on a flat amount per employee. So, let’s say you have a small business and you have 20 employees, then you can give each person $100 (if this is affordable). 

The other option would be to base the cash bonus on how long an employee has worked for you. For example, Susan has been working for your company for 10 years. At $100 per year, Susan would get $1,000. Johnny has only been with you for two years, so he’d get $200. 

A third option would be to base the cash bonus on a percentage of your employees’ monthly salary. Let’s say you decide on 5%. For a monthly salary of $7,000, the bonus amount is $350.

Non-Cash Gifts or Perks

Non-cash gifts are physical gifts you give as a bonus to your employees. Ideas for this kind of gift are really endless. For example, you can do a gift basket with company swag or based on a theme. You can give your employees a nice box of chocolatey goodness. Or your non-cash gift can be tied to a charity. 

For more options, check out our article on Christmas Gift Ideas.  

Another category of non-cash gifts would be perks. 

Perks could be time off. You can give your team the option of choosing when they want to take the extra paid leave. You can also decide to give your employees the week between Christmas and New Year off. Alternatively, you can just add two to three extra days of leave before or after Christmas.   

Another perk could be to let your employees leave work early in the week leading up to Christmas. Let’s say the workday ends at 5 p.m., then your employees can leave at 1 p.m., for example. 

Related: 17 Unique And Rewarding Christmas Gifts For Employees

Performance-Based Bonuses

Your company can also give holiday bonuses based on an employee’s performance during the year. Alternatively, the performance-based bonus can take the place of the holiday bonus. 

In a pay-per-performance program, how much an employee earns for their bonus is tied to whether they met or exceeded certain goals. For this to work, you need to have clear objectives that you share with your employees before you implement the program. These objectives may be included in your employees’ contracts. 

In general, these bonuses are only paid in the new year so that your employees have until the end of the year to meet or exceed targets.  

Related: Incentive Bonuses In Business: The Pros And Cons

Do You Have To Give Christmas Bonuses To Your Employees?

Deciding whether or not you are obliged to give bonuses can be tricky.  

Firstly, no, you don’t have to give holiday bonuses to your employees. That is unless it is stated in their work contracts or another agreement that they will receive such a bonus. Then you are legally obliged to give your team a bonus. 

Secondly, if you have previously given your employees bonuses, then it is challenging to not continue with this tradition. Sure, you can say that your company made a loss this year and can’t afford it. But your employees have come to expect a gift when the holiday approaches. 

Not giving them a bonus may result in lower engagement. This negatively affects morale and productivity, and ultimately, your bottom line. 

It is your decision to give a bonus or not to give one, but gifting a bonus definitely has benefits. 

How Christmas Bonuses Boost Employee Morale

A holiday bonus has the benefit of making your employees happy, and in turn, this boosts their morale. A gift shows that you have thought about your workers and that they are a valuable part of your company. 

Being rewarded for working hard, your team will feel more loyal to your company. This decreases your employee turnover rate. Did you know that hiring a new employee can cost as much as three times that employee’s salary?  

So, even by giving something small as a bonus, you can help show your employees that you value them. Everyone likes being appreciated so this will help keep your employees happy. 

Top Tips For A Great Christmas Bonus Strategy

Here are three tips to ensure you have a great bonus strategy: 

Choose your bonus amounts carefully

First, the bonus amount needs to be fair. Second, the bonus needs to be affordable. 

The total amount you give in bonuses should fit in with your budget and how much profit you made this year. You definitely don’t want to go into debt giving your team elaborate gifts you can’t actually afford.

And you know the saying: it’s the thought that counts. This is just as true for a Christmas bonus for employees as it is for any other gift. 

Make sure you include everyone

Everyone who is employed by your company should receive a holiday bonus. This includes the temporary workers too. 

If you don’t include everyone, the employees who did not receive bonuses will feel left out and be disappointed.  

Communicate with your employees about what to expect

Employees value transparency. So, communicating with them about whether or not you’re giving a holiday bonus is a good move. It also helps to manage expectations if the bonuses are slightly different from previous years. 

If you aren’t giving a bonus, then shortly explain why, especially if you’ve given gifts in previous years. 

Final Thoughts

A Christmas bonus is a kind way of saying thank you for all the hard work your employees have put in during the year. Everyone likes to be recognized for a job well done, and this boosts team morale, loyalty, productivity, and your business’s profit margin. 

How you reward your employees depends on your business, what you can afford and what works for you so be sure to give it a lot of thought.