Annual bonus, should pay or not?

这里是我的微信自媒体。我会在这里和大家聊聊关于HR和劳动法的那些事，和朋友们分享我的职业感悟，我的见闻，以及身边有趣的人和事。由于精力所限，每周只推一次，但请相信，每篇都将是诚意之作，感谢您的关注。
年终岁尾，Annual Bonus（年终奖）又成为大热话题，尤其是在外企，果真是大大的一笔，当然随之引发的争议也是纷繁复杂，千奇百怪。今天的文章来自我们团队的涉外业务律师陈权，他用英文案例与大家分享有关年终奖的那些事。
The basic facts:
Mr. Wong concludeda labor contract with a company (“the employer”) in January 2013, and submittedhis resignation letter to his supervisor on 15th December, 2013. He finishedthe handover work and left the company on 31st December, 2013, i.e.,Mr. Wong served for the employer less than a year since his entry of thecompany.
In January 2014, Mr. Wong heard that the employer paid each full-timeemployee annual bonus which equals to their two months’ salary respectively,therefore, he requested the employer to pay him the proportional annual bonusaccording to his actual working duration prior to his resignation in 2013.
However,the employer rejected to his claim since the annual bonus is only paid to thecurrent full-time employees, while Mr. Wong had already resigned when thepayment was incurred. In view of cannot reach a consensus after consultationwith the employer, Mr. Wong filed a labor dispute arbitration case to the localcompetent labor disputes arbitration committee to claim for his annual bonus.
The decision by the arbitration committee:
The arbitration committee held that the employer has the right to make its internalannual bonus policy, however, neither of the rules and regulations nor thelabor contract signed by the two parties has explicitly regulated such policyregarding the payment of annual bonus.
Therefore, the arbitrator finally, inaccordance with the principle of equal pay shall be given for equal work, concludeda decision to support Mr. Wong’s claim on requesting for being paid the annualbonus by pro rata of his working duration in the company.
Lawyers’ comments:
In accordance with article 18 of PRC’s Labor Contract Law, if a dispute arises due to the fact that the rate or standards for labor compensation or working conditions, etc. are not explicitly specified in the employment contract, the employer and the employee may renegotiate.
If such negotiation fails, the provisions of the collective contract shall apply. If there is no collective contract or the collective contract is silent on the issue of labor compensation, equal pay shall be given for equal work.
Besides, in accordance with the article 3, 4 and 7 of Provisions of National Bureau of Statistics of China on Composition of Gross Wages (“the Provisions”) as well as the Interpretation of the said Provisions, bonuses which refer to the labor compensation for exceeding a specific amount of workload and increasing the company’s revenue etc., fall within one part of an employee’s gross salary, and include the annual bonus. Therefore, the principle of equal pay is given for equal work should be applicable for annual bonus.
At the same time, there is also an issue that cannot be ignored which refers to the final amount of annual bonus is based on the company’s annual revenue and the employee’s work performance during the past calendar year.
Since the company’s annual revenue as well as the evaluation result of the employee’s work performance may be different year to year, the amount of the employee’s annual bonus would be a floated part of the gross salary.
For the aforesaid reason, in practice, it is difficult to estimate the employees’ contribution to the employer for those who resign without working for a complete calendar year.
As a consequence, unlike other forms of salary, the legislators have not enacted clear and specific regulations on the payment of annual bonus. And hence the employer has right to draft the policy regarding the payment of the annual bonus at its own discretion.
However, in this case, the company has no such regulations or policy on the payment of annual bonus in its internal relevant files.The arbitration court therefore took the principle of equal pay shall be given for equal work which is in accordance with article 18 of Labor Contract Law as the grounds to decide that the company shall pay Mr. Wong the annual bonus calculated by pro rate of his service term for the employer.
From legal perspective, the employer could avoid the arising of such a labor dispute if it made clear regulations or agreed in the provisions of the labor contract on the objects and standards and the required conditions of the distribution of annual bonus, as well as when the annual bonus shall be distributed. E.g., the employer may make the regulations in its employment handbook as follows:
Inorder to motivate the employee to bring more benefits to the company during thecoming year, the employer has the right, according to the company’s economicbenefits of the current year, to pay annual bonus to those employees who have achievedfull attendance during the whole previous year as well as considering his/herwork performance during the same year. Such amount of annual bonus will be paidwithin a designated period in early of the next year by the employer.
Theannual bonus shall only be paid to the employees who are still serving for thecompany upon the occurrence of such payment.
Tactics by HR：
HR shall have to engage in management of employee resignation work with due diligence. Except for the abovementioned procedures for employees’ resignation, HR also has to note that whether the resigned employee has to bear any special obligation pursuant to the labor contract, or Non-Disclosure Agreement (“NDA”), or Non-Competition Agreement (“NCA”) or any other agreement signed between and by the employer and the employee. E.g., if the employee signed a NCA with the employer, HR shall have to explicitly inform the employee whether he/she has to bear the obligations as agreed in the NCA after the demission in case of any relevant disputes arising of thereafter.
If the employee does not coordinate with the HR to carry out the handover work as required, or even refuse to carry out the handover work, the employer may temporarily suspend to pay the employee annual bonus, but is not allowed to use this fact as a solid ground to refuse to issue the resignation certificate or transfer his/her personal files and social insurance account.