Undercovering Christmas Bonus in the USA

20 of December, 2022

Employers frequently award their staff members Christmas bonuses over the holiday season. A Christmas bonus is only one of the several incentives a business may offer their staff as an alternative form of payment.

If you own a company or work in human resources (HR), understanding Christmas bonuses may help your duties. Keep reading to understand how this bonus works in the USA and how to manage the payroll of your employees in this season.

What is a Christmas bonus?

A benefit you can give your team in the holiday season is a Christmas bonus. Christmas bonuses can take many different shapes, such as an additional check or sum of money in compensation, an extra day of vacation, or a tangible present. 

Giving everyone on the staff the same Christmas bonus is recommended practice for a member of the HR team. As long as all staff members at the same level receive the same benefit, it is appropriate to provide various incentives to various personnel.

The first step in deciding on team member Christmas bonuses is to assess the company’s financial position. To make well-informed business decisions, it is critical to have a thorough grasp of the company’s finances.

You may consider this end-of-year bonus as a “Christmas” bonus rather than a reference to a specific religious festival. The team member’s work status often determines any Christmas bonus.

On the other hand, a year-end bonus can change based on salary at the time, the length of employment, or performance evaluations.

How much is a Christmas bonus?

Some organizations sometimes refer to the Christmas bonus, which they provide to employees at the end of the year, as a “13-month salary“.

The company will base this policy on its size, finances, and financial performance, but they anticipate the typical Christmas bonus to be around $1,900.

Since it’s officially a gift, the range may be anything the business chooses to give away, which could be anything from $100 to $5,000. As a general guideline, you should budget 2% to 5% of your paycheck for taxes.

The bonus amount may also be based on the business providing a different proportion of the employee’s income. The employee’s contract may spell out a different manner and structure for giving holiday bonuses.

The Christmas bonus payment was made in the following circumstances:

• Once the job contract expressly states as such.
• If the business regularly provides one as a practice or tradition.

Christmas bonuses frequently take on a variety of forms, depending on the management of the company, including:

• Before the holidays, an extra sum in cash or by check
• A favor the business has requested
• More days or time off
• Meals, including hams, turkeys, and desserts
• Coupons or certificates for gift shopping or experiences like access to spas or leisure areas
• A ticket for a sporting event or a theme park
• Gift baskets of several kinds

Is it common to receive a Christmas bonus?

Christmas bonuses are becoming more common, and only some businesses still provide non-performance-based holiday incentives.
The length of the agreement typically determines Christmas bonuses for workers under contract.

Unless employees agree to modify their rights to the incentive or agree to receive only a portion of it, employers should pay them when they meet their goals in situations where incentives are contingent on achieving targets indicated in the contract.

23% of working Americans anticipate receiving a Christmas bonus this year, and 12% anticipate receiving a wage boost. At the end of the year, just 24% of businesses give non-performance-based incentives.

Employers are more likely to give males a Christmas bonus than women. Only 22% of women anticipate receiving a Christmas bonus, compared to 29% of males.

Although around 25% of Americans with jobs anticipate receiving a Christmas bonus, more employers may start to think about doing so since incentives boost employee satisfaction and retention. You should show your employees you appreciate them no matter how much money you give.

Benefits of paying a Christmas bonus

The corporation may benefit from offering staff Christmas bonuses. Giving your team members Christmas bonuses will result in the following advantages:

Increase in employee morale

Christmas bonus may raise your team’s morale. Employees may feel particularly busy around the holidays as a result of an increase in workload. Giving your team members a concrete demonstration of your gratitude may raise morale and thus boost output.

Improve company culture

A Christmas bonus can boost staff spirits and enhance the company’s culture. All employees might feel a sensation of justice and acknowledgment for their contributions by receiving the same incentive. The likelihood that employees will remain committed to the organization increases with how much they feel valued.

The advantages of Christmas bonuses for employees are numerous. It can increase your paycheck’s buffer, which is useful when expenses are high due to travel, gift-buying, and Christmas party hosting.

The employees also receive benefits from it. Below are a few of them.

Boosts morale

A Christmas bonus, regardless of its monetary or even time-off worth, makes workers feel appreciated. Giving your workers Christmas bonuses might improve workplace morale.

Reduces burnout

The holiday may provide some people with a much-needed break. Employers may help mitigate some of the burnout‘s negative impacts by giving employees Christmas bonuses, which makes them feel respected and appreciated.

Boosts engagement and productivity

Employee engagement may be encouraged with a Christmas bonus, which can increase productivity. According to Oxford University research, a motivated and content workforce is 13% more engaged and productive.

How to manage and pay a Christmas bonus?

There are several methods to receive monetary Christmas bonuses. For instance, you may include a bonus in your employees’ normal paychecks or separately give them a bonus check.

Physical gift cards or certificates can also be given, but remember that the IRS will also tax these. Working with your payroll provider or accountant to ensure that your bonuses are properly taxed and legal can be a smart idea.

Once more, standard procedures might change depending on your company and sector.

Christmas bonuses can be distributed in various ways, including as gift cards, stand-alone payments, or increases to regular paychecks. To be sure you’re taxing bonuses appropriately, speak with an accountant or payroll professional.

Payroll management for your workers can be done efficiently and promptly using Sesame HR human resources software. It will be very easy to pay the deserved Christmas bonus for your team using our software. Try it for free right now!