what is a year end bonus 
the term year end bonus refers to a form of compensation paid by employers to their employees in addition to their wages or salaries put simply a year end bonus is a reward that companies pay their workers the amount paid can vary but is usually based on an employee s position and salary it is commonly tied to performance metrics which means it can depend on whether certain milestones are met year end bonuses may be made in different forms including lump sum payments in cash to reward individuals for their hard work and dedication understanding year end bonusescompensation comes in many forms depending on the nature of the work and the type of company employers may offer their employees salaries wages commissions retirement plans health benefits stock options and tips another type of compensation is the year end bonus which may also be called an annual or christmas bonus year end bonuses are offered by companies of different sizes from small businesses to large multinational corporations as noted above it is normally tied to an employee s performance over the calendar or fiscal year so employees who meet their sales quotas or other metrics may qualify for one in some cases anyone who exceeds their goals may be entitled to higher bonuses it isn t uncommon for top executives and employees of financial firms on wall street to receive large bonuses at the end of the year year end bonuses are often paid in cash as lump sums some companies though may choose to compensate their employees in other ways this may include supplemental vacation days gifts or in kind transfers of stock bonuses fluctuate depending on the economy and the year s performance but in most years the amount is substantial some companies may include these bonuses in their employees contracts to encourage consistent results contractual year end bonuses are more often offered to executive management when they are hired or promoted and might not be tied to the company s performance at all in this capacity the bonus can serve as a hiring and retention tool to keep key personnel on board with a company when job openings at rival companies offer higher base salaries if a company misses its targets or otherwise underperforms it is possible that a company will withhold year end bonuses for some if not all individuals on the payroll special considerationscompanies and employees may choose to defer payment of a year end bonus until the next year so rather than receiving it in december an employee may receive their bonus in january or february this option allows workers to push any additional tax burden to the next year so although the employee qualifies for the bonus this year the tax consequences don t apply until they receive the bonus the following year this allows an employee to plan for the windfall at the end of the next year employers remain cautious because of the covid 19 pandemic according to a survey 27 of employers didn t give their employees a year end bonus of those surveyed 81 of the companies paying a bonus said they would keep the amount the same 1