Q: I’m having a discussion with Accounting as to whether a bonus bond should be included in gross earnings for the 52wk calculations – they believe it is discretionary as if the employee leaves before working out the year we would claim it back – I feel that as there is a signed letter stating the terms of the bonus bond that this is an extension of their contract and makes it a contractual bonus (there is no specific mention of it being discretionary in the letter) and so it can’t be excluded under section 14B. Your advice on this would be greatly appreciated!
A: This is an agreed bonus with the employee having to meet requirements, and they have been provided with expectations if they do not meet the terms of the agreement.
Here is a reference on what is discretionary and not, from the EmploymentNZ website (go to the bottom of the page to the following heading “What ‘discretionary payments’ means”