A bonus is a form of compensation that is typically paid to an employee in addition to their regular salary or wages.
The terms of a bonus program, including the amount, frequency, and eligibility requirements, are generally set out in an employee’s employment contract or in a separate bonus plan document. In some cases, bonuses may be discretionary and based on the employer’s subjective evaluation of an employee’s performance. In other cases, bonuses may be earned based on objective performance metrics or other criteria, such as sales targets or production goals.
If an employer provides a bonus to an employee on a recurring basis, the bonus may be considered part of the employee’s regular wages and be owing in the event of termination.