How to Reward Employees?

Which employees deserve a reward? How do you determine the type and amount of the reward? Should the reward be linked to a specific time period? How can it be tied to achieving certain work results? How can you measure whether rewarding employees has an effect on company performance? What are the tax implications of rewarding, and are there any tax incentives available?

If such questions arise in your business, or if you wish to implement or revise a reward system, our team is at your disposal through the following scope of services:

• Supporting companies in defining employee objectives, as well as the types and characteristics of these objectives

• Supporting companies in introducing an employee evaluation system, i.e., assessing employees based on achieved objectives

• Analyzing different reward possibilities and establishing a win-win bonus system

• Developing models and calculations for bonus systems

Common Types of Bonuses

• Regular periodic bonus – a certain percentage of annual salary

• Incentives for achieving targeted KPIs

• Loyalty incentive – a lump sum paid to a director/employee at a future agreed-upon date if they remain employed with the company. This bonus is agreed upon when a director/employee is expected to achieve certain results within a defined period, results that will place the company in a better competitive position or prepare it for a more successful capital sale.

• Exit bonus – a lump sum paid to a director in the event of a successful sale of capital/change of company ownership, provided they are employed on a specific future date.

• Profit-sharing – unlike the bonuses listed above, this is a legally regulated category. Profit-sharing is determined by an employment contract or employer decision, is subject to approval by the company’s assembly, and does not have the fiscal treatment of salary.

• Acquisition of shares or equity in the company – a highly attractive type of bonus, considering the available tax exemptions and the new legal framework for acquiring reserved shares.

See also our dedicated articles on managerial agreements and director contracts.

If you have any questions, feel free to speak with one of our WTS experts.