What is a Merit Bonus?
A merit bonus is a one-time financial reward given to an employee based on their individual performance or specific achievements, separate from their base salary.
Why does a Merit Bonus matter?
Merit bonuses let employers recognize strong performance without permanently raising fixed payroll costs the way a base salary increase would.
How does a Merit Bonus work?
Managers evaluate performance, often against goals set during a review cycle, and recommend a bonus amount that is typically approved through HR and paid out as a lump sum tied to that performance period.
Frequently asked questions
Is a merit bonus guaranteed?
No, merit bonuses are discretionary and tied to individual performance, unlike a guaranteed raise or contractual bonus.
How is a merit bonus different from merit-based pay?
A merit bonus is a one-time payment; merit-based pay refers to ongoing salary increases tied to performance.
How BrightMove helps
BrightMove keeps performance and compensation history together on the employee record, making merit decisions easier to document and defend. Explore BrightMove for staffing agencies.