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Bonus Evaluation Template for Hong Kong

This document establishes the framework and criteria for evaluating and determining employee bonus payments in accordance with Hong Kong employment law. It outlines the performance metrics, calculation methodologies, and payment terms for bonus compensation, ensuring compliance with local regulations including the Employment Ordinance (Cap. 57) and related legislation. The document provides comprehensive guidelines for both formulaic and discretionary bonus components, incorporating provisions for performance assessment, payment timing, and potential clawback scenarios, while maintaining transparency and fairness in the evaluation process.

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What is a Bonus Evaluation?

The Bonus Evaluation document serves as a critical tool for organizations operating in Hong Kong to establish and maintain a structured approach to performance-based compensation. This document is typically implemented when companies need to formalize their bonus assessment processes, ensuring consistency and transparency across all levels of the organization. The document outlines specific criteria, methodologies, and timelines for bonus evaluation, incorporating both individual and company performance metrics where applicable. It includes provisions compliant with Hong Kong employment law, including the Employment Ordinance and various anti-discrimination ordinances, and can be customized to address different bonus types, from annual performance bonuses to special incentive schemes. The Bonus Evaluation framework is particularly important for businesses seeking to align employee compensation with performance objectives while maintaining legal compliance and internal equity.

What sections should be included in a Bonus Evaluation?

1. Parties: Identification of the employer and employee

2. Background: Context of the bonus scheme and its implementation

3. Definitions: Key terms used throughout the document, including types of bonuses, performance metrics, and evaluation periods

4. Bonus Eligibility: Criteria for participation in the bonus scheme, including minimum service requirements and employment status

5. Evaluation Period: Specified timeframe for performance assessment and bonus calculations

6. Performance Metrics: Core performance indicators and evaluation criteria

7. Calculation Methodology: Formula and methods for calculating bonus amounts

8. Payment Terms: Timing and method of bonus payments, including any deferral provisions

9. Clawback Provisions: Circumstances under which the company may reclaim paid bonuses

10. Termination Impact: Effect of employment termination on bonus entitlements

11. Amendments and Reviews: Process for modifying the bonus scheme or evaluation criteria

12. Confidentiality: Requirements regarding the confidentiality of bonus information

13. Governing Law: Specification of Hong Kong law as the governing jurisdiction

What sections are optional to include in a Bonus Evaluation?

1. Discretionary Elements: Additional criteria for discretionary bonus components, used when the scheme includes both formulaic and discretionary elements

2. Group Performance Adjustments: Provisions for adjusting individual bonuses based on team or company performance, used in collaborative environments

3. Regulatory Compliance: Specific provisions for regulated industries or roles, used when applicable to specific sectors

4. Tax Treatment: Detailed tax implications and handling, used when specific tax arrangements apply

5. International Considerations: Special provisions for employees with international responsibilities or cross-border implications

6. Bonus Deferral Scheme: Details of any bonus deferral arrangements, used for senior executives or large bonus amounts

7. Non-Financial Metrics: Evaluation criteria based on non-financial performance indicators, used when emphasizing behavioral or qualitative goals

What schedules should be included in a Bonus Evaluation?

1. Schedule 1 - Performance Metrics Detail: Detailed breakdown of all performance indicators and their weightings

2. Schedule 2 - Bonus Calculation Examples: Illustrative examples of bonus calculations under different scenarios

3. Schedule 3 - Evaluation Timeline: Detailed timeline of the evaluation process, including key dates and deadlines

4. Schedule 4 - Role-Specific KPIs: Specific performance indicators and targets for different roles or departments

5. Appendix A - Evaluation Forms: Standard forms and templates used in the evaluation process

6. Appendix B - Bonus Pool Mechanics: Details of how the overall bonus pool is determined and allocated

7. Appendix C - Historical Performance Data: Reference data for performance benchmarking and target setting

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Hong Kong

Publisher

Ƶ

Document Type

Employment Letter

Cost

Free to use

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