Bonus Announcement Letter | Download Free Template

Download HR letter template for informing employees about annual bonus



Bonus is an additional amount paid to the employee apart from the salary. Companies give their employees bonuses at a particular time in the financial year as per the company policies. For many companies, it is a critical element of their compensation package.


The reasons that a company decides to reward their employees with a bonus differ. Some companies like to share the profit with their entire staff, while others may reward their high performers. A monetary bonus is also a tool to attract and retain top talent in the company.


Companies often reward employees with non-monetary rewards. The bonus-related policies may also vary for the different job profiles in the company.


The bonuses paid to the salesperson depend on the number of sales they bring in, while companies may decide to reward their software developers by sharing a part of the overall profit.


Bonuses can also be given to encourage particular behaviour or efforts to employees put on some alone tasks, such as


  • A signing bonus is given to the new joiner to ensure that the company doesn’t lose on the top talent onboard
  • Back-to-office bonuses are a recent addition to inspire employees to come to the office for work after more than a year of working from home.
  • A referral bonus is given to the current employee of the company if the candidate referred by then gets selected for the said position.
  • Retention bonuses are means of retaining performers in the staff. This tactic is often used by organizations during mergers and acquisitions. Firms also use the retention bonus when an employee is about to leave or has received a competitive offer.



Why do companies give their employees bonuses?

Bonus is a great tool to improve the overall productivity of the organization. It encourages employees to put their best and appreciate exceptional performances. Apart from that many companies give bonuses to compete for talent when all the firms in a similar domain or locality offer it. The bonus also helps to increase employee loyalty and retention.



What to include in the letter?

When a company is paying a bonus for some reason, they should inform the candidates. Bonus is good news, it should maintain a positive tone. While a formal HR letter is a good way to give employees confirmation on the crediting bonuses on top of their salary. The letter should also inform them about a few other bonus-related aspects as mentioned below.


  • Appreciate employees for their  contribution
  • If the bonus is for an individual, give it a personal touch
  • State the reason bonus is being given for
  • Explain in brief the policy or the criteria that will be used to calculate the bonus
  • Give the time duration or date the bonus will be credited on


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