What is a bonus award letter?
A bonus means more when it comes with a clear message about what it's for. It also helps to be clear about what it isn't: a discretionary bonus this year doesn't promise one next year. A short award letter does both.
This letter covers a one-off discretionary bonus, an annual discretionary bonus or a spot award. You describe what the award recognises and the period it relates to, give the gross amount and the payroll date, and choose whether the employee must still be employed on the payment date. The terms confirm the bonus is discretionary, sets no entitlement to future awards, isn't part of base salary, and changes nothing else. You can ask the employee to keep the amount confidential while respecting their legal right to discuss pay.
- Best for
- Discretionary annual bonuses, one-off awards and spot bonuses
- Signed by
- The employer and the employee, who acknowledges receipt
- Future bonuses
- Expressly not promised
- Length
- 1 page
When to use a bonus award letter
- An annual discretionary bonus after the year-end review
- A spot award for an employee who handled a crisis well
- Recognising a project delivered early or under budget
- A thank-you bonus for staff who covered extra shifts during a busy period
- Recording discretionary bonuses consistently across a team
What you fill in
11 blanks, then the name and email of each person who signs: employer, employee.
1 The letter
- Company name*
- Letter date*
- Employee's full name*
2 The bonus
- Type of bonus* a one-off discretionary bonus · an annual discretionary bonus · a spot award
- Period or achievement it covers
- What it recognises*
3 Payment
- Currency*
- Bonus amount (gross)*
- Paid with the payroll on or around*
- Must the employee still be employed on the payment date?* No — it will be paid whether or not the Employee is still employed · Yes — and not under notice, unless the Company gave the notice for a reason other than misconduct
4 Other
- Ask the employee to keep it confidential* No · Yes
5 Who signs
- Employer signature and date, job title · The manager or HR person awarding the bonus.
- Employee signature and date · Signs to acknowledge the award.
What the bonus award letter covers
- What it recognises
- Payment
- Terms of the award
Using the bonus award letter, step by step
1 Choose the type of bonus
Pick a one-off discretionary bonus, an annual discretionary bonus or a spot award, and add the period it relates to if relevant.
2 Say what it's for
Describe what the employee did in a sentence or two. Specific praise lands better than general thanks.
3 Set amount and payment
Enter the gross amount and the payroll date, and choose whether the employee must still be employed then.
4 Send
Sign as the employer and send to the employee to acknowledge. The signed letter is kept in your vault.
Tips before you send it
- Deliver the news in person first, then send the letter.
- For bonuses tied to targets set in advance, a commission or bonus plan agreement fits better than a discretionary award letter.
- Remember employer payroll taxes on top of the gross amount.
- Check whether conditions about still being employed on the payment date are allowed where the employee works.
Sign it online in minutes
- Fill in the blanks. Names, dates and amounts go straight into the agreement — the preview shows exactly where.
- Name who signs. Tick “This is me” for your own part. FileIt builds the PDF with every signature, date box on the right line, and you can check or move anything before sending.
- Send it. Each signer gets a secure link and signs from any device — no account needed. The signed PDF, with an audit trail and a Certificate of Completion, is filed in your vault and emailed to everyone.
Bonus award letter: frequently asked questions
Does this letter promise a bonus next year?
No. It states the bonus is discretionary and doesn't create a right to a bonus of any amount in the future.
How is this different from a retention or sign-on bonus agreement?
Those are agreed in advance and have conditions about joining or staying. This letter rewards something already done.
Can I ask the employee to keep the bonus confidential?
You can ask, by choosing Yes. The letter keeps the employee's legal right to discuss their pay where the law protects it.
Does the employee have to sign?
Signing only acknowledges receipt. It gives you a dated record that the employee was told the amount and the terms.