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The most exciting time for an employee is probably when they get their annual bonus. Why? Because the bonus is usually a reflection of the great work they have been doing in your company!

It also makes employees feel super engaged and motivated.

In this blog, I have written in detail about the annual bonus letter (the letter you write to an employee while sending them their bonus). I have also attached a template that you can download and use the next time you hand out employee bonuses!!

• What is an annual bonus letter?
• Why is an annual bonus letter important?
• What should you include in an annual bonus letter?
• Things to remember about an annual bonus letter
• Summary
• FAQs

Download the annual bonus letter template for FREE!

What is an annual bonus letter?

Getting a bonus is such an extremely happy occasion. When you give an employee a letter that talks about their bonus, they should feel the excitement coming out of that letter!

Bonuses are usually given out annually and to all employees of an organization, irrespective of what their designation or level might be. The focus of this financial year-end bonus is to ensure that employees feel motivated and also appreciated for everything they do.

Why is an annual bonus letter important?

This letter is very important because it tells the employee how much of a bonus they are going to receive. It also acts as a sign of appreciation for the work and effort put in by that employee. The bonus is a tool used for 3 things

1. Appreciation of the employee
2. Employee engagement
3. Employee motivation

What should you include in an annual bonus letter?

An annual bonus letter is a notification given to an employee by their manager or by HR. This letter basically talks about the bonus the employee has received, how much it is and by when they’ll receive it. The language and tone of the letter should be extremely happy. After all, the employee has worked hard to earn that bonus.

So, what to include?

• Employee name
• Designation
• Job role and department
• Current salary (without bonus)
• Bonus (both as a percentage of the salary as well as the absolute figure)
• Congratulatory statement
• Note appreciating the employee for the work they have done throughout the year

Things to remember about this letter

• Always check for spelling or grammatical errors and typos. To err is human. But some mistakes are just plain bad and cannot be excused. Especially ones that can be avoided so easily!
• Don’t make the letter sound like a contract. While this letter is supposed to be formal, it is also delivering the extremely good news. Make sure the letter has an excited and happy tone throughout!
• Don’t forget the communicate the reason why the employee got the bonus
• Be specific, especially about the bonus (that’s why you are writing the letter in the first place)

Summary

Now that you know how to write this letter,

1. Make sure all doubts are cleared by HR and the accounts team, and the employee knows about the bonus
2. Draft a letter or click on the button below to download our template (quite sure you’ve already downloaded it!)
3. Send the letter to your employee and make them extremely happy

FAQs

Not to be considered as tax, legal, financial or HR advice. Regulations change over time so please consult a lawyer, accountant  or Labour Law  expert for specific guidance.