In today’s competitive work environment, it’s very important to offer not just a competitive wage – but also a benefits package that will help attract and retain the type of employee you want for the long term.
Offering a Bonus
Health insurance, 401K, tuition reimbursement or reimbursement for other trainings, seminars, or certifications are just some of the great options that household employers have to offer.
But going above and beyond those benefits can also go a long way in establishing loyalty with your domestic staff. That’s why many household employers choose to provide bonuses to their staff – either throughout the year or once at the time of their annual review or during the holidays.
Year-end bonuses generally equate to at least one to two weeks of pay. If the employee is new to the family, you may consider providing a smaller bonus. For example, for a holiday bonus, you could pay one or two days of wages for each month that they’ve worked with you.
A hardworking employee should always be recognized and appreciated. Regular bonuses are a great way to show that you see their commitment to your home and that you’re grateful for the work they’re doing. shows that you see that you see them and that you are grateful for a job well done.
So, consider giving them a lump sum payment or get creative by giving them a care package of some of their favorite things, along with a gift card to their favorite restaurant or retail store. Or give them an airline voucher or gift card with a handwritten note encouraging them to use their time off to take that trip they’ve always wanted or to visit relatives or friends.
Another option is to offer extra paid time off, which is often much appreciated, or occasionally, families will contribute to an employee’s retirement account or a tax-free contribution to a 529 educational savings plan for their children. If this is the route you choose to go, it’s best to discuss that option with them before you make that commitment.
Tax Considerations
If you choose to provide your employee with a bonus, remember that it’s considered taxable wages. The IRS does not consider this a gift and you will be required to pay the standard FICA taxes, and your employee will too. Their income taxes will also need to be withheld. Some household employers choose to tack a little bit extra onto the bonus to cover taxes.
Is a bonus required?
No, but bonuses are pretty customary in the household employment world and many domestic employees take them as a sign of appreciation for their good work. Your employees shouldn’t expect to automatically receive a bonus, however. They are earned and based on their performance and quality workmanship around your home.
Once you hire someone to work in your home, it is important to work on creating a culture in the home that welcomes that person, values the work they’re doing, and recognizes the commitment they’re giving to their role. A robust and practical benefit package – along with bonuses – is one of the best ways to keep your employee with you for a long time.
So, considering that bonuses are a common practice, at the time of hire, consider budgeting accordingly for a bonus. You can even consider adding it into your employees’ work agreement – stating that you may offer them a bonus at your discretion – so they know what to expect.
Ready to find an experienced household employee that will keep your home operating smoothly? For nearly 30 years, we’ve placed qualified employees of all kinds in homes across the country. Contact our talented team today to start the placement process.
