As Christmas approaches, many people hope for a festive bonus from their employers to help with the extra costs of the season. But what happens if, during the festive period, you and your spouse are separating?
Is a Christmas Bonus guaranteed in Scotland?
Whilst some employers and industries may offer some form of bonus, guaranteed Christmas bonuses for staff are not commonplace among employers in Scotland. This can be contrasted with a number of countries across Europe, Central America, South America and Asia; where either a mandatory or customary “thirteenth month” payment is made to staff in December each year.
Even if a bonus is paid by an employer in Scotland, this is unlikely to be guaranteed and will instead usually be entirely at an employer’s discretion – although repeated payments over a number of years may give rise to arguments for having a Christmas bonus from a custom and practice perspective. In some cases, the bonus may be linked to ongoing business performance for the year in question.
If paid, a bonus would be treated as salary for tax purposes and therefore taxed via PAYE in the usual way.
How are Bonuses Treated on Separation?
In Scotland, whether a Christmas bonus will be considered as part of a financial settlement on separation will depend on whether it is classed as “matrimonial property”. Matrimonial property includes anything acquired by you between the date of your marriage and the date of separation, so the date of payment of the bonus is critical.
If it is paid into your bank account before you separate, then the value of Christmas bonus is matrimonial property, and you will have to share the value of it with your spouse when you come to sort out the family finances. If the Christmas bonus is paid to you after the date the separation is confirmed, it is not matrimonial property and the value of the Christmas bonus does not have to be shared with your spouse
Understanding whether your bonus counts as matrimonial property can help you avoid surprises when sharing assets on separation. If you are facing separation and want clarity on how bonuses or other financial matters will be treated, seeking professional advice early is the best way to protect your interests.
If you require advice on how your bonus will be treated in the event of separation, or the financial aspects of separation more generally, please contact our family law team to discuss your requirements further. Alternatively if you would like to discuss any Employment related matters please get in touch with our Employment Law team.
