Reward – a one-time cash or non-cash award for significant outstanding performance.
Defined Reward Program – a documented reward program developed, communicated, and implemented in consultation with the Office of Human Resources (OHR) for a particular department. Defined Reward Programs consist of rewards that range from spontaneous to those that are more formal in nature.
- Rewards should be given for significant outstanding performance that advances department goals, and should be tied to a specific accomplishment.
- Rewards are most effective when they are meaningful to the individual.
- Care should be taken in communication and distribution of rewards so that they are not viewed as entitlements.
- Rewards may be designed to reflect the unique nature of the department’s work culture and organizational structure.
- Rewards should not be substituted for a competitive salary plan. For example, rewards should not be used as a long-term alternative to permanent salary adjustments when these adjustments are appropriate for consistently high performance, significant changes in responsibility, increased value of a position, or internal pay equity.
- Rewards are not adjustments to base salary, supplemental compensation, or variable pay programs (such as commission).
- Rewards should not be used as a substitute for supplies, support services, or training.
- These guidelines do not apply to customary work-related expenses such as travel, conference attendance, and memberships in professional organizations.
- Through the process of consultation and approval of Defined Reward Programs, parameters may be modified to meet individual college or department needs.
- Departments must consult with the Office of Human Resources, when cash distributions to an entire department are being considered. OHR approve such distributions prior to implementation.
Departments interested in creating a Defined Reward Program should notify the human resource contact, who will initiate the Defined Reward Program consultation process with the Office of Human Resources.
- All Defined Reward Programs must be designed in consultation with the Office of Human Resources.
- The purpose, process, parameters, and expected outcomes of the reward program should be communicated in writing to staff.
- All expenditures must be consistent with company guidelines.
- Cash and non-cash awards should be determined in a manner that considers deductions such as taxes, and their effect on the net amount.
The Manager concerned will:
- Design reward programs that reflect company guidelines and department strategic plans.
- Seek consultation on the development and approval of Defined Reward Programs.
- Provide written communication about the purpose, process, and expected outcomes of the reward program to department staff.
- Implement reward programs in a manner that is consistent with the departments written guidelines.
- Fund reward programs, reflecting the realities of the company and department budget, and establish accountability within each department for use of funds.
Office of Human Resources Responsibilities
The Office of Human Resources will:
- Provide guidelines regarding reward program structure and processes.
- Serve as consultants to departments in developing reward strategies.
- Approve Defined Reward Programs.
- Oversee the use of reward programs.
- Serve as a clearinghouse for best practices.
- Process payroll taxes for cash and taxable non-cash awards.
- One-time cash rewards are administered through the additional pay panels of the HR System. Cheques are issued during the normal payroll cycle. If a check is needed outside of the normal cycle, a written Request for Off-Cycle Check must be sent to the Office of Human Resources, Payroll Services.
- All taxable non-cash awards must be reported to the Office of Human Resources through the additional pay panels in the HR System using the Non-Cash Award (NCA) earnings code. The appropriate taxes will be withheld from the individual’s paycheck.
Tax Law Compliance
- Reward and recognition activities must be in compliance with all applicable tax laws. Before issuing awards, offices should work closely with the Office of Human Resources, to insure compliance.
- Under Kenyan tax laws, all compensation is subject to income tax unless there is a specific exemption. Following are common types of compensation that are exempt from income tax. It is important to properly classify compensation to avoid potential payroll tax liability for the company.