Fall in Christmas bonuses expected this festive season

With the rise in employers’ national insurance announced in the Budget, fewer employees are expecting a larger Christmas bonus this year, as employers scale back on pay rises throughout 2024. After a tough year, only 8% of employees are expecting a larger Christmas bonus, with 60% admitting they aren’t expecting one at all.

As the new year approaches, optimism about financial rewards remains low, with over four in ten (44%) employees not expecting a pay rise in 2025. Beyond reducing Christmas bonuses, employers have been cutting back on pay rises in 2024, with just two fifths (43%) of employees receiving the pay increase they anticipated.

Given financial pressures and stagnating pay, employers are increasingly embracing new ways to reward employees beyond salary to stay competitive. Benefits packages are becoming an increasingly popular method for companies to attract and retain key talent. These packages are favoured by employees for improving morale and increasing productivity, offering a cost-effective solution to reward staff.

The research from Zest reveals that 71% of employees who are expecting a Christmas bonus would prefer an enhanced benefits package instead. This trend is particularly pronounced among younger workers, with 80% of those aged 18-34 prioritising benefits over bonuses.

The significance of workplace benefits packages is evident, with two-thirds (63%) of employees stating that benefits have become more crucial when deciding where to work. However, with 41% of employees unsatisfied with their current benefit packages, there’s an opportunity for employers to reconsider how they allocate their Christmas party budget, as nearly six in ten (57%) employees would prefer long-term financial support through a better benefits package over a festive celebration.

How employers choose to use Christmas budgets or reward employees this year is crucial. It’s essential for them to communicate effectively with individuals across the organisation to understand their demands and needs. Those who manage this well are likely to see increases in morale, productivity, and employee retention in the coming year.