Contractual bonus vs discretionary bonus — critical difference before you sign

Learned this the hard way after banking on a bonus that never came.

Contractual bonus: Written into your contract as a guaranteed amount or formula (e.g., "2 months salary paid in March annually"). Company must pay this or it's a breach of contract.

Discretionary bonus: The company may pay a bonus at its discretion based on company and individual performance. If company performance is poor, or they simply decide not to, they have no legal obligation to pay.

Most bonus clauses in Malaysian employment letters are discretionary. Many employees don't read carefully and assume it's guaranteed.

Before you accept an offer: ask the recruiter or HR to clarify in writing whether the bonus is contractual or discretionary. The answer changes how you should think about your total compensation.