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FPM 6.6 Employee Recognition

Effective Date:
July 25, 2017
Last Revised Date:
June 12, 2026
Responsible Unit(s):
Finance & Budget
Responsible Unit Email(s):
FNSV-Financial-Management@arizona.edu
Manual:
Financial Policies Manual
Status:
Active

Purpose and Summary

To provide policies and procedures for Employee Recognition, including limits, taxation, and reporting requirements and guidelines for the following:

  • Service and recognition awards (cash and non-cash),
  • Retirement farewells, and
  • Employee recognition events.

Scope

This policy applies to all University locations and units, including all University extensions, satellite locations, and off-site campus units, both domestic and international.

This policy shall apply to recognition awarded only to University employees. For expenditures related to non-employees, refer to FPM 6.1 General Expenditure Policy.

Definitions

  1. Allowable: Expenditures that are Reasonable, Business-Related, have adequate supporting documentation and a University Business Purpose and benefit, and are not prohibited by any policy or law, and are therefore payable from University funds. Note that not all Allowable expenditures are allowed on all funding sources.
  2. Business Purpose: A statement that justifies how an expense is appropriate and Reasonable, and how it supports and/or advances the goals and objectives of the University.
  3. Employee Recognition: A way for the University to focus on specific achievements and activities and acknowledge the significant accomplishments of its employees and may include elements of morale-building team activities meant to reward or celebrate successes. The University sponsors a number of formal recognition programs for University employees, such as length of service awards and retiree recognition. Additionally, the University encourages colleges and departments to recognize their employees as a whole for contributions to the University in a less formal manner.
  4. Prepaid Cards/Certificates: A card preloaded with funds that is purchased with University funds and provided to an employee. Examples are gift cards/certificates, vouchers, Groupons, and e-Cards. Prepaid Cards/Certificates are treated the same as cash and require the same level of security if storage is required prior to distribution.
  5. Employee Recognition Award Compensation Form: When Employee Recognition awards are considered taxable income, the Employee Recognition Award Compensation Form must be completed and reviewed for compliance by Payroll and Accounts Payable.
  6. Tangible Personal Property: Property, other than cash, that can be touched or felt. Tangible personal property includes retirement and length of service awards such as plaques.

Policy

General Policies

  1. Employee Recognition is only allowed to be funded from local accounts.
  2. Expenditures for Employee Recognition must adhere to University policies for Allowable expenditures.
  3. Employee Recognition must have a Business Purpose and therefore does not include holidays or recognition for personal life events such as condolences, congratulations, and birthdays.
  4. Employee Recognition awards are not to be used as a long-term alternative to permanent salary adjustments.
  5. Colleges and departments may establish more restrictive procedures, policies, and dollar limits than those set forth in this policy.

Employee Recognition Events

  1. Employee Recognition events must be non-discriminatory and held for the benefit of all departmental employees. Separate events for different categories of employees are permissible, for example, senior leadership, faculty, or staff. If separate events are held, the department shall ensure that no employees are excluded.
  2. Meals, light refreshments, and non-alcoholic beverages, including tax and tip, may be provided but must adhere to the requirements for Business Meals in FPM 6.5 Business Meals.
  3. Reasonable incidental costs, such as decorations and audio-visual equipment, are allowable in relation to the event with proper Business Purpose.
  4. The event must be held preceding, during or immediately following normal business hours.
  5. When events on the main campus include food and the total cost exceeds $750, departments must contact the Arizona Catering Company to make food service arrangements. Departments at The University of Arizona Health Sciences have the option of using the Banner University Medical Center food service. Events costing less than $750 and events catered off campus are exempt from this policy. See the Catering and Food Service Policy and FAQ 10 for additional information.

Length of Service and Recognition Awards

  1. The University will comply with taxation requirements for tangible personal property presented to an employee for a length of service or recognition award. See the table below for nontaxable and taxable limits.

Retiree Farewell Events

  1. Expenditures for a retiree farewell event are allowable if the individual is leaving the University on Official Retirement Status. Refer to Retirement Policy.
  2. Meals, light refreshments, and non-alcoholic beverages, including tax and tip, may be provided but must adhere to the requirements for Business Meals in FPM 6.5 Business Meals.
  3. Reasonable incidental costs, such as decorations and audio-visual equipment, are allowable in relation to the event with proper Business Purpose.
  4. The event must be held preceding, during, or immediately following normal business hours.
  5. Retirement awards provided in the form of tangible personal property may be subject to taxation depending on the amount. See the table below for nontaxable and taxable limits.
  6. When events on the main campus include food and the total cost exceeds $750, departments must contact the Arizona Catering Company to make food service arrangements. Departments at The University of Arizona Health Sciences have the option of using the Banner University Medical Center food service. Events costing less than $750 and events catered off campus are exempt from this policy. See the Catering and Food Service Policy and FAQ 10 for additional information.

Prepaid Cards/Certificates

  1. Prepaid Cards/Certificates may be purchased and provided for Employee Recognition, provided it adheres to the general guidelines for Employee Recognition and is reported for inclusion in taxable income and payroll tax withholding.
  2. Prepaid Cards/Certificates are prohibited from being purchased on the PCard.

Taxation

  1. Recognition activities and awards must comply with all applicable tax laws.
  2. Departments offering taxable awards assume responsibility for ensuring accurate income tax reporting to their employees and will assume the risk of fines and penalties for failure to report taxable income that is identified in an audit.
  3. The following table includes the tax treatment for the recognition awards allowable under this policy:
NONTAXABLETAXABLE
N/ACash
N/AAny Prepaid Cards/Certificates
Tangible personal property awards for length of service that are no more than $400 when the employee has at least five years of service and receives no more than one nontaxable length of service award every five years.

Tangible personal property awards for length of service when the employee has at least five years of service and receives no more than one award every five years are taxable only on the amount in excess of $400.

Length of service awards for less than five years of service or when provided more frequently than once every five years are fully taxable.

Tangible personal property retirement awards that are no more than $400.The amount in excess of $400 for tangible personal property retirement awards is taxable.
Any tangible personal property with a total cost (including sales tax and engraving) of $75 or less provided for recognition other than retirement or length of service. Examples are pens, mugs, and plaques.Any tangible personal property greater than $75 provided for recognition other than retirement or length of service.
N/ATickets to sporting or theatrical events, including University events.
Occasional group meals or refreshments of a reasonable amount for Employee Recognition and retirement events.N/A

Procedures

General

  1. Meals, light refreshments, and non-alcoholic beverages, including tax and tip, associated with Employee Recognition events and retiree farewells should be recorded using Object Code 5175 – Business Meals. Attach all required documentation per FPM 6.5 Business Meals.
  2. Taxable awards processed through payroll will be recorded to the appropriate personal services Object Codes.
  3. Employee Recognition and retirement awards, other than taxable amounts processed through payroll, should be recorded using 5350 – Awards.
  4. If the department or college has an Employee Recognition policy, a copy should be included with the transaction in UAccess Financials as supporting documentation.
  5. If a taxable recognition award is being provided to an employee, the Employee Recognition Award Compensation Form must accompany the Disbursement Voucher (DV) or Requisition (REQS).

Prepaid Cards/Certificates

  1. Purchases or reimbursements for Prepaid Cards/Certificates for distribution should be processed on a DV with the accompanying Employee Recognition Award Compensation Form. Failure to provide a Recognition Award Compensation Form will cause the request to be rejected. Since Prepaid Cards/Certificates are considered taxable income to the employee, the Recognition Award Compensation Forms submitted must substantiate 100% of the Prepaid Cards/Certificates purchased and distributed. Therefore, it is recommended that Prepaid Cards/Certificates be purchased as close as possible to the scheduled distribution date to avoid potential financial burden on the purchaser.
  2. Payroll will include the value of the Prepaid Card/Certificate received by the employee on the next available pay cycle. It is the responsibility of the department to notify the employee receiving the prepaid card/certificate that it will be taxable, and the amount will appear on the employee's paycheck/Form W-2.
  3. Prepaid Cards/Certificates are treated the same as cash and require the same level of security if storage is required prior to distribution.

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