With the credit crunch still making things tough for companies the world over, many corporations are looking to cut back on traditional Xmas bonuses – and Google thinks it's on to a cost-reducing winner.

According to CNet, the company has ditched the traditional holiday bonus payments in favour of giving staffers a free Android-based G1 smartphone. While the handset is a developer version – i.e. unlocked and not tied to a particular network – there are rules attached to the gift.

Gizmodo has got its hands on a list of questions and answers the company is including with the free G1 announcement, and it's interesting to see the number of limitations on the 'free' handset. One such question, which asks “what happens to my holiday bonus [if] I already have an Android phone” is answered with a strict warning that the handsets are “a personal gift [...] please do not resell them as this is against Google policy.” Which – you'll notice – doesn't actually answer the question: the answer being, of course, “you don't get a holiday bonus, bucko.”

The handsets will be provided to around 85 percent of the company's staff worldwide, with employees in nations unable to receive the G1 getting a more traditional cash gift instead.

While the move is clearly an effort to reduce costs at a difficult time, communications from Google to recipients explain that it also represents an opportunity to “dogfood a product” - in other words, to get all staff using the handsets in order to increase consumer awareness and encourage suggestions and improvements from employees. Whether the suggestions will take the form of “give us the cash instead” remains to be seen.

Do you think that the Googlers should be glad to get anything at all, or should Google stump up the traditional cash bonus and offer the G1 handsets as an option instead? Share your thoughts over in the forums.