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Yes, a manager can take a call on this but must work towards making a part of organizational framework and policy. Else it may develop certain side effects like leading to dissatisfaction among the members of other team(s) OR / AND in his own team in long run.
Yes. Positive reinforcement is key to bbuilding a strong team morale and promoting positive results. The rewards neednt be monetory, it can be a simple recognition of the efforts & highlighting the same amongst the employee's peers by the manager.