Bonuses are generally made at your employer’s discretion and so will include a way for them to measure who qualifies and to determine the amount of the bonus. How an employer uses their discretion is a common cause of conflict and one that leads to many disputes. If you are being denied your bonus, we can help.
Courts have made it clear that an employer must exercise their discretion in good faith and on reasonable grounds. If you meet the bonus criteria, then your employer needs to have reasonable grounds for not paying you, to show that they exercised their discretion fairly.
Custom and practice
Your employer may find it difficult to refuse to pay a bonus where it has been custom and practice to pay a bonus in the past. If this is the case, an entitlement could then be implied into your contract.
There is less room for disputes to happen when the bonus is part of your contract and where the qualifying criteria are agreed with you in advance. You may have an individual performance and annual target. Your employer would have little if any discretion in these circumstances. Their failure could give rise to a claim for breach of contract, unpaid wages or constructive dismissal.
Bonus payments on termination of employment
Disputes often arise over the non-payment of bonuses when you leave a business – whether you have resigned or been dismissed – and your employer may argue you have lost your right to a bonus.
If you have been dismissed for gross misconduct, you will almost certainly lose your entitlement to a bonus because you would be regarded as having breached your contract. Any bonus which you had earned but not been paid for, will be forfeited. You can still bring a claim for wrongful dismissal which would include your notice pay and loss of entitlement to a bonus.
You will probably expect to receive your bonus if you have worked a full year by the time you leave. Some may also expect to receive a proportion of their bonus payment if they leave before the year end. However, most bonus schemes require you to still be employed at the date the bonus is actually paid and not working under notice.
If you resign by giving notice before the bonus payment date, you may lose your entitlement, even though you are still working when the payment is made.
If your employer pays you in lieu of your notice, you will almost certainly not be employed at the date the bonus is paid and you will lose entitlement to it, unless your employment contract says otherwise. It is not unusual for some employers to regularly pay staff in lieu of notice to specifically avoid having to pay a bonus.
What do I do now?
This is where we come in. Employment law is all we do.
It can often feel like your employer holds all the power. They will likely have experienced HR professionals or a solicitor working in the background. That’s why you need the best support and advice available. You need a specialist employment lawyer – one who will push for what you are entitled to.
We understand how it feels. We have helped hundreds of employees and because we act for businesses too, we know the tactics you’re likely to face from your employer. We know all the tricks in the book.
We will advise you of your options and how best to proceed.
You only have a limited amount of time to take action to preserve your employment rights – usually just three months (less one day) from the date the payment became due or your employment ends. You may have longer to bring a claim for breach of contract in a County Court.
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