Outstanding Bonus Payment

[Iwantmymoney]

My employer has been paying me a quarterly bonus based on 5 objectives for 3 years. The bonus is in my contract, and I have an official email from my boss stating the objectives I will be paid on if I achieve them in the quarter. In October '05 I was underpaid by at third of the bonus and my boss has confirmed to the MD that I met my objectives and that I should be paid the missing money. This is still to materialise. Then in January I wasn't paid any bonus at all, despite my objectives being met. Any contact with my boss and the MD is proving inconclusive, although I did receive a mail from the MD stating all would be sorted in January. I still have heard nothing. I have provided copies of payslips, contract etc and am now at my wits end. Can anyone advise how I should proceed with trying to obtain the money I believe is owed to me?

[Miss Zippy]

Give your boss/MD one more chance to try and rectify the situation. Can you comfortably suggest a brief meeting with one of them or both of them to try and sort this out? It is obviously in your interests to get this resolved as amicably as possible if you intend to stay working there. If �informal� channels fail, then the next step is to try and resolve the issue using your employer�s formal grievance procedure (all employers, no matter how small, must have a formal grievance procedure in place). This involves submitting a written statement of your grievance to your employer, which will be followed by an internal meeting. If you are unhappy with the outcome of this meeting, you can request an appeal meeting. If you are unhappy with the outcome of the appeal meeting, then you�ll need to consider your other options (note that you must first go through your employer�s internal grievance procedure before you can take any form of legal action). In a nutshell, your options will be either going to arbitration or issuing a claim in the civil courts (or Employment Tribunal if you decide to leave your employment due to the breach of contract).

[themas]

Agree with previous answer but you can go to Employment Tribunal while still employed by the firm. If they are unhappy about this, they would be just as unhappy if you took Court action (which would also cost you - fees etc.)

[Golden Shred]

I totally disagree with the above answers. Why should you even think, let alone allege in writing, that your boss and MD are of low integrity? Clearly it is only you who is of the opinion that your work performance is satisfactory and that your objectives have been met, not your immediate boss or the MD. Equally it is quite clear that things are so bad that they are politely showing you the door before you are pushed. Grievance Procedures, Tribunals and Court ? Tosh. That will get you an expensive black eye. Just quietly slink away and get another job if anybody will have you.

[Pippa68]

I think it could be hard to prove breach of contract ~ a bonus is a bonus, even if it is stated in a contract that bonuses can be earned a lot of the time they are connected to company profits so shouldn't be relied on. Maybe there is some small print? just a thought.

My husband also get's a quarterly bonus ~ there have been times it hasn't been paid which is disappointing, but as it is a 'benefit in kind' it shouldn't be expected to land on the mat. If it were your regular salary which hadn't been paid that would be a different matter.

I would give them another gentle shove ~ if you still get no joy then look for another job.

[Golden Shred]

You are quite right, Pippa. A bonus can be given or taken away, can be of any size and given at any time. It is entirely at the whim of the giver, it is a freely given gift, and therefore there is no legal entitlement to a bonus whatsoever. None at all. It cannot be a contractual term such that the non-payment of a bonus is a breach of contract. It cannot be the subject of a grievance procedure, appeal, arbitration, employment tribunal or civil court. In the case cited by the complainant where a regular bonus is no longer given after three years the only conclusion to be drawn is that the employer no longer wishes the association to continue and the complainant should seek another job.

[themas]

The original post says the bonus is in the contract, that the objectives to be achieved are stated in writing and that the boss has confirmed they were achieved.

In my view, if these are the facts, it is totally clear that there is a contractual obligation. This is a straightforward case where the grievance procedure (and there is a statutory one if the company does not have its own) can be used, followed - if necessary - by Employment Tribunal. This will not cost the claimant anything, but he/she has to accept the employer may be unhappy as a result & try to manouvre a dismissal.

Golden Shred's suggestion that the boss and MD are not of low integrity is offset by his comment that they are using non-payment as a means of "showing the door". If they are, that really is low integrity - they should go through the proper disciplinary/dismissal procedure. It could just as well be that the company is strapped for cash & can't afford to pay because of that.

[Golden Shred]

There is no "contractual obligation" created by writing to someone and saying if you do this I will give you a bonus of that. The essence of a bonus is that it can be given or taken away entirely at the whim of the giver, therefore it is not possible to create a "contractual obligation" that a bonus must be paid.

It is very common practice to stop a bonus payment to get rid of somebody. There is nothing of low integrity about that, if you knew the subject well you would know that it is a situation forced upon Employers by Government.

[themas]

I don't understand why you think that using the word bonus has some magical property that removes contractual obligations. If I offer to pay you �x if you carry out tasks Y & Z and further say I will pay you a bonus of 25% of �x if you complete the tasks in one month the bonus is just as much part of the contract as the basic amount. How would you feel if you bust your gut & completed in one month and I then said I wasn't obliged to pay the bonus?

We clearly disagree on integrity. If an employee is not performing he/she should be told so and given an opportunity to improve. In my view it is unethical and lacking in integrity to treat them badly in the hope that they will just leave.

[Golden Shred]

A bonus is something given above what is due. In your example it is only the �x which is due, nothing else whatsoever, that is all that any rational employee is entitled to and should expect. As a bonus is something given above what is due, offering a bonus is in effect saying that entirely at the Employers discretion (A) if you complete in one month (B) the Employer may, or (C) the Employer may not, pay an extra 25% above what is due. The Employer and the employee both take a gamble upon whether (A) is achieved, and if it is the employee takes a further gamble upon whether the Employer will make the outcome (B) or (C). There is no entitlement of any sort to (B).

An employee should turn up every day fresh, fit and alert for work and upon the clear understanding that he cannot do too much for his master. If performance drops below this then the employee is lacking in integrity, not the Employer, and down the road the employee goes - the method of ejection does not matter much. From the Employer's point of view there are plenty more at the gate.

[themas]

Can I suggest you learn something about contract law, and employment law?

If you actually are an employer and you act as you describe in relation to your employees I hope they succeed in taking you to a Tribunal - where you would likely find that such a Victorian approach is not in accordance with the law.

[Golden Shred]

For you, it would be more appropriate and beneficial to apply your suggestion to yourself. Only employee ne'er-do-well's think about tribunals.

[Miss Zippy]

A bonus can be either discretionary or non-discretionary in nature, it depends on the wording used in the contract of employment. Discretionary bonuses can be withdrawn or altered without notice, but non-discretionary bonuses cannot. Hence, breach of contract if a non-discretionary bonus is not paid.

[themas]

Just as there are good and bad employees, so there are good and bad employers. Employment law and tribunals are there to help good employees in their dealings with bad employers, and to help good employers act fairly in dealing with bad employees.

[Golden Shred]

You are wrong as usual, Miss Zippy. A bonus is something given above what is due. "Discretionary" only flags up that something may or may not be given above what is due (a gift) and it is not by prior arrangement and no regular payment will be made. "Non-Discretionary" flags up two things, the one regarding bonus is that if conditions are met there is a prior arrangement that the employee can expect something to be given above what is due. Legally, expect = probable and likely to happen but not necessarily so. So in a contract with the word "bonus" with whichever prefix (or non) in the event of non-payment no action can be started, there is no breach, no cause. The prefix "Non-Discretionary" also flags up that the probable bonus can be used in an entirely different and divorced calculation, but don't ask as I am not going to turn this into a tutorial.

With regard to you, themas, you are being silly again.

[Pippa68]

I have to agree with Golden Shred

A bonus is exactly that ~ it means 'extra payment above what is due' therefore payable if & when the employer decides to do so. If you weren't paid your basic salary then you would have grounds for complaint, but not so with a bonus as it is essentially a gift.

As I have already posted, my husband has a bonus written into his contract & there have been times this hasn't been given. Nobody in the company has complained because they understand the concept of a bonus.

Any solicitor will tell you that Breach of Contract is notoriously difficult to prove, & ACAS will tell you that you will have to leave the company or get fired in order to take it any further (I know this from my mother in law's recent experiences).

[themas]

Golden Shred - pots and kettles come to mind.

Miss Zippy is of course right. If something is said to be non-discretionary or words such as must or will are used and are not qualified in the context then there is a contractual obligation. If words such as can or might are used then clearly there is not.

If, in the example I gave you, I had used the words "performance payment" instead of "bonus" would you then have accepted that it was a contractual obligation?

[erimus1]

I wish people would not coment on things that they know very little about. A bonus can be incorporated into a work contract, and can be enforced if the requirements have been proved - i.e. the performance has been adequate..

The practice of adding or promising bonuses and the like extraordinary to the original contract comes under the law of estopel.

I know about these things because I studied law to post graduate level (7 years in total) - I can't comment any more specifically - how can some of you when you obviously haven't a clue about the whole facts or any legal or equitable remedies. Giving advice about something that you don't really know about can be very dangerous.
Go and read 'Street on Contract' and you might have a chance.
Regards,
Steve B..... LLB (Hons), LLM

[Miss Zippy]

Excuse me Golden Shred, who are you to say I am wrong "as usual"? Being LL.B (Hons) and LL.M qualified and, more importantly, having over 10 years' experience of putting the law into practice I am confident I know what I'm talking about!