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Ben Jones
Ben Jones, UK Lawyer
Category: Law
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My employer has informed me that they are going to defer a

Customer Question

My employer has informed me that they are going to defer a large part of everybody's bonus payment until later in the year, instead of paying it at the end of January as normal. This is due to a temporary shortage of cash.
Whilst the award of a bonus is discretionary, I would like to know whether the decision, this year, to defer payment of a large part of it constitutes a change to my terms and conditions of employment and which I can therefore refuse.
I am leaving the company very soon and the expectation is that deferment of the bonus would mean I would never receive it.
Submitted: 4 years ago.
Category: Law
Expert:  Ben Jones replied 4 years ago.
Hello, my name is XXXXX XXXXX it is my pleasure to be able to assist with your question today. Please let me know if the payment date is mentioned in your contract?
Customer: replied 4 years ago.

No, there is no payment date explicitly mentioned.


 


My reasons for regarding the end of January as the "normal" payment date are:



  1. This is the date the bonus was paid last year

  2. In (verbal) discussions with HR, the end of January was referred to as the "normal" date for bonus payments

  3. When the idea of deferment was communicated, it was to delay the payment from "the usual date" until later in the year.

Expert:  Ben Jones replied 4 years ago.
What is the bonus due for, is it because your performance meets certain criteria?
Customer: replied 4 years ago.

It it based on both personal and company performance, with the maximum bonus percentage stated in my contract.


During the discussions already held I have been told the percentage bonus that the company expects to pay this year (which I have no objections to) and I believe this constitutes application of the "discretionary" aspect of the bonus scheme.


 


A scan of the relevant clauses from my contract is below:


 


Expert:  Ben Jones replied 4 years ago.
Even though the payment of the bonus is discretionary, case law has confirmed that this discretion is largely removed as long as the employee has met the necessary performance criteria needed for eligibility of the bonus. The employer would then be more or less obliged to pay the employee their bonus because relying on discretion in these circumstances would be seen as a breach of the implied term of trust and confidence.

You also have reasons to argue that the payment date has been implied as being in January, although it won't be the strongest of arguments if this was only done once before because it would not have created a solid precedent which would have been the case if it had happened for a number of years.

Whilst you can reject the delay and argue that it is a breach of contract, it will still not guarantee that you receive the payment now. The employer can refuse to hear your argument and decide that a delay is necessary. That would then mean that to take the matter further you would need to consider other methods of getting the payment, which could go as far as taking legal action. I would advise against doing that straight away, especially if the employer has cash flow problems and see what happens with the payment by the time you decide to leave. If you are still waiting then, you can re-consider your options and take appropriate action to try and pursue this further.

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Customer: replied 4 years ago.

Ben,


 


Thanks for your reply.


I think my next step should be to have a conversation with my boss to state that I am not happy with my bonus being deferred until after I have left the company, thus causing me to lose the bonus. I would also like to say that I believe that "changing the rules" regarding the payment of the bonus is a change to me T's and C's which I have a right to refuse.


 


If I have to take this further I will consider doing so, but would much prefer an amicable resolution based on what is fair and right.


 


I don't want to do nothing, and be deemed to have implicitly accepted the deferment.


 


Does this appear to be a prudent course of action, or would you recommend against instigation such a discussion?


 


David

Expert:  Ben Jones replied 4 years ago.
I fully agree with the proposed course of action - you should not just sit back and do nothing as it could imply you have accepted the employer's actions and could make future action more difficult. Make your position clear and say you wish to reach an amicable resolution, however make it clear at the time that you would not hesitate to take the matter further if necessary