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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 50130
Experience:  Qualified Employment Solicitor
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My employers are wanting to change my profit share scheme

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Hello, My employers are wanting to change my profit share scheme to a target based bonus. I will have a target I can hit, but this will no longer be related to profit share. Though not confirmed by the employer, I believe this is to ensure they can try to pay less in future years.
My offer letter states "Profit share: you are also entitled to participate in a profit share scheme. This is paid and reviewed annually." There is no further mention of profit share in my contract, nor a mention that it can be removed as there is no mention of it being discretionary.
In addition, I have a meeting on 1 March which will spell the details out for me - yet in spite of having worked for the last 2 months (with the change having been first mentioned approximately 7 months ago) the employer is claiming this new system will cover all of 2016. So the two months I have worked this year will not be paid on the old profit share scheme, but on the target based bonus, in spite of the fact I do not yet know what that target is.
I would like some advice as to whether my employer can remove my profit share based on my offer letter, and if it can do so at this stage for 2016?
Thank you in advance,
Rachel Lewis
Hello, how long have you worked there for and is the current scheme a contractually binding one?
Customer: replied 2 years ago.
6 years, and it is not mentioned anywhere in the contract, but it is within the offer letter.
Has it been consistently applied throughout your time there?
Customer: replied 2 years ago.
yes, each year. The percentage was increased a couple of years ago - I have no written confirmation of that from my manager, but have profit share statements from the last 6 years.
Would there be a big difference in pay for the two months where the new system would start to apply, compared to the old system?
Customer: replied 2 years ago.
Judging by last year's statement, I would have achieved approx £2,800 for the first two months of the year. I am led to believe that if I hit target over the course of the year, I can earn £8700 over the course of the year. The new scheme is a spend target being hit (or not hit) and there have already been 4 events this year, 1 of which is one of the two largest of the year.
If the employer wants to change the bonus scheme you could try and argue that it amounts to a change to your contractual terms and conditions. It may not be mentioned in your contract but it could have become an implied contractual term having been applied consistently over the years. The basic requirement for implying terms is the presumed intention of the parties, in other words - did the employer and employee intend for the terms in question to be treated as contractual. In general, a practice would need to have been clearly communicated and consistently applied for a substantial period of time before it can be considered an implied contractual term. Therefore, something that is uncertain, not communicated properly, not been applied consistently or has just been around for a few months is unlikely to qualify. You could certainly try and negotiate with them over the proposed changes. For example, if it looks likely that they will introduce the changes regardless, you could sate that you would agree to the changes if the scheme only covers events after its introduction and any time until then is covered by the old scheme, so that any adverse effects are minimised as much as possible. If they do not agree then you could say that you will not give your consent and you would challenge the forceful introduction of these terms. This is your basic legal position. I have more detailed advice for you in terms of the law on custom and practice and also your options for dealing with forced contractual changes, which I wish to discuss so please take a second to leave a positive rating for the service so far (by selecting 3, 4 or 5 stars) and I can continue with that and answer any further questions you may have. Don’t worry, leaving a rating will not close the question and we can continue this discussion. Thank you
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Customer: replied 2 years ago.
This has been done. Thanks. I understand they won't pay the old scheme until I am informed of the new - others have asked this, so I'd have to challenge the forceful introduction.
Thank you. As far as custom and practice is concerned, case law has suggested that the following are important factors when considering whether a term has become implied in a contract:{C}· On how many occasions, and over how long a period, the terms in question have been applied - the more times they have been applied and the longer the period over which this has occurred, the stronger the argument they had become implied into the contract{C}· Whether the terms are always the same - large differences will make the argument they had become implied weaker{C}· The extent to which the terms are publicised generally - there must be widespread knowledge and understanding amongst the workforce that such terms were being applied As to the proposed changes, there are a few ways in which an employer may try and make changes to an employee’s contract of employment. These are by:· Receiving the employee’s express consent to the changes.· Forcefully introducing the changes (called 'unilateral change of contract').· Giving the employee notice to terminate their current contract and then offer them immediate re-engagement under a new contract that contains the new terms. If the changes are introduced without the employee's consent, then the following options are available: 1. Start working on the new terms but making it clear in writing that you are working ‘under protest’. This means that you do not agree with the changes but feel forced to do so. In the meantime you should try and resolve the issue either by informal discussions or by raising a formal grievance. 2. If the changes fundamentally impact the contract, for example changes to pay, duties, place of work, etc., you may wish to consider resigning and claiming constructive dismissal. The resignation must be done without unreasonable delay so as not to give the impression that the changes had been accepted. The claim must be submitted in an employment tribunal within 3 months of resigning and is subject to you having at least 2 years' continuous service. You would then seek compensation for loss of earnings resulting from the employer's actions. 3. If the employment is terminated and the employer offers re-engagement on the new terms that could potentially amount to unfair dismissal. However, the employer can try and justify the dismissal and the changes if they had a sound business reason for doing so. This could be pressing business needs requiring drastic changes for the company to survive. If no such reason exists, you can make a claim for unfair dismissal in an employment tribunal. The same time limit of 3 months to claim and the requirement to have 2 years' continuous would apply. Finally, it is also worth mentioning that sometimes employment contracts may try to give the employer a general right to make changes to an employee’s contract. As such clauses give the employer the unreserved to change any term, so as to evade the general rule that changes must be mutually agreed, courts will rarely enforce such clauses. Nothing but the clearest language will be sufficient to create such a right and the situation must warrant it. Any attempt to rely on such clauses will still be subject to the requirement of the employer to act reasonably and can be challenged as above.
Customer: replied 2 years ago.
Thanks for this, this gives me some idea of how to proceed. Which suggests that when they want me to agree to this next week, I could do so, but under protest and inform them in writing that I feel I have no choice but to do so. They are unilaterally changing my contract - which it does seem like they are legally able to do, with or without my consent, and regardless of the wording on my offer letter. I believe I have understood this correctly?
yes they can, but then it is a matter for you to decide whether you are willing to eventually accept these changes or to negotiate with them for a compromise, or if you cannot continue working there as a result - go down the constructive dismissal option
Customer: replied 2 years ago.
Thanks a lot for your help.
You are welcome, all the best