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Ben Jones
Ben Jones, UK Lawyer
Category: Employment Law
Satisfied Customers: 73447
Experience:  Qualified Employment Solicitor
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My employer refused me to pay my employment loyalty bonus in

Customer Question

Hello, my employer refused me to pay my employment loyalty bonus in full. The situation was that they forgotten to start paying from the time where I was already entitled and said that they can not make back dated payment regarding this.
JA: Have you discussed this with a manager or HR? Or with a lawyer?
Customer: Just with the person that acts on behalf of the company
JA: What is your employment status? Are you an employee, freelancer, consultant or contractor? Do you belong to a union?
Customer: employee
JA: Is there anything else the Lawyer should know before I connect you? Rest assured that they'll be able to help you.
Customer: I have a contract that clearly states that I am entitled for this loyalty bonus after one year of employment. And it has a bonus section where it says it is on discretion of the company but I think it is totally different and have no connection between two.
Submitted: 12 days ago.
Category: Employment Law
Expert:  Ben Jones replied 12 days ago.

Hello, I’m Ben. It’s my pleasure to assist you today. I may also ask for some preliminary information to help me determine the legal position.

Expert:  Ben Jones replied 12 days ago.

How long have you worked there for? Please note this is not always an instant service and I may not be able to reply immediately. However, rest assured that I am dealing with your question and will get back to you today. Thanks

Customer: replied 12 days ago.
Hello, thank you for your response! As per contract from July 2018, but it was supposed to be from even earlier dates and I had to push them to provide one as they did not have any initiative for doing this.
Expert:  Ben Jones replied 12 days ago.

Thank you very much for clarifying. So are they relying on the discretionary wording to also say that the bonus is discretionary to start with and it was never guaranteed?

Expert:  Ben Jones replied 12 days ago.

Without the requested information, I can only provide you with the following general response, which will hopefully still answer your query. First of all, I am sorry to hear about the issues you have experienced in your situation.

The key issue is whether the bonus was guaranteed or discretionary. Workplace bonuses can, in their nature, overlap in the way they become payable, which can sometimes create some difficulties. For example, they could be contractual with discretionary eligibility, contractual with guaranteed eligibility or discretionary altogether. I will summarise the usual positions below:

1. Contractual bonus

This is the preferred situation as the bonus terms are clear and transparent as they are contained in the employee’s contract or associated bonus eligibility document. The employee’s participation in a bonus scheme is practically guaranteed, although it would not automatically mean they are also eligible for receiving payment under it. Whether that happens depends on the criteria set out in the associated terms.

Assuming the conditions have been met, an employer will rarely be able to refuse payment of the bonus as doing so would be acting in bad faith and considered unfair. It is also going to be a likely breach of the implied term of mutual trust and confidence, which exists in every employment relationship. They should pay that, even if it is to be backdated

2. Non-contractual/Discretionary bonus

These are actually the more common types of bonuses. There is no automatic right to a bonus, allowing the employer flexibility in choosing if and when a bonus is payable and such decisions may be made entirely at the employer's discretion and on their own terms. The key aim is to avoid placing the employer under any obligation to implement a bonus scheme or make any bonus payments. A scheme where the employer has total discretion on whether to pay a bonus or not could be difficult to challenge. However, less stringent schemes where the employer may only have partial discretion or still form an opinion on eligibility or base it on performance could potentially be challenged under the fairness arguments mentioned above.

It follows that even though a bonus clause may be described as being at the employer's discretion, there are circumstances, mainly in performance-based eligibility, where this discretion is removed and the bonus would automatically become payable if the eligibility criteria have been met. The employer must have reasonable grounds for not paying that bonus and be able to show that it has acted in good faith.

Expert:  Ben Jones replied 12 days ago.

Hopefully, I have answered your query in a way that is simple and easy to understand. If anything remains unclear, I will be more than happy to clarify it for you. In the meantime, thank you once again for using our services.