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Ben Jones
Ben Jones, UK Lawyer
Category: Law
Satisfied Customers: 50187
Experience:  Qualified Solicitor
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Can an employer stop a bonus scheme if it is not in my contract

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Can an employer stop a bonus scheme if it is not in my contract but has been give for 20+ years?
Can an employer buy my bonus off me by adding a sum to my salary and if so what would be a fair offer? how should the offer be calculated?
Hello, my name is ***** ***** it is my pleasure to assist you with your question today. Has the employer actually made an offer to buy the scheme off you?
Customer: replied 2 years ago.

For Ben Jones. No definite offer as yet, I have been told they want to stop the bonus and given a brief outline that their offer will be based on years service and past bonuses up to a maximum of £1500.00

How was the bonus calculated up until now?
Customer: replied 2 years ago.

For Ben Jones, I have been told it is calculated as:-

3.5% of the company nett profit is allocated to the bonus pot, based on the total salary (Thousands) of all employee that are eligible for the bonus. Pot divided by the total salary thousands figure gives a £/thousand value, each employees bonus would be the £/thousand multiplied by their salary?


Bonus pot of say £150000.00

Total Salary of eligible employees say £250000.00

£/Thousand = £150000.00/£250000.00 = £0.60

Say my salary is £30000.00 my bonus would be £0.60 * 30

There is a principle in employment law where terms may become implied into an employment contract by ‘custom and practice’. This makes them contractually binding even if they are not written down anywhere. This area of law is rather complex and it is usually only down to the courts to establish with certainty if something had become an implied term. Nevertheless, it does not prevent employees from directly raising this argument with their employers. 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. 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 So you may certainly argue that this bonus scheme has become an implied contractual term through custom and practice. 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, in relation to the buying out of the bonus there is unfortunately nothing in law that deals specifically with how that is done and what is to be considered a fir offer. It would usually come down to a court deciding on the specific facts what they consider fair but for that to happen t has to be challenged in court first. As you can imagine it is rather rare for such matters to take place so it is not something which you will find much guidance on – it is effectively down to negotiations between you and the employer and if no amicable resolution can be reached – by challenging this as mentioned above. I hope this has answered your query. Please take a second to leave a positive rating, or if you need me to clarify anything before you go - please get back to me and I will assist further as best as I can. Thank you
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