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Ben Jones
Ben Jones, UK Lawyer
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I have worked company years and resigned as

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Hi I have worked for a company for 19 years and resigned as a director on 1st March. This company operates a discretionary quarterly profit sharing bonus. I have never received any written details. The last quarter ended in January 2016 and payment due in March. On Friday the company decided to put me on garden leave and informed me they would not be paying my discretionary bonus payment. The bonus would have been worth approx. £2700. I have been paid this bonus for the previous 76 quarters. I have read about custom and practice do is this worth pursuing?
Hello, my name is***** am a qualified lawyer and it is my pleasure to assist you with your question today. Have they said why they are refusing to pay you the bonus?
Customer: replied 2 years ago.
They said it was 'company policy' not to pay the PSB to leavers
Customer: replied 2 years ago.
Hello Ben!
But there is no reference anywhere to such rules?
Customer: replied 2 years ago.
Hi there is no formal written reference to this.
What is the criteria for the bonus, is it performance related?
Customer: replied 2 years ago.
The bonus is linked to net profit generated on a monthly basis. Ten percent of the profit is put into the bonus scheme along with the other 2 Group companies. It is then paid out on the basis 70% group/30% individual company.
I was told prior to leaving the figure for march is around the £150 per point. I have 18 points as a director. The quarter due in March 2016 covers November, December and January period.
In the absence of a formal clause or policy stating that leavers are not entitled to a bonus, or evidence to show that this policy was continuously applied over time, they may find it difficult to challenge this. When it comes to workplace bonuses, there are two main types: contractual or discretionary. There can be an overlap where a contractual term gives the employer discretion over payment, or there can also be further sub-categories, for example performance-related bonuses or bonuses payable subject to other conditions. What is certain is that the legal issue of bonus eligibility is a rather complex matter and would mainly be subject to interpretation of individual circumstances and the wording of the clauses in question. A common example is a bonus clause which is contractual but which gives the employer the discretion to decide whether it would be payable or not. This is also a situation which would cause most disputes between employee and employer. Whilst at first glance this may give the employer full discretion as to whether the bonus should be paid or not, this will not always be the case. If the eligibility to a bonus is based on performance criteria then first of all if an employer is required to form an opinion of an employee's performance they must do so in good faith and be fair. Any other performance criteria would usually be determined based on qualitative data. Assuming the performance 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. So this is an example where the employer's discretion is removed once the relevant eligibility conditions have been satisfied. It follows that even though a bonus clause may be described as being entirely at the employer's discretion, there are circumstances where this discretion is removed and the bonus would automatically become payable if the eligibility criteria have been met. Also you have the argument of custom and practice. Case law has suggested that the following are important factors when considering whether a term has become implied in a contract through custom and practice:· 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· Whether the terms are always the same - large differences will make the argument they had become implied weaker· 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 This is your basic legal position. I have more detailed advice for you in terms of the steps you can take f the employer still refuses to pay you the bonus, 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.
Thank you Ben what would be my next step as I explained I have received this bonus every quarter for 19 years that's approx. 76 payments?
If they refuse to pay you then this potentially amounts to an unlawful deduction from wages, which is made illegal under the Employment Rights Act 1996. In order to try and resolve this, the employer should be contacted in writing, advised that this is being treated as unlawful deduction of wages and ask them to pay back the money within 7 days. Advise them that if they fail to pay the money that is owed, legal proceedings could follow. If the employer does not return the money as requested, the following options are available:1. Employment Tribunal - the time limit to claim is only 3 months from the date the deductions were made. To make the claim, form ET1 needs to be completed and submitted - you can find it here: County Court – this is an alternative way to claim and the advantage is that the time limit is a much longer 6 years and is usually used if you are out of time to claim in the Tribunal. The claim can be made online by going to: ***** ***** by warning the employer you are aware of your rights and are not going to hesitate taking further action they will be prompted to reconsider their position and work towards resolving this.
Customer: replied 2 years ago.
Thank you Ben should I wait for March payment to be made or should I contact and issue the warning ASAP re he meeting I had last Friday when I was informed they would not be paying the bonus?
You can raise the matter now in terms of bringing this to their attention and telling them that you will pursue it further but technically you cannot make any claim until they have failed to pay you on the due date
Customer: replied 2 years ago.
Thankyou Ben very helpful.
You are most welcome