Disappointed With Your UK Bonus ?

By Andrea Nicholls, employment consultant for Prolegal Solicitors, andrea.nicholls@prolegal.co.uk

With many bonus awards now either announced, paid, or imminent, what are the options for those who are disappointed ?

Most banks and brokerage firms will have drafted their bonus clauses carefully. Bonuses will often be stated as 'discretionary', usually saying that any payment will only be made if the employee is still employed, and that any previous bonus payment does not imply a right to any subsequent bonus award.

Also there may be a 'guaranteed bonus'. This is particularly likely for those who are within a year or so of joining their current employer and who have effectively been 'bought out' of any equity, or cash bonus, that they would have received had they remained at their previous organisation.

Whether a bonus payment is truly discretionary, however, may not be as straightforward as the employer would like.

Often a bonus will comprise of several elements: the achievement of the individual, the team or desks performance and the overall company’s performance. Therefore parts of a bonus may be truly discretionary, but others may not.

If the individual’s performance is calculated according to a formula there is more chance that it will not be discretionary. So if the bonus is measured by the amount an employee has made in revenues or profits, and it sets out how much bonus will be paid between various bands of achievement, there is a high chance that at least this element of the bonus will not be discretionary.

But what if bonuses seem to be a fairly arbitrary divvying up of the bonus pool ? This is more likely to be regarded as discretionary, however, such a system is not without risks.

It is these types of bonuses which have more often been challenged by women as evidence of sex discrimination or a breach of the equal pay provisions.

In recent years, men have struck upon their own ‘sex in the city’ claims - under the whistle blowing legislation.

Whistle blowing was introduced following several high profile disasters such as Zeebrugge and Piper Alfa. Its aim was to encourage employees to raise health and safety issues by protecting them from recrimination from their
employers.

However, the Public Interest Disclosure Act 1988 which contains the whistle blowing protection, is now arguably more often used by employees where there is no 'public' interest element at all.

This has been possible by a leading case which held that a 'protected disclosure' could be interpreted as 'merely' being a breach of the employee’s own employment contract. In recent years, case law has taken this concept even further, and it could now be a breach of an implied term of an employee’s contract, i.e. not one written down but existing in the ether.

And it is this extension of the whistle blowing protection that comes to the fore when challenging bonus awards. In the employment context there are several implied terms, in particular the implied term of trust and confidence. It may be possible to challenge a low bonus award by stating that the amount is a breach of this implied term.

However, one of the key provisions of the Act is that the employee must have made a 'protected disclosure' before suffering the detriment. Even if there has been not been anything that could amount to a 'protected disclosure' it may still be possible to challenge a bonus award if the bonus could be regarded as irrationally low.

Exactly how aggressive an employee wishes to be will no doubt be tempered by the reality of taking on an employer with deeper pockets than the individual, and concerns about getting a bad name in the market place.

www.prolegal.co.uk

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