What are bonus disputes?

A bonus dispute will arise if you disagree about the payment conditions of an agreed bonus, or if a bonus payment is being withheld.

Here at Lupton Fawcett, we understand how difficult it can be to dispute a bonus with an employer or an employee and we will always maintain a pragmatic approach to a resolution.

Our employment team specialise in employment law for employees, call us on 0330 404 6434 to discuss your case.

Typically, there are two types of bonus structure;

  • Contractual

This is where the bonus has been agreed in writing as part of the remuneration package and will usually be based on the performance of an individual or the overall performance of the company (or the department) in which the individual is employed.

  • Discretionary

This type of bonus is also normally agreed against some sort of performance related targets. The difference is; the payment of the bonus is at the discretion of the employer. This does not mean however that the employer can simply refuse to pay the bonus, he must have reasonable cause.

Our experts frequently handle claims and disputes concerning contractual and discretionary bonus schemes and our lawyers are adept at understanding the legal rules and nuances that can often make all the difference in terms of securing you a successful outcome.

If you are in dispute, or, you are negotiating your contract and want to make sure the wording is clear and indisputable then please call our team on 0330 404 6432.

Contractual bonuses

As the title suggests, this will have been agreed somewhere in the contract of employment offer and will be reasonably clear. We say ‘reasonably’ because contracts will often be drawn up by a Sales or Commercial Director and his or her wording may not be up to scratch in the eyes of the law.

It will normally be paid based on a target or targets and be paid on a specific date or over a period of time.

In the cases of contractual bonuses, there is normally little or no room for manoeuvre and the employer must pay on time should the agreed targets have been met. Not doing so would result in a breach of contract.

That said, it doesn’t always stop an employer withholding a bonus.

Discretionary bonuses

A discretionary bonus will also be paid based on performance and again, this would typically relate to an individual, a department or the entire company.

The employer is on control of whether the bonus is paid, and this can often lead to disputes as the views of employees and employers can differ greatly.

An employer may argue that cash liquidity is required for future stability for the company, rather than clearing out the bank account for past performance. He does however not have carte-blanche over the reason for non-payment and must have reasonable grounds.

If not, then a dispute may be raised as this case demonstrates;

Case in point;

In the case of Clark v Nomura plc, the discretionary bonus was challenged by Mr Clark when he was dismissed partway through the year for misconduct.

His bonus was dependent on performance, and in the previous year had earned him £2 million based on earning the company £14 million. Following his dismissal partway through his second year with Nomura, he argued he was entitled to a portion of the current year’s bonus.

The High Court agreed, and Mr Clark received a substantial pay-out including damages when his case was upheld.

How can we help?

When it comes to bonus payment contracts, our experts can help you.

  • If you are an employer, we can assist with;

Drafting a bonus document –

Getting the wording right from the outset is critical if you are to defend yourself successfully against a future claim. Don’t fall into the trap of leaving it to your Sales Director, as this can often leave gaping holes with regard to contract law and leave you exposed.

Of course, you may want to outline the main conditions of the bonus scheme, then engage us to make it legal and watertight. Our experts will help you draft, review or negotiate contracts and our vast experience will assist you in including clauses you may never have thought of.

Defending you against a non-payment claim –

There are a number of options open to you, but if you find yourself in dispute with an employee regarding a bonus claim, please call us without delay. We can review any contractual documentation whether it is written or implied and advise you accordingly

Call our expert contractual lawyers on 0330 404 6432 now and let us help you.

  • If you are an employee, we can assist with;

Questioning a bonus contract clause you are not happy with and re-word it

Legal writing can be difficult to understand at the best of times and it’s important to seek an independent opinion when you are reviewing your bonus contract. Don’t take the word of the employer or their lawyer, or you might find it’s not in your favour when it comes to a dispute.

Disputing and claiming a non-paid bonus –

If you are already in dispute and your employer is withholding all or part of your bonus, then it’s wise to engage an expert immediately. Your position is often strengthened when the employer realises you are serious about the dispute and the situation can normally be resolved expediently.

From the outset, we may agree to take a pragmatic approach as we understand being in dispute with an employer is often uncomfortable.

However, if things are escalating, we will be forceful when required.

If you find yourself in either of these positions, please get in touch without delay. We can help resolve your situation.

Call our expert contractual lawyers on 0330 404 6432 now and let us help defend what may rightfully be yours.

Non-payment of City bonus

City bonus contracts are often complex and disputes can involve millions of pounds. With this in mind, it can be common for employers to look at making savings and withhold employees’ bonuses.

Reputation management is key here and we can use this in your favour.

Terminated employment

Whether a bonus should be paid if an employee is no longer working at the company is often a grey area, irrespective of any written contractual clause.

Oftentimes a contract will state that an in order to receive a bonus, an employee must;

  • Be employed at the bonus payment date
  • Not be working under notice

However, it can depend heavily on the manner in which an employee left the company and how their exit was managed.

Bonus discrimination

If you are an employer then it’s wise to tread carefully when withholding, reducing or agreeing bonuses. In today’s delicate climate it can be all too easy to leave yourself open to discrimination claims.

If you feel this is the direction your dispute is heading in then get in touch, we will handle your case with discretion.

Next Steps

Lupton Fawcett have successfully resolved many bonus related cases and we maintain a commercial and pragmatic approach in terms of what is achievable.

We can adopt a forceful approach whichever side you are on, but we are also practical and focused on bringing any dispute to a prompt conclusion whilst maintain the reputations of all involved.

Call the experts now on 0330 404 6432 and we can begin to resolve matters.

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