GUEST COMMENT: Legal options if your bonus is substantially smaller than your colleagues'

Despite all the controversy, most people will get bonuses this year, and some people will probably paid a lot more than others for reasons that don't appear entirely fair.

If you think you've been paid unfairly compared to colleagues, it will help if you're able to establish precisely what they earned. This can be difficult due to the operation of secrecy clauses in your contract of employment. There is also no obligation on employers to make the criteria for awarding bonuses transparent and of course unsurprisingly, most elect not to do so.

It is unlawful however, to use bonuses to discriminate against an employee because of their sex, race, age, disability or religion. Performance should be the only satisfactory basis for an employer to justify any differences. As has been recently publicised women earn an average of 40% less than men in the financial services industry and this disparity is higher than in any other industry. Unsurprisingly, sex discrimination cases are common.

If you think you have a case for discrimination, remember that any claim must be brought within 3 months of the date the bonus was paid. To succeed, you would need to show that you have been treated less favourably than your colleagues, for example, because you are pregnant or have been on maternity leave.

If you've been paid less than colleagues who performed equally well, but this was not due discrimination on the grounds given above, you will find it a lot harder to bring a claim.

However, recent case law suggests that even where discrimination isn't an issue, employers don't have total freedom to allocate bonuses, and their decisions can be challenged in court.

In one of the leading cases, Clark v Nomura, Mr. Clark's bonus scheme was discretionary and dependent upon his performance. However, the court found that an employer's discretion must still be exercised in good faith and not irrationally or perversely. Given that Mr. Clark had earned approximately 22 million in profits for Nomura in the relevant year, it was held that Nomura's decision not to award him a bonus was perverse and that Mr. Clark was entitled to a bonus of 1.35m.

This case illustrates that employer's do not have unlimited discretion. Subsequent case law shows that employers who do not have transparent bonus schemes will find it difficult to justify the exercise of any discretion, in the absence of a paper trail to back up their decisions, such as appraisals or warnings about poor performance.

Provided that you have more than one year's service, you could also raise an additional claim by resigning and claiming constructive dismissal as a result of your employer being in breach of the implied term of trust and confidence that exists in any employment contract. Given the current job market, it would be a brave soul who did this though.

Philip Landau is a partner at London law firm Landau Zeffertt Weir. Feel free to contact Philip on pl@lzwlaw.co.uk or 020 7357 9494 for a free consultation on this or any other employment law issue.