We all know this will not be a good year for bonuses. Predictions suggest bonus pools will be down 30 to 50 percent and that as many as 20 percent of front-office bankers may receive virtually no bonus at all.
But if you are not happy with your bonus, is there anything you can do about it?
Every bonus scheme and situation is different and needs careful analysis, but there are some key points which often come up.
If your bonus is contractual, you can bring a straightforward breach of contract claim for the amount due.
If, on the other hand, your bonus is discretionary, your employer only has to give proper consideration to what your bonus should be and is not obliged to pay you any specific amount.
In this situation, a challenge cannot be a simple breach of contract claim. Instead, you have to claim that your employer did not consider your bonus properly. This means showing that no reasonable employer would have made the decision your employer made. Unfortunately, this is not easy to demonstrate: reasonable employers can legitimately make a wide range of different decisions when exercising the same discretion. You would also have to persuade a court what size bonus an employer behaving reasonably should have given you. Discretionary bonuses are therefore hard to challenge.
Confusingly, however, in some instances your contract may describe your bonus as being discretionary when it could, in fact, be contractual. For example:
Even when your bonus is discretionary, there may be further grounds for a legal challenge. For example:
What if your bonus is deferred or paid in shares? Check whether your employer is entitled to do this under the rules of the bonus scheme. If the FSA remuneration code applies, your employer will be subject to specific rules about deferral.
Are you entitled to unpaid deferred bonus after you have left? Again, you need to check the rules of your scheme. There may be “good leaver” and “bad leaver” rules under which deferred bonus can be lost either automatically when you leave or only in particular circumstances – such as if you solicit business from your employer’s clients on behalf of a competitor.
Adrian Crawford is an employment law partner at Kingsley Napley LLP.
This article first appeared on our UK site.