Commission and bonus disputes can be a contentious area between employees and employers, particularly in relation to city workers’ bonuses which can run into millions. Employers may seek to make savings by withholding or reducing bonus payments.
Before making a claim for unpaid bonuses it is important to understand the nature of the bonus, which typically fall into one of two camps:
- Contractual – when the bonus payment is contractual it will be based on a specific formula as set out in the contract of employment. In this circumstance there is little room for manoeuvre by an employer, so they must pay the agreed bonus or face a breach of contract claim
- Discretionary – discretionary bonus schemes normally include some benchmarks, such as individual or team targets, for determining the amount of bonus but will reserve the right of the employer as to whether to pay the bonus. However, the employer does not have unfettered discretion and must be able to justify its decision and have reasonable grounds for not paying
There can often be questions about whether a bonus should still be paid when employment has been terminated. This will depend on a number of factors and you should seek legal advice before you make a claim.