A guide to bonuses

If you're after more money from your employer it's always difficult knowing how to approach it, no matter what your circumstances are.

So we've compiled a handy guide to bonuses to make things a little easier for you.




Is my employer awarding bonuses fairly?

Even with a discretionary bonus, your employer can’t give bonuses in an irrational or unreasonable way. Many bonus schemes specify performance criteria. Some also specify who will judge performance against those criteria.

Your employer should ensure that decisions are made by the right people, and that their decisions are transparent, consistent and objectively justifiable. There should also be no conflict of interest, e.g. where decision-makers receive their bonuses from the same pool.

My colleagues have all had a bonus – does this mean I should?

If your employer regularly awards bonuses, there will be rules that govern the manner and method of payment. These rules might be recorded in writing, agreed orally, or have arisen through custom and practice.

If your performance has been similar to your colleagues over the year and they have been paid bonuses, you are entitled to a similar bonus level. If you think your employer might be trying to encourage you to leave by not paying your bonus, you could potentially claim constructive dismissal.

Can my employer withhold my bonus?

If your employer wants to withdraw from or amend a current bonus scheme, they should do this at the end of the bonus year, with the new criteria applying to future entitlement.

I’ve lost my job – but should I still get my bonus?

If you’ve been made redundant shortly before your bonus was due, you may still have the right to this payment. There are many different types of bonus schemes, some related to commission (based on specific contractual formulae) and others to performance (normally discretionary).

If your bonus is contractual, it should still be paid (pro rata if appropriate), regardless of when you were dismissed. If the bonus is discretionary, the position is more difficult. But if your employer has by custom and practice paid bonuses to employees who have left before the year-end bonus date, you should be paid.

Should I get any bonuses I would have earned during my notice period?

If your employment contract specifies payment in lieu of notice (PILON), you probably aren’t entitled to any bonus or commission you would have earned during your notice period.

If your contract doesn’t specify PILON arrangements and your salary includes a large commission or bonus element, you may be entitled to work out your notice period so you can earn this. Contracts of employment contain an implied term preventing employers from avoiding contractual obligations (including bonuses) by terminating employment early.

What to do if you have a problem

If you think you’re entitled to a bonus or that your performance-related pay is too low, you should first discuss it with your employer. If you have an employee representative, such as a trade union official, they may be able to help.

The information on these pages is provided for your information and reference only. Before making any important decisions regarding your employment or any legal matter, you should consult a qualified professional adviser who can provide specific advice based on your individual position.


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