Maternity Leave and Bonus Payments

Deano1000

[FONT=&quot]A friend of mine earns a bonus each month which is paid into the following month’s wages; in other words, it is paid in arrears. [/FONT]
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[FONT=&quot]She is due to go on maternity leave at the end of July, but has been told that because she will not be working at the end of August, she is not entitled to the bonus earned during July.[/FONT]
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[FONT=&quot]I was of the understanding that if a bonus relates to a period of time prior to the employee starting maternity leave, then the payment must be made in full, irrespective of whether or not she is on maternity leave when the payment is made.[/FONT]
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[FONT=&quot]Is my understanding correct, and if so, can anyone advise me of the relevant legislation and case law which she can present to her employer to evidence their error.[/FONT]

corbyboy

Not only is she entitled to the bonus for July, she is entitled to a pro-rata bonus for however long she works in August.

Not_a_Newbie

Surely this depends on what was specified in her contract?

SarEl

True. There is no relevant legislation for bonuses - they are are agreement between employer and employee, and as with any other form of contract, what matters is what is stated in the terms of the bonus scheme. So that would be her starting point - what do the rules or policy governing the scheme say? It is impossible to give a definitive answer about what the terms are without knowing the terms!

Deano1000

Thanks guys. I will ask her about the bonus scheme within the contract, but when she goes on maternity leave on August 1, she would have worked the whole of July and earned the bonus, which is contractually paid in arrears at the end of August. The employer thinks that because it is paid in arrears and she won't be there on payday, they don't have to pay it. However, it is not remuneration for August, but July?

corbyboy

I don't see how she wouldn't be entitled to the payment no matter what it states in her contract.

Presumably anybody who is off sick in August won't be getting their July bonus either?

clairec79

so if she returns on 1st June next year will she receive the bonus from May when she wasn't working? If she asks that question they may realise the disparity of their logic

Deano1000

Section 71(4)(a) of the Employment Rights Act 1996 states that a person who exercises her right under subsection 1 is entitled to the benefits of the terms and conditions of employment which would have applied if she had not been absent.

Is this the relevant legislation which would assist her in her argument?

SarEl

Deano1000 wrote: »

Section 71(4)(a) of the Employment Rights Act 1996 states that a person who exercises her right under subsection 1 is entitled to the benefits of the terms and conditions of employment which would have applied if she had not been absent.

Is this the relevant legislation which would assist her in her argument?

No - because the terms of the bonus scheme still aren't known and they are applicable. There is an assumption here being made, that because she receives payment "a month in arrears", that payment is due a month in arrears. That isn't necessarily the case. The rules may say a number of things. We do not know what would happen if she was otherwise not in work, so there is not yet any evidence of detriment. And one thing to also watch out for is that many bonus schemes specifically stipulate that the terms of the scheme are no contractual. Although they would be expected to abide by the terms, they are non-contractual to enable them to be varied by the employer without breach of contract claims.

You really do need to get the rules of the scheme, or at least ask the employer to justify why payment is not due.

Deano1000

Ok, I have established that although her contract of employment is quite comprehensive, it is absolutely silent on the bonus scheme.

The company have simply, and by conduct, assessed the bonus earned at the end of the month in which it was earned, and then paid it in the following month's wages.

This has happened since the day she commenced her employment 6 years ago.

So she 'will' earn July's bonus. How can it now not be paid at the end of August, contrary to 6 years of previous company conduct?

SarEl

Deano1000 wrote: »

Ok, I have established that although her contract of employment is quite comprehensive, it is absolutely silent on the bonus scheme.

The company have simply, and by conduct, assessed the bonus earned at the end of the month in which it was earned, and then paid it in the following month's wages.

This has happened since the day she commenced her employment 6 years ago.

So she 'will' earn July's bonus. How can it now not be paid at the end of August, contrary to 6 years of previous company conduct?

I did say that such things are not always (or even often) in the "contract of employment". You have to ascertain the terms of the bonus scheme and you have to ask the employer for these. She has no idea what "previous company conduct" in these circumstances is because she has never been in these circumstances before. Before going off and demanding payment she needs rto be utterly sure that the scheme does not have rules that covers absences from work through sickness, maternity etc., and if they do, whether those terms are fair. You are trying to deduce something without having any evidence that it is true. Ask for the terms of the bonus scheme or an explanation of why the payment is being refused and upon what this is based.