Bonus payment withdrawn when being made redundant

WoB

Hi

Just after a little bit of advice. I am in the process of being made redundant alongside a few other colleagues. The question I have is around the withdrawal of a potential bonus to those being made redundant. Here are the details on the bonus system:

• The bonus is classed as discretionary and is based on performance of the individual for the year 2011.
• All employees performances are judged via a scoring system.
• The same bonus is paid to all employees receiving the same score.
• Any bonus for 2011 is to be paid in the March salary of each employee.
• If a bonus is to be paid the employee must still be working for the company on 31st March.

Now, the redundancies have all happened quite quickly (I am not here for advice on that). Affected people are also being offered voluntary redundancy with an extra tax-free additional lump-sum. We are to leave the company on 31st March. We've been told we won't be receiving any bonus paid as we are leaving in March!

My first thoughts are this can't be legal. We are not choosing to leave of our own accord. The company are making us redundant on this particular date (all very rushed!). It seems like the potential bonus is not being paid in order to pay for the tax-free addition on the VR package!

There is also the notice period payment which obviously takes us past this 31st March date. I am not sure that counts though if they are paying us in leiu of notice. We have asked about working the notice but they said we couldn't (even though I checked my employment contract and there is no mention of this).

Would appreciate your thoughts/knowledge regarding this situation - does it seem right that a bonus payment (if due) should be with held from an employee they are making redundant. Seems very odd the coincidence with the leaving date and the fact no bonus are paid to staff leaving in March!

If you need other info please let me know.

Best Wishes
WoB

Emmzi

if it says "discretionary" then it's just that.

Sambucus_Nigra

WoB wrote: »

If a bonus is to be paid the employee must still be working for the company on 31st March.

This ^

It means that IF a bonus is to be paid the employee must be working for the company on 31st March. Not that every employee working on 31st March will get a bonus.

LittleVoice

OP - Though it has been pointed out that it is a discretionary bonus,
had you previously been told that you would receive a specified amount as a bonus in respect of your 2011 performance?

The rules you have written include that working for the organisation on 31 March is a key date. Therefore the statement that "as we are leaving in March" doesn't quite fit - you will be employed on 31 March.

WoB

I understand discretionary but I would think if 100 people received the exact same scoring and 99 received a bonus but 1 did not, I would wonder why that was the case. If it happened that this person was being forced out on the last day of remaining criteria, I would think this a bit fishy.

What about the law around mutually agreeing to receive pay in lieu of notice? I understand if that is not in your contract you do not have to accept it and can work your notice instead. If this happens I assume you would then be eligible for the bonus if you were awarded it based on your performance?

Thanks for replies.

WoB

LittleVoice wrote: »

OP - Though it has been pointed out that it is a discretionary bonus,
had you previously been told that you would receive a specified amount as a bonus in respect of your 2011 performance?

The rules you have written include that working for the organisation on 31 March is a key date. Therefore the statement that "as we are leaving in March" doesn't quite fit - you will be employed on 31 March.

We still don't know if we are to receive a bonus - announcement due very soon. I hope I clarified the position in my recent general reply. Basically the bonus is paid across the board per rating (so if you score rating 2, everyone with that rating receives the same bonus figure). Of course they may wangle 'discretionary' as meaning per individual but it really means any bonus paid is discretiionary (i.e. at the company level).

I think our last working day is 30th March - we leave the company on the 31st. Hence we leave in March - all a bit iffy to me. :cool:

LittleVoice

WoB wrote: »

I understand discretionary but I would think if 100 people received the exact same scoring and 99 received a bonus but 1 did not, I would wonder why that was the case. If it happened that this person was being forced out on the last day of remaining criteria, I would think this a bit fishy.

What about the law around mutually agreeing to receive pay in lieu of notice? I understand if that is not in your contract you do not have to accept it and can work your notice instead. If this happens I assume you would then be eligible for the bonus if you were awarded it based on your performance?

Thanks for replies.

I don't think there is a mutuality requirement.

If there is no mention in your written particulars of employment of pay in lieu of notice then it is not a contractual payment and can be considered as compensation for your not receiving notice and may not be subject to income tax - but some employers will still deduct tax.

Emmzi

I think you'll find your last working day is 30th March precisely to avoid any possible challenge on bonus.

WoB

Emmzi wrote: »

I think you'll find your last working day is 30th March precisely to avoid any possible challenge on bonus.

Agree. Do you know if a company can refuse that you work your notice (if it is not in your contract)?

LittleVoice

WoB wrote: »

Agree. Do you know if a company can refuse that you work your notice (if it is not in your contract)?

Employers do just that and not infrequently. You cannot force them to allow you to work your notice - and if you are in a redundancy situation that backs up their decision.

Emmzi

give it up, you are going to lose this one.