Bonus removed after TUPE

wesleyad

Hi all looking for a little help

My company was bought out last year and we all TUPE'd across. We had a bonus scheme that paid out x% depending on band multiplied by a performance multiplier. That multiplier couldn't go lower than 0.5 and has never been lower than 0.8.

Now new company are debt laden and making no money and so are saying bonus multiplier is now 0. So clearly we are a little miffed as we haven't changed anything.

In terms of what's in contract its only 2 parts,

Bonus: 18%

and

Your current bonus target is 18% Bonus targets may change in line with compensation programs.

So company are saying that second line means they can make it whatever they want. But we are thinking there's some sort of historical weight that factors in? Bonus has been paid at a multiplier of 0.8-1.2 as long as anyone can remember (at least 30 years). Or are we grasping at straws?

Any help is appreciated

Wesleyad

Undervalued

What were the exact terms of your bonus before you were TUPEd?

The vast majority of bonuses are "discretionary" and not a hard and fast right. It all depends on the wording. If it was discretionary then the law generally allows the employer wide discretion as long as it is not so far off as to be "perverse".

Wonka_2

As @Undervalued says - presumably (as most are) the bonus is discretionary and therefore can be amended/not paid etc

But specifically in this situation where you're talking about the multiplier is that the number they're using for this year or a longer term part of a contract or T&C's - given the current financial situation it's not unlikely that many won't receive bonuses this year that have historically been paid 

wesleyad

Thanks for replies.

The only terms are as above. A contractual bonus of 18% but a second term that allows the target to change. There's nothing else. There old calculation used was the bonus could never go below 0.5 whatever the financial situation. There was a company performance factor and a site performance factor, split 50:50 so if company did rubbish we would still get a bonus due to our site doing well and vice versa if required. But non eof those calcs are in t&cs.

 As far as we can tell they are changing the multiplier to 0 from now on, so even though the bonus is contractual they are saying that they are fulfilling the tupe contract by giving us an x% bonus multiplied by 0, so no bonus. If that's allowed it seems pretty dodgy. 

Undervalued said:

If it was discretionary then the law generally allows the employer wide discretion as long as it is not so far off as to be "perverse".

That's what we thought, surely going from a minimum historic multiplier of 0.8 to 0 is perverse? 

Scorpio33

Under TUPE you keep your contractual Ts & Cs. However, these can be changed at any time after that as long as they have a "business case", ie:

there is an ‘economic, technical or organisational’ (ETO) reason involving a change in the workforce, for example the organisation needs restructuring

Examples:

• essential cost-saving requirements (economic reasons)
• using new processes or equipment (technical reasons)
• making changes to the structure of an organisation (organisational reasons)

A change in the workforce could include:

• making redundancies
• restructuring an organisation
• job role changes
• a change in work location

Even in saying the above, bonuses are usually discretionary anyway...

Undervalued

wesleyad said:

Thanks for replies.

The only terms are as above. A contractual bonus of 18% but a second term that allows the target to change. There's nothing else. There old calculation used was the bonus could never go below 0.5 whatever the financial situation. There was a company performance factor and a site performance factor, split 50:50 so if company did rubbish we would still get a bonus due to our site doing well and vice versa if required. But non eof those calcs are in t&cs.

 As far as we can tell they are changing the multiplier to 0 from now on, so even though the bonus is contractual they are saying that they are fulfilling the tupe contract by giving us an x% bonus multiplied by 0, so no bonus. If that's allowed it seems pretty dodgy. 

Undervalued said:

If it was discretionary then the law generally allows the employer wide discretion as long as it is not so far off as to be "perverse".

That's what we thought, surely going from a minimum historic multiplier of 0.8 to 0 is perverse? 

If there is enough money involved to justify it then you need to take proper legal advice from a solicitor who can read the contracts etc.

As another reply has suggested, it is easier than most people realise for an employer to lawfully change your terms and conditions in many circumstances. That applies to both the original employer and the new one after TUPE has gone through.

You also need to consider the "real world" situation with the new employer if you were able to successfully claim this "bonus".

TheSpiddalKid

From the above description by the OP it would appear the new employer is very cautiously and judiciously applying the rules of the bonus scheme as described in order to try to argue there is scope to say that the multiplayer is zero'd out and so therefore no bonus is payable. In saying this they are not trying to remove the bonus scheme (yet) but make a defendable position that it wont be paid on this occasion and still mitigating the risk of a breach of TUPE.