Once organizations agree with employees the payment of a bonus, irrespective of the circumstance that this is granted on the basis of a written document or a verbal promise, these are subject to a series of restrictions and constraints, which could be tantamount to the employer being trapped in a vicious circle from which this may find it extremely difficult to escape. Henceforth, deciding to no longer pay a bonus or to pay it partially cannot be invariably considered as an employer viable prerogative. Yet, needing to make decisions about the appropriateness of paying a bonus when, for instance, an employer has just resigned or has been dismissed can prove to be a very daunting feat to perform. Bonus schemes may represent an important component of a company employee retention and attraction practices, but can potentially cause employers many troubles. Knowing in advance the pitfalls habitually associated with the management of this type of variable pay arrangements can indeed help employers to avoid these and the problems and waste of money habitually associated with them.
maintained by Gannons (2011), a company decision can clearly vary according to
the different circumstances. It is most likely that an employer decides to
reward a “good leaver” or an employee made redundant, whether it is likely that
this might be less incline to award a resigning employee or an employee
dismissed for gross misconduct. The best approach is to clearly state in the
contract of employment that in case of termination the bonus will not be paid.
In general, courts in the UK tend to impose employers the payment of the bonus
when this is paid for the attainment of past objectives and these have been actually
achieved, and not whether intended as a means of motivating or retaining individuals.
Notwithstanding, to prevent the risk of breaching the anti-avoidance term employers
should definitely refrain from dismissing people in coincidence with the bonus
payment period. This move might be intended as triggered by the employer unwillingness
to pay the bonus and as such as a breach of the contract of employment.
Also in this case, the appropriate wording of the clause would have certainly helped the employer to better manage the issue. However, the doubt that the anti-avoidance implied term was actually breached by the employer remains. The FILON express term was in fact used by the employer to invalidate another express term of the written contract, that is, the one concerning the payment of a particularly generous bonus to the Appellant. This would have been paid to the Appellant only whether this would have been employed by the firm after twelve months; but this condition was not met because the Defendant exercised its power or prerogative to apply the FILON clause to the detriment of the Appellant who undergone it.