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chris-hadrill-profileChris Hadrill, a specialist employment solicitor at Redmans, answers the question:

“I am currently negotiating a settlement agreement with my employer and am arguing that I should receive a pro-rata proportion of this year’s bonus payment. My employer is refusing this so far. What can I do?”

There are two separate sets of questions in the above: whether an employee is legally entitled to receive their bonus upon termination of their employment and, secondly, whether it is common for employees to receive a bonus under their settlement agreement even if they aren’t legally entitled to it.

Whether an employee is legally entitled to receive their bonus upon termination of their contract of employment depends upon three issues: firstly, the date on which it would normally be decided whether the employee would be entitled to receive a bonus for the particular financial year (“the Bonus Decision Date”); secondly, whether the termination date of the employee’s employment (“the Termination Date”) falls before or after the Bonus Decision Date; and, thirdly, what the contractual terms of the bonus are (e.g. whether the bonus is mandatory or discretionary, whether there has been a custom and practice of paying bonuses and, if so, how much has generally been paid etc.).

The employee will first have to determine what their usual Bonus Decision Date. Once the employee has done so, if the Bonus Decision Date falls on or before the Termination Date then it is generally possible to argue that the employee should be paid a bonus (the situation becomes slightly more complex if the employee is being paid in lieu of notice – in this circumstance whether the employee is entitled to a bonus payment will depend on whether there is a payment in lieu of notice clause (“PILON clause”) in the employee’s contract of employment and, if so, what the terms of that PILON clause are); if the Termination Date falls before the usual Bonus Decision Date then it is generally not possible to cogently argue that the employee should receive a bonus under the settlement agreement.

If the Termination Date does fall on or after the Bonus Decision Date then whether the employee is entitled to a bonus under their settlement agreement will depend upon a variety of factors, including (among others):

  1. Whether the employee’s entitlement to a bonus is discretionary or absolute (normally the employee’s entitlement to a bonus is discretionary in respect of whether the employee should receive a bonus and, if so, how much)
  2. Whether there has been a custom and practice of paying bonuses during the employee’s employment; and
  3. Whether there has been a custom and practice of paying bonuses in cases where an employee leaves under the terms of a settlement agreement

The employee should carefully check their contractual documents (or get their lawyer to check them) to determine whether there is a bonus clause and, if so, what the terms of that bonus clause are. The employee should also create a chronology of when they have received bonuses in the past and how much they have tended to receive. If possible (and being careful not to contravene the terms of any settlement agreement the employee may have been offered) the employee may wish to try and see what departing employees leaving under settlement agreements have been offered in respect of their bonuses (it can be difficult to determine this, though, as other (ex-)employees may be reluctant to be forthcoming about the terms of their settlement agreement for a variety of reasons).

If you believe that you should be receiving a bonus under your settlement agreement then it is advisable to ask your lawyer to check this for you and, if appropriate, return to your employer to negotiate this for you.

About Chris Hadrill

Chris is a specialist employment lawyer at Redmans. He specialises in contentious and non-contentious employment matters, including breach of contract claims, compromise agreements and Employment Tribunal cases. He writes on employment law matters on a variety of websites, including Direct 2 Lawyers, Lawontheweb.co.uk, LegalVoice, the Justice Gap and his own blog. Contact Chris by emailing him at chadrill@redmans.co.uk

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One Response to Question: should I receive a bonus payment under my settlement agreement?

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Testimonials

4.73 Average

92 Reviews

Anonymous

Redmans Solicitors provided a professional and prompt service in dealing with my settlement agreement. They used their experience to negotiate a better deal for which I am grateful for. I highly recommend their services.

Posted 5 hours ago

Cheryl R

Very efficient and friendly lawyers. I have used Redmans twice now and Chris Hadrill has been amazing to work with. Would highly recommend Redmans.

Posted 5 hours ago

Anonymous

I found Redmans Solicitors to be extremely professional, dealing with my questions and concerns quickly and in detail. I would have no hesitation in recommending Redmans Solicitors to anyone.

Posted 7 hours ago

Anonymous

I requested Redmans services on a redundancy case. Both Chris and Rana were great, thoughtful, very professional and responded quickly. They were very clear throughout the entire process, regarding the process and my options and I couldn't feel I had better legal advice for my case. Overall excellent service and I would certainly recommend and use their services again.

Posted 3 days ago

Anonymous

Responsive, patient, thorough and personable - an excellent service.

Posted 1 week ago

Anonymous

The team at Redmans, Chris Hadrill and Sacha Barrett were always very helpful and had expert knowledge to assist me during my employment law matter, I would not hesitate to recommend them to all!

Posted 1 week ago

Arun T

Chris was punctual, attentive and accurate. He answered my questions with clarity and avoided dubiosity. I would recommend him to anyone seeking legal advice within his remit.

Posted 1 week ago

Yulian Z

Great service

Posted 1 week ago

Anonymous

Excellent, professional service and a speedy resolution. Many thanks

Posted 1 week ago

Taral P

Sacha and Chris were both very helpful in closing out my matter. Sacha was very clear in helping me understanding the documents I needed reviewing, providing a professional service throughout.

Posted 1 week ago

Anonymous

Really pleased with the swift and professional service from Redmans. They provided very clear advice and helped conclude my matter with the minimum of stress or delay.

Posted 1 week ago

Matthew L

Redmans were very quick to respond to my initial enquiry, and provided me with a very effective and efficient service, generating a most satisfactory outcome. I would definitely use them again if the need arose.

Posted 1 week ago

Anonymous

First rate service. Warm and friendly whilst exceptionally efficient at the same time. I would highly recommend them.

Posted 1 week ago

Anonymous

Professional and helpful. Thorough and supportive.

Posted 1 week ago

Richard A

Excellent service, prompt replies, great advice

Posted 1 week ago

Anonymous

Very professional services

Posted 1 week ago

Margaret

Redmans Solicitors took a lot of the worry away and were very thoughtful and meticulous in their dealings with my case , thank you very mush , great service and a great job

Posted 1 month ago

Mark B

Prompt efficient service. Hourly, and part thereof, billing got a bit stressful at times - as opposed to flat fee - made me think twice about sending an email or making a quick call when I had a query because it would have eaten up minutes from my budget. But happy with the legal service I received overall and would recommend.

Posted 1 month ago

Anonymous

Chris Hadrill has provided a truly wonderful service and was willing to lend his support and expertise at a time when other solicitors, only wanted to discuss their fees! A clear thinking and down to earth professional, Chris can be trusted to listen carefully to your matter, cut through the fog, and advise you on the best (and most realistic) way forward, saving you time, money and heartache. It will be helpful if you first get your ducks in a row in terms of documents / evidence etc. and then contact Chris, (that’s what we did) as this will help your matter to be dealt with faster. The more organised and together you are the more successful you will be. You'll be fine with Chris, I highly recommend him. Good luck!

Posted 1 month ago

Richard v

Excellent Service

Posted 1 month ago

Anonymous

Very happy from service received. Highly recommend

Posted 1 month ago