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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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Brittany

I was very grateful for Redmans to treat my case with respect and discretion. At the time, I was very new to London and it was meaningful to have someone on my side and win the case for me. Without any doubt, I would definitely recommend Redmans Solicitors to anyone who is in need of it.

Posted 2 months ago

Jake L

Chris is very professional and calm. Very attentive and patient, been a positive experience having Chris represent me, and would recommend him.

Posted 3 months ago

Anonymous

Excellent service. It was a pleasure to work with Chris H, who is brilliant at what he does and very efficient. Their Senior Associate Rana T. is also very knowledgeable and resolves any queries speedily and efficiently. My issue could unfortunately not be resolved, but that was due to my employer and not the firm. Redmans however did all they could. I would definitely recommend them.

Posted 3 months ago

Anonymous

Very pleasant and quick to deal with. Mnay thanks.

Posted 3 months ago

Anonymous

Easy to get hold of. Quick.

Posted 3 months ago

Owen J

Very helpful, efficient service.

Posted 3 months ago

Anonymous

I am very lucky that I worked with Mr. Chris Hadrill and he managed my case very progressively with an analytical approach and trustfully. Of course with a very positive result. I strongly recommend Mr. Hadrill to any one seeking for a successful result from a highly qualified solicitor.

Posted 4 months ago

Kulbir S

Amazing, quick friendly service from Chris from the start and Caroline. They made me feel at ease during a difficult time, they understood and advised accordingly and I am really happy with the outcome of my case. Will always advise anyone who needs legal advice to contact Redmans, I’m so glad that I did and can confidently say I don’t think any other firm could have handled my case any better. Well done guys, wish you all the best and please keep doing what your doing, simply the best!

Posted 4 months ago

Mark A

Excellent service - rapid and “to the point” advice given to ensure meeting the target time frame

Posted 4 months ago

Anonymous

Chris Hadrill kept me sane during the negotiations with my employer. He was courteous professional and he cared about doing the best he could for me. I will use Redmans again if ever I need an employment solicitor. Excellent service.

Posted 4 months ago

Muhammad Z

Awesome services. Professionals at their best .

Posted 4 months ago

Anonymous

Thanks for the advice and for negotiating a good outcome. Good to have the support at a very stressful time

Posted 4 months ago

Chloe F

My solicitor at Redmans was very helpful and efficient. Really pleased with the smooth service.

Posted 4 months ago

Anonymous

Chris was absolutely excellent. Clear and concise, offering sound advice.

Posted 4 months ago

Tim O

Experienced and competent advisors

Posted 4 months ago

Rachel A

Quick and expert assistance. I would highly recommend Chris for any of your legal needs.

Posted 4 months ago

Joe S

I was very happy with the service provided by Chris and the team at Redmans Solicitors. I felt very comfortable discussing all matters with Chris and am very grateful for all the help and guidance I was given throughout the whole process. I would definitely recommend Redmans Solicitors to friends and family!

Posted 4 months ago

Anonymous

I had a very good experience working with Chris Hadrill during a difficult and emotional time. This held true from the moment I spoke to him on the phone, to the end of the process. Overall, he was attentive, professional and highly supportive. He provided sound advice and clarity. It was the reviews that led me to Redmans! I was very happy to know they were all true. I highly recommend working with Redmans Solicitors. Thank-you to the entire team!

Posted 4 months ago

Anonymous

Good service

Posted 4 months ago

Anonymous

Excellent professional service. Highly recommend.

Posted 4 months ago

Rob O

Very prompt response and I could not fault the service. My solicitor listened carefully to the details of my case and I felt very confident in the advice I was offered. All emails and work done on my behalf with my former employer was of the highest standard and Redmans helped take a lot of the stress out of the situation for me.

Posted 5 months ago