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Discretionary bonus

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  • Discretionary bonus

    My daughter works for a company with a discretionary bonus scheme:

    HTML Code:
    The Company may, at its discretion, pay the Employee a bonus of such amount and at such times
    as may be determined by the Company. Payment of any bonus is conditional on notice to
    terminate the Employee's employment not having been sent by either the Employee, or the Company,
    for any reason prior to the bonus payment date. The Company has the right to change, vary, suspend or
    withdraw any bonus arrangements at any time and if the Company pays a bonus, it
    shall not give rise to a contractual entitlement to a bonus in the future.
    A bonus was announced (around July 2022, so 12 months ago).

    Employees received formal confirmation of the amount and a payment date (November 2022).

    The company then suspend payment (October 2022).

    As of now (July 2023), nearly 12 months on, the bonus has not been paid although the company continues to state that it intends to pay it (when finances allow).

    The terms of the bonus above look to give the Company the ability to do what it wants (that's the nature of a discretionary scheme!).

    My only question is, does the fact that the bonus was "committed to", via formal confirmation of amounts and payment dates, make any difference to the discretionary nature?
    At what point does a discretionary bonus scheme because a contractual commitment?
    Tags: None

  • #2
    Unfortunately there is no contractual commitment to pay a discretionary bonus, hence the nature of it being "discretionary". The only time it may become otherwise is if a bonus has been paid over a number of years and then it may possibly be argued as "custom and practice" but that is not likely based on what you have set out in your post.
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    Comment


    • #3
      Unsurprised this is the case, but worth asking the question.
      Thanks for replying so quickly.

      Comment

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