Bonus should have been paid to former employee

A paralegal who handed in his notice before receiving his bonus was entitled to receive the bonus a tribunal has ruled. The employee started working part time a law firm specialising in personal injury claims, in April 2014.

It was agreed at the start of his employment that he would be entitled to a 5% bonus of the amount by which his ‘profit costs’ exceeded six times his ‘gross income’ between May 2014 and April 2015, which would be paid as a lump sum as soon after the financial year as possible.

At some point in May 2015, the firm’s paralegals were called to a meeting with the managing director to discuss several issues, including bonus arrangements. It was agreed at the meeting that the bonus amount for May 2015 to April 2016 should be increased to 10%, and the profit costs target multiplier would be reduced from six to five. According to a witness at that meeting was it not set out that an employee would be ineligible for the bonus if they were working notice.

After the meeting, the company sent around a template contract, which stated that bonuses would be paid in instalments and that an employee would be ineligible if they were on notice. The employee refused to sign the contract as he felt it did not accurately reflect what had been agreed at the meeting. Nobody at the firm chased him to sign it.

He resigned on 29 April 2016 providing a week’s notice. The company agreed that he could leave as soon as he had finished a handover. He did not receive his bonus and when he queried it was told he was not eligible to receive it.
The legal firm was ordered to pay £13,830.50 to cover the unpaid bonus.
This demonstrates that any change of terms should be backed up with a formal notice confirming agreement to the change.

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