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29
Jul 24

Posted by
Gemma Pontson

Highlights of the CIPD Festival of Work

The 2024 CIPD Festival of Work was a landmark achievement for HR professional development, with over 11,000 attendees gaining access to more than 150 content sessions, 60 festival activities, and 180 exhibitors of leading products and services.

Keynote Speeches

The festival opened with Dr Daniel Hulme’s keynote speech, ‘Rethinking AI and impact on Business and Humanity’. Dr Hulme inspired attendees by generously sharing ideas for how HR practitioners could use Artificial Intelligence, including: data visualisation, chatbots, employee avatars, video generation, and network analysis.

Stacey Dooley MBE presented the next keynote, with the topic of breaking barriers and igniting change in media, mind, and society. The compelling speech was warmly received by attendees, with highlights including an amusing anecdote about her experience meeting David Dimbleby, and sincere reflections on her gratitude for the many learning experiences she accesses through her work. Attendees were moved by her explanation of the difficulties and disillusionment she experienced with education as a teenager, and her genuine appreciation for the lifelong learning opportunities offered through her career. The Learning and Development Stage offered attendees a wealth of professional development content, with topics including: lifelong learning, strategic skills development, and navigating the future landscape of learning initiatives.

The final keynote was presented by Alex Mahon, Chief Executive of Channel 4. This insightful speech explored leadership, culture, and key principles for Equity, Diversity and Inclusion. Attendees engaged with her exploration of authenticity, resilience in response to challenges, and her passion for fostering an open and honest organisational culture. The Festival provided further opportunities for reflection on the importance of EDI with a plethora of interesting presentations and panel discussions on topics including: neurodiversity, psychological safety, advocacy, and diverse leadership.

Takeaways for Employers

It’s an exciting time for professional development with a vast amount of guidance and learning opportunities, but many people are likely to feel apprehensive about the volume of work involved in keeping up with the increased compliance requirements and recommendations for best practices.

Bright Contracts clients have access to over one hundred carefully reviewed employment policies and additional resources, including new content for 2024 on Flexible Working, Carer’s Leave, Paternity Leave, and Absence Management.

Posted in Events, News

28
May 24

Posted by
Gemma Pontson

The Most Expensive Sandwich in HR History?

Potentially the most expensive sandwich in HR history… was it filled with foie gras? Were there layers of lobster? Absolutely covered in caviar?

Well, no. It was a plain, ordinary sandwich by all accounts, coming well under the expenses limit. Yet this sandwich was integral to a Senior Banker’s dismissal (Szabolcs Fekete v Citibank NA 2023).

Fekete, a Senior Banker, put two sandwiches, two pasta dishes, and two drinks, on his lunch expenses during a work trip.

The quantity was suspicious, so he was questioned about this rather substantial lunch. Fekete responded to say the items were all for him and they were well within his expenses limit. He was hungry after skipping breakfast, the drinks were small, and the second sandwich was for his dinner. He asked why he was being put under scrutiny. However, the investigation continued, and Fekete later admitted some items were consumed by his partner, in breach of his employer’s Expenses policy. The Disciplinary procedure concluded with his dismissal.

Fekete then raised an Unfair Dismissal claim. He argued the sanction was unfairly harsh and had not sufficiently considered that he had been going through personal difficulties at the time. However, he lost the case as the Judge decided the dismissal was a reasonable response. The Judge’s conclusions emphasised that as a global financial institution, it was reasonable for Citibank to have high standards for honesty and ethical conduct.

If the Disciplinary Policy had been unreasonable, the case could have ended differently of course!

Bright Contracts clients have access to a comprehensive Employee Handbook, including a template Disciplinary Policy. Please contact us if you would like more information.

Posted in Company Handbook, Dismissals, Employee Handbook, Employment Law, Employment Tribunals, Staff Handbook

26
Mar 24

Posted by
Gemma Pontson

No More Excuses! Consequences of Not Providing Employment Documents

Excuses, excuses, excuses… there are many reasons why employers fail to provide legally required documents to employees. Unfortunately for employers who have failed in these responsibilities, excuses will not protect them from consequences including financial penalties and reputational damage.

In Cartmill v Always Transport and Others, the claimant Ian Cartmill explained he had not been issued with a written statement of his employment terms and conditions despite working as a Lorry Driver at Always Transport for over three years. On behalf of the respondent, Jean Murray admitted she had not completed this document as his ‘four days on and four days off’ shift pattern made it more difficult.

The Tribunal Judge stated that Ms Murray’s belief in the difficulty of completing the statement was ‘no real excuse’ and confirmed that Cartmill’s claim succeeded. Given the importance of drivers to the business, and ‘the absence of a credible reason’ for not providing the written statement, the Judge ordered an award of four weeks’ pay.

Likewise, in Mrs A Yeates v GT Plumbing & Heating Ltd, the respondent admitted there was ‘a lack of comprehension’ around HR practice. When the claimant Mrs Yeates joined the small business as a Showroom Manager/Designer, there was no employee handbook, and she did not sign an employment contract. Due to the failure to provide the written terms of employment, the Tribunal Judge ordered the respondent to pay the claimant the sum of £480.

Takeaways for Employers

It is essential to comply with the legal requirement to provide employees with written terms and conditions of employment within the required time limits. Excuses about difficulty or lack of understanding were not accepted in these tribunal cases.

Bright Contracts clients can quickly and easily create legally compliant terms and conditions of employment using the step-by-step instructions in our software.

Bright Contracts also provides a ready to go Employee Handbook which clients can tailor to their requirements. Policies and procedures are reviewed and updated in line with employment law changes and recommended practices.

Posted in Contract of employment, Employee Contracts, Employee Handbook, Employment Law, Employment Tribunals

10
Nov 23

Posted by
Charlotte McArdle

Government Changes

The government has published a paper? which announces that, amongst other things, it will consult on proposals

  • to remove EU-derived obligations to keep records of working time.
  • to simplify calculating holiday pay.
  • to allow businesses to inform and consult the workforce directly about TUPE transfers if they don't have representatives in place, where the employee has fewer than 50 employees and the transfer affects fewer than 10 of them.

The announcement comes at the same time as the government is abandoning its proposed default repeal of all retained EU law in favour of a more limited repeal.

 

Working time records

The government intends to consult on working time reporting and other administrative obligations under the Working Time Regulations (WTR) 1998. It believes that the current rules place unfair burdens on businesses.

These proposals would include removing retained EU case law which requires employers to record daily working hours, including overtime, worked by employees. This case was decided under the EU Charter of Fundamental Rights and the Working Time Directive. Currently, the UK's Working Time Regulations require only that employers keep and maintain "adequate" records to demonstrate that they are complying with rules on maximum working hours and protections for night workers.

 

Simplifying calculation of statutory holiday pay

The government proposes to simplify statutory holiday pay calculation, subject to consultation. It identifies two particular measures.

The first is to allow rolled-up holiday pay. Paying holiday pay in this way is a fairly common feature for zero-hours workers who, due to the nature of their working patterns, sometimes don't designate days specifically as annual leave. Rolled-up holiday pay was held to be unlawful several years ago, but amounts clearly identified and paid as such could be offset against any potential liabilities. This has meant that many organisations have continued to use rolled-up holiday pay, due to its administrative convenience, and the lack of a practical alternative.

The second identified measure is to merge the two types of statutory holiday entitlement. A worker's overall statutory entitlement is to 5.6 weeks of leave (28 days for a full-time worker). Four weeks of that entitlement comes from the EU Working Time Directive. The additional 1.6 weeks was granted as a purely UK entitlement. Different rules have built up over time relating to how to calculate statutory holiday pay for the two types of leave, as well as in relation to the right (or lack thereof) to carry leave over to the next holiday year. The paper is silent on which set of rules would be retained. It remains to be seen whether the government will identify any other measures for simplifying holiday pay.

 

Relaxing TUPE consultation requirements for small businesses

The government will consult on allowing small businesses (employing fewer than 50 people with the TUPE transfer affecting less than 10 employees) to consult directly with affected employees. Currently, unless the employer falls within the scope of a micro-business, they must consult with employee representatives on the TUPE transfer.

 

Limiting post termination non-compete restrictions to three months

The government is planning to legislate, when parliamentary time allows, to limit the length of post termination non-compete clauses in the employment context to three months. The government does not believe that this will affect an employer’s ability to use paid notice periods, gardening leave or other post-termination restrictions such as non-solicitation clauses. Back in 2020, the government ran a consultation on measures to reform post-termination restrictions in contracts of employment. The consultation closed on 26 February 2021 but the government has not published its response. It is unclear whether the current proposal is intended to take over?the earlier consultation.

 

Retained EU Law (Revocation and Reform) Bill (REUL Bill)

The government's much championed REUL Bill would have seen all EU-derived subordinate legislation effectively abolished by the end of this year by default, unless it was specifically retained. The number of affected pieces of legislation was estimated to be in the region of 4,000. The Bill allowed the government to extend, exempt or keep affected legislation, but the default position was that it would disappear from the UK statute book.

The government has now acknowledged the widespread criticism of this sunset mechanism and will replace it with a mechanism whereby only expressly listed legislation will be revoked.

It remains to be seen whether any items of employment legislation will make it onto the list of rules to be revoked. However, the government's announcements on TUPE consultation and working time rules suggest that TUPE and the WTR 1998 will be retained.

Aside from the scrapping of the sunset mechanism, the REUL Bill could still be significant for employment law in other ways. The Bill will do away with any remnants of the old principle of the supremacy of EU law as well as "general principles of EU law". In addition, the Bill effectively seeks to encourage UK courts and tribunals to stop and really think whether they should continue to follow any European Court of Justice (ECJ) case law, or domestic case law that applied ECJ case law. One area of employment law that has seen frequent ECJ interventions is the entitlement to paid annual leave.

Posted in Employment Update

6
Nov 23

Posted by
Charlotte McArdle

Diversity, Equity and Inclusion

DEI stands for diversity, equity and inclusion. As a discipline, DE&I is any policy or practice designed to make people of various backgrounds feel welcome and ensure they have support to perform to the fullest of their abilities in the workplace.

- Diversity refers to differences within a setting; in the workplace, that may mean differences in race, ethnicity, gender, gender identity, sexual orientation, age and socioeconomic background.

- Equity is the act of ensuring that processes and programs are impartial, fair and provide equal possible outcomes for every individual.

- Inclusion is the practice of making people feel a sense of belonging at work.

Combining these three elements, DEI is an ethos that recognizes the value of diverse voices and emphasizes inclusivity and employee well-being as central facets of success. To bring those values to life, companies must implement programs and initiatives that actively make their offices more diverse, equitable and inclusive spaces. DEI issues matter to candidates and employees, and initiatives improve the long term health of companies

Diversity in the workplace is important because with different backgrounds come different points of view, which ultimately leads to better ideas and solutions.

In order to ensure equal circumstances for all individuals across the organization, equity requires that employers recognize barriers and advantages. This is the crucial difference between “equity” and “equality.”

While the workplace does require professionalism and etiquette, an inclusive culture should not bar individuals from being themselves.

So how can employers be compliant in regards to DEI? In general:

- Employers can include DEI in the handbook.

- Employers can provide training/education sessions to their employees.

- Employers can set up a DEI committee where the situation is analysed and goals are set to be improved.

- Employers can make sure they balance all three and focusing on one can cause the other two to suffer.

More specifically diversity can be improved by:

- Employers can use a blind hiring process which will allows the hiring team to focus on qualifications and experience. A blind hiring process involves names and other identification factors to be removing before the CV is sent for review.

Equity can be improved by:

- Employers can work with each employee to identify development opportunities.

- Employers can avoid asking for previous salaries and instead provide salary guidelines with pay bands that offer equitable salaries for various positions.

Inclusion can be improved by:

- Employers creating a policy on inclusion for the company. In this, issues that have been known in the past can be addressed in this.

- Employers can provide benefits that are flexible and compatible for a more diverse workforce such as floating holidays so employees can have time off for the holidays they choose to celebrate or health insurance plans that offers benefits for LGBTQ+ employees.

- Employers can support differences. If employers provide food, perhaps have a separate fridge for Kosher food.

7
Sep 23

Posted by
Charlotte McArdle

Return to Work Guidance

The government has turned its attention to helping individuals who have taken a career break return to work (Returners). It has now published guidance for employers (the Guidance) and a toolkit designed to help employees returning from such a break. The toolkit includes tips for Returners on how to build confidence and negotiate salaries and flexibility, as well as providing resources for job opportunities and training.

The Guidance:

The Guidance comes when many businesses are taking steps to reassess and update their policies to align with the post-pandemic working landscape. Returners are seeking flexibility in their working patterns and the same can be said for a high proportion of the UK workforce in general. Research from LinkedIn, found that:

  • 33% of UK workers would consider leaving their job if returning to the office full-time became mandatory.
  • 52% of women had left, or were considering leaving, their jobs due to a lack of flexibility and that the current demand for remote working jobs exceeds the number available in the UK.

The Guidance focuses on those who are returning to work following a period of time away to “take on a caring responsibility” as well as those returning to work after a period of absence for other reasons, such as ill health or an earlier “retirement”.

The objective is to help individuals get back into work and to help businesses recruit from a pool of experienced people. When it comes to flexibility, the Guidance urges businesses to consider where, when and how much they need people to work. Another point is that, by hiring and supporting Returners, a business can demonstrate that it is “open to non-linear career paths” and that it “values the role that caring plays in society” – a message that can help attract and retain diverse talent.

The Guidance also notes that:

  • 90% of non-workers want flexible work
  • job adverts received 30% more applications when they were advertised as allowing flexible working (versus those that were silent on that point)

The Guidance suggests several ways employers can support Returners in returning to permanent employment. Examples of such initiatives include:

Returnships– fixed-term contracts with the potential for a permanent role at the end (which can be an effective way of facilitating a trial period that benefits both the employer and employee).

Supported hiring– permanent roles, with adjustments made to support Returners;

Return to practice– sector-based training and work experience; and

Fellowships– supported research and development projects which may also lead to a permanent role.

The Guidance emphasises the importance of businesses spreading awareness of these initiatives internally, whilst also actively supporting line managers who are bringing Returners into their team. Managers should be supported both in terms of training and knowledge-sharing to ensure that the business is taking a holistic approach.

Businesses are being encouraged to actively engage with Returners, seek their perspective and listen to feedback. Support can be provided by allocating buddies, mentors and/or coaches. Businesses should then reflect on any feedback, collect additional evidence and implement reasonable changes suggested by stakeholders.

Key takeaways

Given the increasing demand for flexibility both from Returners and other employees, businesses may benefit from implementing programmes such as those proposed in the Guidance. The evidence clearly demonstrates that the wider the variety of jobs, contract types and levels of flexibility offered by a company, the greater the talent pool from which to hire. Therefore, such initiatives should be seen as “a talent attraction strategy and not just a corporate responsibility”.

5
Sep 23

Posted by
Charlotte McArdle

Bullying in the Workplace

In this blog, we consider how employers can define bullying, spot bullying behaviour by their staff and take effective steps to address it early.

How to define bullying behaviour?

There is no specific legal definition of bullying, which means it is difficult for employers to clearly understand the behaviours, and patterns of behaviour which are generally understood to amount to bullying.

Employers often adopt a broad definition in their anti-bullying policies, although it is often set out without due regard to the employer’s industry, working environment, culture or practices.

According to ACAS in its guide to harassment and bullying in the workplace, bullying can be described as unwanted behaviour from a person or group that is either:

“offensive, intimidating, malicious or insulting”

“an abuse or misuse of power that undermines, humiliates, or causes physical or emotional harm to someone”

This is a good starting point for any internal policy, training or guidance. However, most anti-bullying policies would benefit from examples of prohibited behaviours which relate to the employer’s particular business.

How can we spot bullying behaviour?

ACAS makes clear that bullying can be a regular pattern of behaviour or a serious one-off incident. The guidance gives examples such as:

  • spreading malicious rumours about someone
  • consistently putting someone down in meetings
  • deliberately giving someone a heavier workload
  • excluding someone from team social events
  • consistently undermining a manager
  • posting humiliating, offensive or threatening comments or photos on social media

Employers should be on the lookout for patterns of inappropriate behaviour across the business.

The dangers of leaving bullying unchecked:

Although there is no express statutory prohibition against bullying in the workplace, employers can still face legal liability if they do not take care to monitor and address any behaviour which might amount to bullying.

For example, affected employees could bring potential legal claims of harassment and discrimination on the basis of a protected characteristic under the Equality Act 2010, personal injury, and/or constructive unfair dismissal arising from the employer’s fundamental breach of contract in failing to prevent the bullying:

If bullying is related to any of the nine protected characteristics under the Equality Act 2010 it could amount to harassment or discrimination, for which the potential compensation awarded by an employment tribunal is uncapped and can include an award of injury to feelings of up to £56,200 (depending on the seriousness of the behaviour).

An employer has a duty of care under common law to provide a safe and stress-free place of work for all staff. Prolonged bullying can deteriorate an individual’s physical and mental health, and potentially give rise to a personal injury claim. A victim of bullying could be signed off by his or her GP with work-related stress and anxiety, resulting in long periods of absence from work. For an employee to have a claim for personal injury, they must show they have a medically recognised psychological injury or illness. However, the court has found that an employer will only be liable for an employee’s ill health in the circumstances if it is on plain notice of an employee’s stress, or vulnerability to stress, and then fail to address the issue. Compensation may be significant: the 2022 Judicial College Guidelines provide guidelines of average compensation for severe psychiatric damage from stress at work of between £54,830 and £115,730.

Where an employee feels they have no choice but to resign because of bullying, this could give rise to a constructive dismissal claim based on the employer’s breach of the implied term of mutual trust and confidence. Note that an employer is unable to argue in its defence that it has the same style of management as the rest of the relevant industry.

Practical steps:

Employers can focus on mitigating the risks of bullying and harassment in the workplace through a number of key steps:

  1. Anti-harassment and bullying policy: Employers should have an anti-harassment and bullying policy in place. This will demonstrate commitment to providing a working environment free from bullying, but also demonstrate the employer’s intention that all staff are treated and treat others with respect. The policy should ideally be non-contractual, allowing employers to keep it up to date. It should cover bullying which occurs at work and work-related events, such as business trips or social functions. The policy should define what the employer considers to be bullying, and it should cover the behaviour of staff, but also of third parties such as customers, suppliers or visitors.
  2. Training: Regular and effective training in relation to anti-harassment and bullying is a key component of creating a positive and inclusive workplace culture. The whole workforce should understand the contents of the policy and the employer’s behavioural expectations.
  3. Be pro-active: All businesses should ensure that supervisors are proactive in looking out for behaviour which may be considered bullying by the recipient. If negative behaviours are caught at an early stage, then this could prevent formal grievances or legal claims which might arise if intimidating or offensive behaviour is not challenged. As well as the general training recommended above, consider whether specific training in feedback, supervision, delegation or other management skills should be provided for managers.
  4. Deal with grievances and complaints promptly: When handling a bullying complaint from an employee who suffered or witnessed alleged bullying, employers should deal with the matter as quickly as possible and in accordance with internal investigation and grievance procedures. Broadly, first talk to the person raising the complaint to understand the issue and what might resolve it. Ensure that you look at the complaint in a way that is fair and sensitive to the person who made the complaint, anyone who witnessed the alleged behaviour, and the person accused of bullying. There will inevitably be sensitivities around confidentiality, the seniority of the individuals concerned, and the likely impact on other employees and the business. A key consideration will also be the necessity of taking disciplinary action against the perpetrator, if it becomes clear that they have behaved in an unacceptable way.

Posted in Bullying and Harassment

23
Aug 23

Posted by
Charlotte McArdle

A Guide to Redundancy

Redundancy is a painful process for both the employee and the employer. It is a decision that many businesses seek to avoid but sometimes a restructure of the organisation or reducing the number of roles is necessary.
Redundancy occurs where an employee is dismissed for reasons such as:

  1. Employer ceasing business
  2. Requirements of the business have changed
  3. Employer requires less employees
  4. Change in work systems (mechanisation etc)
  5. Role amalgamation

It is essential when roles are being made redundant the selection and consultation process is fair and objective and those employees who are selected are done so in a transparent and fair manner. Most third-party claims in relation to redundancy are often based on the selection process.

Selection
There are two broad methods of selection for redundancy:

  1. Last in First Out
  2. Selection matrix: objectively selects employees for a redundancy based on a compiled score of their skills, knowledge, and other relevant criteria. The criteria must be as objective as possible, which should only be based on facts which have been documented and/or raised to the employee prior to the redundancy.

Employers would be bound by the precedent for redundancy selection in the company or agreed mechanisms between a union and the company. It is imperative that businesses are aware of the following two points:

  • Custom and practice – what did the company do in previous redundancies if any?
  • Agreed procedure – is there a precedent or an agreed procedure in place? This is more commonly seen in unionised work environments.

In terms of the recommended process, employers should make an announcement to the employee(s) – advise them they’re ‘at risk’ of redundancy, explain why this is happening and inform the employee you will then be entering into consultation with them.

Consultation

  • Consultation meetings should be arranged with the employee(s), an employee is entitled to bring representation i.e., colleagues/external union official.
  • During these meetings it’s important to give the employee(s) an opportunity to have their input/say into the situation.
  • Consider proposals for alternative roles/options – implement if feasible.
  • If there is no alternative roles/no other viable options – you are looking at proceeding to termination – and give notice of redundancy.
  • Ensure notes are taken at each meeting and request that the employee(s) sign these to confirm they are an accurate reflection of the items discussed.
  • Consider offering a right to appeal the redundancy decision.
  • Redundancy process should not be rushed - there should be at least a minimum of two weeks for consultation.
18
Aug 23

Posted by
Charlotte McArdle

Award for Upset and Hurt: Case Law Example

Individuals who bring successful discrimination claims are entitled to be compensated for the upset and hurt they have suffered by way of an injury to feelings award. These awards are separate from, and in addition to, compensatory awards for financial loss which are uncapped.
Awards for injury to feelings have been increased for all claims presented on or after 6 April 2023 and are now over double the original rates.
The new bands are as follows:

Lower band - suitable for one-off and isolated incidents which are considered to be less serious. £1,100 - £11,200
Middle band - suitable for cases that do not merit an award in the upper band. £11,200 - £33,700
Upper band - suitable only in the m sot serious cases which was where there has been a lengthy campaign of harassment. £33,700 - £56,200 with the most exceptional cases capable of exceeding £56,200.

It is worth remembering that a claimant does not need to prove that they have suffered any ill health or produce medical evidence in order to get an injury to feelings award – although if they do, they may get a higher figure.

The tribunal will consider the extent to which the victim of discrimination has had their feelings injured and will attribute a financial value to that injury. Awards in the upper band are rare and most awards are in the upper lower and middle bands.

Case Law Example:

Mrs. Messum, a qualified executive HR assistant at Bradford, faced discrimination and mistreatment after becoming pregnant. Despite her qualifications, her boss started assigning her physically, unrelated demanding tasks. She was signed off due to pregnancy-related issues and during sick leave, was asked to attend an urgent investigatory meeting. When she could not attend due to illness, her maternity leave was initiated. Later, she was asked to attend the meeting again, in her own home with an 8-week-old baby and if she did not attend there may be disciplinary action.

After she returned to work, she attended the investigatory meeting, during which she was accused of stealing food from the canteen. She said that her manager had given permission for her to take food home when she had worked late and did not have time to take a break. Despite her explanations, she received a verbal warning and her job duties were changed. Her HR duties were taken off her and she was instead asked to process sales orders and, later on, to do housekeeping duties - including laundry. She resigned, claiming unfair dismissal, pregnancy/maternity discrimination, and harassment.

The tribunal ruled:

  1. Unfair dismissal: Company actions breached trust, mishandling investigations and changing her role fundamentally.
  2. Pregnancy/maternity discrimination: Demoting her and changing her role was unfavourable treatment due to her condition.
  3. Harassment: Repeated unwanted contact during her pregnancy and maternity period was deemed harassment.

The tribunal awarded Mrs Messum £18,000 for injury to feelings, an additional ACAS uplift of 25% (because the employer had not followed the Acas Code of Practice) plus interest amounting to £28,000.

This case underscores persistent issues with pregnancy and maternity discrimination, with a significant percentage of mothers facing mistreatment or job loss. Legal protections exist, but many employers still fall short. It's vital for employers to understand their obligations and treat pregnant employees fairly.

 

Posted in Bullying and Harassment, Employment Tribunals

27
Jul 23

Posted by
Charlotte McArdle

Bonuses 101: A Guide to Managing Bonuses

Many employers routinely consider the award of bonuses to their staff at this time of year and inevitably this leads to disputes with some staff members about the failure to award a bonus to them at all or at a particular level. In this blog, we set out some factors of which employers should be mindful when making bonus-related decisions.

Entitlement to a bonus

The contractual status of a bonus is a significant factor to consider. Generally, offer letters and employment contracts outline eligibility to earn a bonus without explicitly guaranteeing it. They often state that the bonus scheme's operation and the amount awarded are solely at the employer's discretion. Bonuses are typically contingent upon the employer's business performance, the employee's work performance, or a combination of both during the previous year.

Even if bonuses are described as discretionary, there might still be a contractual entitlement to them implied in the employment contract. This could happen when an employee consistently receives a bonus at a particular level over an extended period due to custom and practice. If a contractual entitlement exists and the employer fails to pay the bonus, it could lead to a breach of contract claim or a complaint about an unlawful deduction from wages. It may also contribute to a constructive dismissal claim. In some cases, bonuses might be factored into loss of earnings awards in unfair or constructive dismissal cases.

The entitlement to a bonus may be contingent upon the employee remaining employed (and not serving notice) at the time of the award and not facing any performance or disciplinary issues. However, in instances where no express condition exists, courts have rejected implying such terms.

Employers should be aware that even if they have the discretion to terminate a bonus scheme, they cannot withhold bonuses that employees have already earned and accrued under the scheme as it was at the time. This means that once employees meet the conditions for earning the bonus, they have a right to receive it.

Exercising discretion to award a bonus

Bonuses are typically evaluated based on objective individual and/or business performance criteria. Employers must clearly define the criteria and decision-makers responsible for awarding bonuses at specific levels. Bonuses may come in various forms, including stock options, subject to the scheme's terms. However, caution should be exercised to avoid conditions that could be seen as a restraint of trade or penalty clause, as these might be deemed void due to public policy considerations.

In cases where bonuses are discretionary, employers cannot exercise their discretion arbitrarily or unfairly. The decision-making process must be carried out in good faith, consistently, and in line with the implied duty of trust and confidence. While equality laws do not require identical treatment of employees, employers should be especially cautious not to discriminate based on any protected characteristics. Ensuring fairness and transparency in bonus allocation fosters a positive work environment and reinforces the employer-employee relationship. Employers should be mindful to avoid any discrimination amongst employees based on any protected ground(s):

  • Gender
  • Marital status
  • Family status
  • Age
  • Disability
  • Sexual orientation
  • Race
  • Religion
  • Member of the Traveller community

Employees on leave

Care should be taken regarding employees absent on sick leave during the performance year.

The general principle in relation to maternity leave is that where a bonus comprises payment for work done, an employer is entitled to make a pro rata reduction in the bonus award for an employee’s absence on leave. However in many cases, there is scope for dispute about whether bonuses are in respect of work done. This area can be fraught with risk, and close consideration should be paid to whether a bonus is expressed to relate to company performance only or in combination with individual employee performance.

 

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