Bonuses in employment termination packages

We take a brief look at the way employers in the professional services sector often see terminations as a way to avoid paying bonuses due, especially in the run-up to the new financial year. We offer some quick tips on what to look out for and how to avoid being deprived of your bonus payments.  See also our guide about bonus payments for senior executives.

When and how bonuses are withheld

Every year between about November and March there’s a large increase in terminations in the professional services sector. Employers have one eye on their plans and budgets for the following year and are looking to make changes.

Many employers also see terminations during these months as a good excuse to withhold bonuses that are due to be paid either in January or April and usually require you, the employee, to remain employed by the employer at the time the bonus either crystallises or is actually paid.

Large professional services companies such as banks, legal firms, consultancy firms and tech firms have tightly worded bonus policies that allow them, in the event that your employment is terminated, to proceed without pro rata payment of your bonus.

This is all well and good, but terminations in professional services companies are rarely for overt causes and usually a ‘protected conversation‘ occurs well before the time when the employer can legally dismiss you. You may also be placed on leave or ‘garden leave’ until an exit package can be agreed.

What can you do to get your bonus paid?

In such circumstances, what, if anything can you do to get the bonus payment(s) due to you? 

This is where we come in with our extensive experience of representing employees who want to enhance their settlement agreements and secure payment of their bonuses.

The employer is often in a relatively weak position as they may have no actual case for lawful dismissal and they have had a protected conversation without any real issues to justify it, or even have removed you from the office without cause.

As well as enhancing your ex gratia payment, we can usually argue that your bonus should be paid on a pro-rata basis, despite you having no actual entitlement under your contract. This is because you can simply refuse to engage in settlement negotiations and demand to come back to work. 

At this point your employer will be forced to unlawfully dismiss you, or, alternatively, allow you to work the following months and receive your bonus in the normal manner.

Negotiations are almost always preferable to either scenario, so the payment of your bonus is back on the table.

Next steps

Are you having problems with your employer over your entitlement to bonus payments?

Are you in exit negotiations with your employer and want to ensure that your full bonus entitlement is included in your settlement agreement?

Our expert team of specialist employment lawyers is well-qualified to help you! Contact us at Monaco Solicitors for advice and find out about our no-obligation consultation:

• Via this link
• Phone: 020 7717 5259
• Email: communications@monacosolicitors.co.uk