Bonuses and other types of incentives, like commission or share options, are a valuable tool for rewarding performance, motivating staff and encouraging loyalty.
However there are many different types of schemes including individual/team/company bonuses; discretionary/non-discretionary; cash/shares; sign-on/retention.
The success of any scheme is based on an understanding of it and how fits with the business context and objectives, and clear scheme rules.
Contact our solicitors, explaining what you would like us to do.
You will be allocated to the most appropriate lawyer for your matter, who will be able to advise you.
If you want advice on the terms of any bonus/incentive scheme we offer competitive hourly rates and flexible fixed-fee options. We will provide clear and upfront cost information to ensure that you remain in control of your costs at every stage.
Some thorny issues when it comes to bonuses and incentives are whether schemes stated to be non-discretionary/non-contractual are just that, or whether in fact staff have a contractual right to a payment through custom and practice or because of other commitments made to staff outside of any written document. Even where a scheme is discretionary, employers should not exercise their discretion perversely or irrationally. Our solicitors can help you design, document and operate it effectively.
We understand that every business is different so we will ensure that we help you put together a scheme which fits with business objectives. Spending some time and money on well-drafted bonus/incentive provisions is an investment because they will help you manage the expectations of staff and avoid disputes.
We will also help you deal with complaints and disputes from employees about bonus/incentive payments, which are often pursued in the Employment Tribunal as unlawful deduction from wages claims, or breach of contract claims.
We have drafted a bespoke commission and profit share scheme for a senior executive taken on by our property company client. We have assisted a US-based company with an employment contract and essential policies for their first UK-based employee.
It depends on what the terms of their contract/bonus scheme says, which is why it is important to ensure that arrangements are accurately documented.
If the business intends not to pay a bonus in these circumstances ethos should be clearly stated in the scheme rules/contract, and consideration should be given to what happens if employees have worked the whole bonus year but leave before the payment date, the reason for leaving may also be relevant, and whether bonuses should be forfeited in employees are under notice prior to the payment date but haven’t actually left. Alternative options would be to specify a pro rata entitlement.
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