In short, no.
The Employment Appeal Tribunal (EAT) heard the appeal in the case of Mr R Moon v Slater & Gordon UK Ltd, which included a complaint of “unlawful deduction from wages”; Mr Moon claimed he should have received a bonus of more than £20,000.
Section 13(1) of the Employment Rights Act 1996 (ERA) sets out the right not to suffer unauthorised deductions from “wages”. “Wages” is defined in section 27(1) ERA as including:
“…any sums payable to the worker in connection with [their] employment, including-
- any fee, bonus, commission, holiday pay or other emolument referable to [their] employment, whether payable under [their] contract or otherwise,”
*Note: claims for unlawful deductions from wages are made under section 23 ERA.
However, as Mr Moon came to find, this does not mean that any claim for bonus can be brought in the Employment Tribunal (ET).
The EAT referred to an earlier decision of the Court of Appeal called Coors Brewery v Adcock & Others before explaining that Mr Moon’s entitlement to a bonus had depended on a discretion held by Slater & Gordon, his employer. It was, therefore, not a quantifiable sum, which meant it could not be the basis of a claim for unlawful deduction from wages. Mr Moon should have brought his bonus claim as one for breach of contract.
In summary, the options which may be available to recover an underpaid bonus are:
- Unlawful deduction from wages in the ET, as above. Please note, the claim must be made within three months less one day of the under payment.
- Breach of contract in the civil court. This claim may be made at any time up to six years after the under payment. The civil court is, therefore, the natural venue for claims about how an employer has exercised its discretion over a bonus scheme.
- Breach of contract in the ET, within the above three-month less one day time period. Please note, however, the ET can only deal with claims that result from or are outstanding on termination of the person’s employment and the maximum award is capped at £25,000.
- If the bonus scheme has been run in a discriminatory way, the claim must be made in the ET within the above three-month less one day time period.
- An outstanding bonus payment may also be recovered as part of an unfair dismissal claim in the ET. A successful employee is entitled to such compensation as the ET considers “just and equitable”, but compensation in a straightforward unfair dismissal claim is capped, currently in the sum of £115,115 plus any “Basic Award”.
This blog was written by Ben Lindsay, Solicitor at didlaw
