Your rights: To avoid confusion, get it in writing

Q: Since January I have been employed as a technician in a large company. When I was interviewed, I was told all staff received a bonus if the company achieved its financial targets. This was one of the reasons I took the job.

After several months the company said the monthly bonus would no longer be paid, and the company would review the bonus criteria and whether or not it would be re-introduced.

Do I have the right to this bonus or can it be taken away as the company sees fit? The payments were mentioned in my interview but not in my contract. Can I insist this should be paid under a verbal agreement?

A: Possibly, although situations like this are always pretty unclear (for both the employer and employee). The obvious problem with verbal agreements is that they can be very hard to enforce because the people involved often have different recollections of what was said.

At the very least, it is probably worth talking to your manager, telling him what you were told in the interview and that you relied on it, and that you are now disappointed to be losing the bonus.

However, if you wanted to legally enforce your point, you would need to persuade the employer or a court that the bonus was promised to you.

It is possible you will be believed, but in these sort of situations an employer will often say (quite genuinely) that they told you the bonus was awarded on a discretionary basis.

To avoid these problems some employers put a clause in their contracts stating that all relevant terms are in the contract (or policies), and that the contract replaces any previous representations or verbal agreements.

If this clause is in your agreement it is going make it very hard for you to claim the bonus.

Likewise, you are unlikely to succeed if your employer can point to another document (such as written guidelines) that you should have been aware of, stating that the bonus is discretionary.

Clearly the lesson here for employers and employees is that they can never completely rely on anything unless it is clearly recorded in the contract (or otherwise written down and agreed).

Your situation is also a good reminder to employers who want to operate discretionary bonus schemes. For a scheme to be wholly discretionary, the bonus policy or the employment agreement needs to state it can be amended or withdrawn at the employer's discretion at any time. If this is not made very clear to the employee, the employer may be unable to discontinue or alter the scheme (they will probably need to also include the employee's earnings from the scheme for the purposes of calculating leave payments).