Today is the day that bankers at UBS learn their bonuses for 2012. At least 40% are expected to be paid less than the market rate. If you’re among them, there may be methods of seeking restitution, says Deborah Casale, a solicitor at Slater & Gordon Lawyers.
“If you work in investment banking and your bonus is less than expected, all is not necessarily lost. Here are our top ten tips for challenging a disappointing payment.
One: If your bonus is contractual check whether it been paid in accordance with the formula. Wording can sometimes be ambiguous. Review the terms used carefully.
Two: Even if your bonus is described as discretionary, you may still have contractual rights depending upon how the bank has communicated with you. For example, in the case of the contested bonuses paid by Commerzbank to bankers at Dresdner Kleinwort, Commerzbank created a legal obligation to pay bonuses because of the way it communicated with Dresdner staff in a meeting. Check back through recent communications from your employer. Does anything imply a legal commitment to pay bonuses this year?
Three: You may have a right to a bonus if there has been a custom and practice of paying bonuses. This means that if bonuses have been paid on a regular basis, your employer’s discretion to withdraw the payment of bonuses may be limited, even if the scheme itself is discretionary.
Four: Were performance conditions attached to the payment of your bonus? If they were and you have achieved them, your employer may be obliged to award a bonus, especially if a colleague with similar performance conditions has been paid a bonus and you haven’t.
Five: Has your employer been irrational and perverse? Even if your employer retains the right to award discretionary bonuses, it will need to act in good faith. Acting in good faith implies that you must be treated fairly, up to a point. If your bonus has been withheld, ask your employer for reasons why.
Six: Is there a clawback provision related to your bonus that can be challenged? Clawbacks can sometimes be challenged, especially if they are linked to restrictive covenants which state that employees cannot work for rival banks post-termination. These covenants can be difficult to enforce.
Seven: Have you been discriminated against? If your employer has paid higher bonuses to other employees on the basis of age, race, sex or pregnancy/maternity, you may have a discrimination claim which can result in compensation for the difference in payment.
Eight: Have you been dismissed just before your bonus was due to be paid? This is a difficult area. Often banks will have contracts stating that they are within their rights to withhold bonuses from employees who have been dismissed. In this case, the key thing to look out for here is whether your employment contract also lacks a key clause stating that an employer can pay you your salary in lieu, instead of requiring you to work your notice period. When it does and an employer tries to disallow you from working your notice period, and to pay you no bonus, you may have a claim for wrongful dismissal, which could include your bonus payment.
Nine: Are you a fixed term or part-time worker? If you fall under either category you have a right not to be treated less favourably unless that treatment can be objectively justified. It is a high threshold for employers to show justification and claims for proper bonus entitlements are often successful in such cases.
Ten: Negotiate at the outset – as with all disputes, the best advice is to negotiate the terms of the contract before signing. Take legal advice on the provisions to ensure that the bonus clause is as tightly worded as possible.”
Deborah Casale is a solicitor at Slater & Gordon Lawyers and specialises in advising employees in the financial services sector.