Bonuses and settlement agreements

Some employers in the professional services sector often exploit terminations as a means to evade rightful bonus payouts, particularly in the lead-up to a new financial year.

On this page we’ve provided some useful insights on what to watch for and how to safeguard your bonus entitlements. For more in-depth information on bonus payments for senior executives, please refer to our comprehensive guide.

Understanding the Timing and Methods of Bonus Withholding

In the professional services sector, a curious pattern emerges each year, spanning from November to March, as terminations surge. Employers, with one eye on their upcoming year’s plans and budgets, often see this period as an opportune time to effect changes.

What’s more, many employers view these months as an ideal pretext to withhold bonuses that are scheduled for disbursement in either January or April. Typically, these bonuses come with a condition stipulating your continued employment with the company at the moment the bonus becomes crystallized or is disbursed.

Large professional services entities, such as banks, legal firms, consultancy firms, and tech companies, often draft bonus policies replete with stringent terms. These policies, in the event of your employment termination, allow them to bypass prorated bonus payments.

While this may appear straightforward, terminations in professional services firms tend to be far from transparent. Usually, a ‘protected conversation’ takes place well in advance of any lawful dismissal, and you might even find yourself on leave or ‘garden leave’ while exit terms are being negotiated.

Strategies to Secure Your Due Bonus

In such challenging circumstances, you may be wondering what steps you can take to ensure you receive the bonuses owed to you.

This is where our expertise comes into play. Drawing on our extensive experience representing employees aiming to enhance their settlement agreements and secure their rightful bonus payments, we offer a strategic approach.

The employer, in these situations, is often in a relatively weak position. They may lack a legitimate basis for a lawful dismissal and might have engaged in a protected conversation without any substantial grounds to justify it. In some instances, you might have been removed from the workplace without a clear reason.

In addition to boosting your ex gratia settlement, we can typically make a compelling argument for pro-rata bonus payment, even if your employment contract doesn’t explicitly entitle you to it. This leverage arises from your ability to decline participation in settlement negotiations and insist on returning to work.

At this juncture, your employer faces a choice: to unlawfully terminate your employment or to allow you to resume work, thus triggering the usual bonus disbursement. In most cases, both parties prefer negotiation to these alternative scenarios, effectively placing the payment of your bonus back on the table.

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