Discretionary bonus while on mat leave

[carmenblue]

My company uses a discretionary bonus scheme. I was off for 10 months on maternity leave and they are giving me the bonus on a pro rata basis.

When I went on maternity leave, I was under the assumption that if the company did award bonuses this year, I would be entitled to the full bonus. This was based on the simple fact that a woman in my team was awarded her full bonus a year ago after she came back from maternity leave. When I learned that my company would be awarding bonuses, I therefore figured I would get the full one.

The terms and conditions are hazy - nowhere under maternity leave does it say you will or won't get it. Under the employment terms and conditions,it simply says it's discretionary and bonuses are bound under the terms and conditions of the bonus scheme, which, again, are hazy. Anyway, that is not really my argument in this case. My argument is this: 'You gave the full bonus to Mrs X while she was on maternity leave. Why don't I get it?' Is that a valid argument? My fear is that they come back saying it was their mistake to give it to Mrs X. If they say that, can I say that's unacceptable? Can I fight it?

No- because bonuses are discretionary, they're not contractually binding. Tey're not obliged to give anyone anything.

I think you can have the conversation with your boss but it may go along the lines of "we consider Mrs X to be more of an ireeplaceable asset than you" or, more likely they wont discuss anyone else's remuneration with you. Equally well, it may just be that they've changed their policy in the light of the recent financial crisis.

Bonuses are basically one big game of bluff between employer and employee - they'll give you the least they think they can before you walk. This is why there's such a discrepency between male and female pay in the City- women, rightly or wrongly, settle for less.

Thanks for your message. My boss gave Mrs X 100% bonus when she went on maternity leave and she (the same boss) gave me 100% bonus too. She was as surprised as I was when the company came back to her and said because I was on maternity leave I wasn't entitled. She's asked why Mrs X was entitled a year ago but I wasn't this year. It sounds like the company probably changed their policy, but nobody was notified of this change. Knowing that, do you think I might have a chance? Or, alternatively, if the company comes back and says it was a mistake to award Mrs X her bonus, does that still make it a precedent?

I dont think it will make a difference as its still a discretionary bonus - that means they can grant to one person and not another.

This a very tricky area - a 'discretionary' bonus is of course not a contractual entitlement...so you could receive nothing and not be able to complain. That said, you ARE entitled to be treated no differently to anyone else just by virtue of being on maternity leave...so if bonuses are being paid by the company, you are entitled to:

• be included in the performance review process
• have your performance rated according to the same criteria as everyone else
• have the same calculation/rationale applied to the bonus you are awarded
• not be discriminated against/short changed because you have been out on mat leave

There are a few angles to your situation:

1. Previous payment to another woman on mat leave - potentially precedent, but if their policy has changed since, not sure it's that persuasive - especially if they are now treating all mat leavers in the same way this bonus year (in their shoes, I would argue that this is your comparator group, not people paid in prior bonus years)

1. How is the bonus calculated? If it is rewarding performance, your performance should be measured based on the time you were at work, and not 'discounted' because you were on mat leave; so, if you worked for 6 months of the year, and had excellent performance, this should be the rating for the whole year, not put at 'average' or 'acceptable' because you didn't have a full 12 months. This applies in the other direction too, you can't get an improved performance rating just for being on mat leave!

1. Is the bonus also supposed to be a retention mechanism? If this is the case, as well as the pro rated amount for the time spent at work, I would expect to receive an element (which may not have a strict formula attached to it) for retention on top.

As a rough guide, when I worked for an investment bank, we applied a rough calculation like this:
performance rated period: x months out of 12 possible months
retention element: deemed to be equivalent to 3 months out of 12 (quite arbitrary, so this could definitely vary from company to company)
The total could only be equal to 12 months, if that makes sense eg 6 months at work, 6 months mat leave =
6/12 (performance) + 3/12 (retention) = 9/12 in total.

They can award different payments to different people - but not on an arbitrary basis, the same principles have to apply to all, certainly those who are in an easily comparable group (all members of one team etc)

Carmen - I would probably ask for more details as to the methodology for calculating the bonus and ressurance that you have been treated the same way as all other comparable employees. Your boss will probably learn something by asking this too! Don't expect a detailed breakdown/spreadsheet calculation, but they should certainly be able to outline the principles they applied.

Hope that helps

Thanks for your detailed message. I'll take it all on board. One final question: if their policy had changed, would it have to be documented? Or, because it's a discretionary bonus, would they be entitled to change the policy without documenting it? I'll investigate further about how the bonus is calculated but I have a feeling it may have been the new head of HR (recruited in the last year, I believe) who decided to stop giving bonuses to women on maternity leave. But is that 'legal' if they never documented that change and never informed management?

I never assumed I'd get a bonus. But when my boss called me last month and said 'Good news, we're all getting bonuses this year and I've put you down for 100%', I obviously assumed I'd get it. She did too because her last employee on maternity leave received it.

If the bonus is genuinely discretionary you may be entitled to it all. Have a read here and here. If it's contractual, either explicitly or by custom and practice, they are right to pro rata it. If it's genuinely discretionary, not a regular thing, then you may be entitled to all of it.

Have a read of those links and see where you think your bonus fits.

If it turns out to be the kind that can be paid pro rata, one woman receiving a full bonus despite having been on maternity leave a year ago isn't going to be nearly enough to demonstrate that you are contractually entitled to the same. Several women recently receiving full bonuses is one thing. One woman a while ago could well have been an error, possibly discovered too late to do anything about it, and your employer certainly couldn't be forced to do the same for all pregnant women from then on.

But as I say, if it was genuinely discretionary, like an unexpected Christmas bonus would be, or similar, then you probably should have had it all.

I found out some more information and I'm hoping you can give me some more advice.

I went on maternity leave in March 2009 - at a time when women on mat leave received 100% bonus if the company was giving bonuses that year (discretionary but they were a regular end of year thing). I just found out that a new bonus scheme came into effect in April 2009, which says, among other things, that women on maternity leave will get their bonus pro rata. As I was already on maternity leave, I never heard about this new scheme. Two months ago, my boss found out that the company was giving out bonuses so she put me down for 100% (this was also signed off by her boss - both of them were unaware about the new policy). Then HR tells them that I am not entitled to the 100% because of the new guidelines.

In my terms and conditions it says: 'The company is entitled to end or vary any bonus scheme at any time with or without replacement on giving one month's notice to you.' The company never told me about the new scheme or sent me the new scheme ts and cs.

Do you think I have a case to fight it? I think my boss and her boss would fight my corner if it came to it but at this stage they just want to leave it between me and HR. I'm probably the only woman who was on mat leave during the changeover.

Any suggestions would be greatly appreciated.