Rights regarding redundancy and bonus

[bogwitch]

I am being made redundant at the end of this year.

Our annual bonus will be paid in March 09 for the year 2008.

This year's bonus is expected to be about 8% of salary, but my redundancy package will give me a 5% of salary bonus at the end of this year instead of the 8% in March.

I would prefer to hold out for the 8% in March.

Where do I stand on this? Can anyone advise?

Not sure I'm following bogwitch. You are being made redundant in December, and as part of your redundancy package have been offered a bonus which is less than you expected, is that right?

Not sure what you mean about holding out for 8% in March. Is the redundancy voluntary, and you have the option to stay on? If so, if they are having to make redundancies isn't it likely that previous estimates of bonuses might have to be revised down anyway?

Bonuses are usually 'discretionary' so I'm not sure what you could do. 5% in present climate is pretty good. Also not sure what you mean by holding on for 8% in March (don't see how this is an option).

The prediction is that in March 09 when the bonus for Jan to Dec 2008 is paid, it will be 8% of salary. But my company who are making me redundant (no chance of staying on) want to pay me off with a 5% bonus at the end of December 08 as part of my redundancy package.

I would prefer to wait and get the same percentage as everyone else in March 09, as it could be as much as 8%.

I am not on megabucks by any means but would like to be paid for the work I have done - the same as all those people who haven't been made redundant.

Sorry if not very clear before. Hope that helps.

What are the terms and conditions of your bonus scheme bogwitch? Is it discretionary or contractual, what conditions do you have to meet to participate? What generally happens when someone leaves employment?

Normally an employee only gets the bonus if they are employed on the date it is paid i.e. March 09. Payment of it depends on orders, revenues, EBIT and cash. I have heard that EBIT and cash are well over the targets and revenues and orders may not make the target but it depends on the rest of the year. The bonus is part of the terms and conditions of employment as long as there is the money for it, and the orders, revenues, EBIT and cash all come in. So some years we have had nothing and some years we could have had up to 10%.

However as I am being made redundant (centralising the dept I work for) they want to make this one off payment of 5% to me instead.

I have pointed out that it is not my fault I will not be here in March 09 and I would prefer to wait and get the same as everyone else. HR pointed out that in this climate 5% is good going, however my company are doing very well despite the recession so it is likely the bonus will be greater than 5% when all the accounts are done and it is due to be paid in March 09.

Got to go pick up DD so will look in later.

Thanks for the replies so far.

It's good just to whinge to be honest!

I think most people who are made redundant would like to stay on longer and get more money.

Well if the terms and conditions of the bonus scheme state that you must be employed 3 months after the bonus year has ended, then you won't meet those terms so strictly they don't have to pay you anything.

I'm assuming this is a redundancy package over and above the statutory minimum? 5% doesn't sound bad to me tbh.

Bubbaluv - I am happy to go. We have had this redundancy hanging over us for 2.5 years and with no hope of another job there I am more than happy to move onto pastures new.

However, as the redundancy isn't my fault I just want what is owed to me.

Flowerbeanbag - I suppose that no, they don't have to pay me any bonus, and the redundancy package is more generous than a statutory one. However people in the same dept who have moved on already did receive their fair share and more besides.

I just wondered if there was anything I could do to ensure I got the same deal.

Is your redundancy package written down anywhere, your staff handbook or whatever, or is it just arranged individually each time someone is made redundant?

Your argument would be that, by paying previous employees full estimated bonus on redundancy, that has become part of your terms and conditions by way of custom and practice.

If people being made redundant usually get the full estimated bonus, what is the reason you have been given for being treated differently?

Although if it's contractual, and forms part of your normal remuneration, you should get it. Is it definitely contractual, not discretionary?

The redundancy does seem to be an individual thing for departments. However, trying to find out about other departments' packages would be impossible.

It depends on the time of year that you leave as to whether you get the bonus pro rata I think.

I will try to contact an ex employee who was also made redundant and see what happened to her.

Thanks for your help, flowerybeanbag

It is in the contract yes

It would be normal to get a pro rata amount if someone is not employed for the whole financial year, yes, but if you are certain the bonus relates to financial performance from Jan-Dec 2008 and just happens to be paid out 3 months later, then presumably your amount shouldn't be pro rated as you will have worked the whole year.

Do contact your ex colleague, and read through the terms and conditions of the bonus scheme with a fine toothcomb, I would expect it to say something about termination of employment in there.

Bogwitch,

I agree with Flowery (surprise, surprise ), I think you need to be careful here.

Very few enhanced redundancy schemes will say anything about bonus. It will normally relate to the main enhanced payment (e.g. a week's full pay per year of service). Great for you if yours does though.

If you need to be in employment on the date the bonus is paid (i.e. March 2009), and that is a condition in the bonus plan, you have no automatic entitlement to the bonus if you go early. I am afraid that is just the way the plan and the law works.

If you have been unfairly dismissed, loss of a bonus can be factored into compensation. However, if they have done things fairly and gone through the proper consultation process (and you are right that it is a term of the plan that you need to be in employment at March), it doesn't matter that it's not your fault you won't be there then, you will have no way I can think of of threatening to sue for the full bonus.

To be brutally honest, if all of the facts above are true, I think 5% is a good, and actually pretty generous, offer. If the company hasn't done proper redundancy consultation, then come back as that might be a different matter. Sorry, don't mean to sound harsh...

Agree with RibenaBerry and Flowery.

So grateful for the replies. Thank you all very much. Sorry for delay in replying. Had to go out.

Will certainly get in touch with ex colleague about what she got as regards bonus. And check my employment terms and conditions.

And thanks for letting me know the legal side RibenaBerry - that is most helpful.

The company have been really fair (except for the redundancy having hung over the dept for 2.5 years) and are a great company to work for.

I really don't want to leave on a bad note. It is just a shame that they seem to be reneging on what they offered originally. I feel like my life has been on hold since they told us 2.5 years ago that we would be made redundant and was expecting a rainbow at the end of it for being loyal to the end.

But then, life isn't like that is it - ever the dreamer me!

Also check your employment contract for restrictions on discussing salary/bonuses with other staff and ex-staff. I know that at my husbands work it is a dismissable offence so check before you bring up your colleague's info in an HR meeting!
Of course you could always say you didn't ask, but the info was offered without prompting.