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About non payment of bonus

Andy Low's Profile

I am working for a top consultancy firm. I have worked for the entire 2011 in good standing. In 2012 from June I am on leave without pay. My appraisals were all done & I was also intimated of my bonus amount.

Then on one day before the salary being credited, I get a call from the HR that the partners have taken a call to defer the bonus until I join back. None of this is put on a record & they communicated over a phone only. Even when I sent a mail asking them to confirm the same on a email & point it to the relevant policy, they have not replied to my mails.

When I check the policy document, it is written that bonus will be paid only to 'active' employees. I have actually earned my bonus for 2011 & the firm is not paying the same.

Is this legal? I am yet employed with the firm, just that I am on leave without pay. Can I take a legal action?

Please do adice...

Thanking You!

 

 

Answers

Topic Expert
Keith Perry
Title: Director of Global Accounting
Company: Agrinos, Inc.
(Director of Global Accounting, Agrinos, Inc.) |

Andy,

It depends on the contract and on the State. I would also factor in whether you plan on going back or not, and if not what relationship you will have with them in the future.

That you heard from HR and not your direct-line manager is to me a red-flag. It isn't always the case, but often you bring in HR because you think you have an issue and you want to resolve it. If they are truly avoiding putting this into writing, that could also be a bad sign. However, those are just indications...they are not necessarily representative of the facts of your situation or of your company's intent.

To provide a context for answering your question;
It is possible to have structured the bonus plan so that when the bonus becomes payable (let's say they plan on declaring it payable on July 1), you have to be employed actively through that date for it to be payable to you. So, modulo what the plan says, what state you are in, and when you went on leave, it is very possible that you didn't actually earn the bonus.
There are differences between "paid" and "payable". It is possible that the plan says "payable if active through March 15 of the following year" or somesuch...in which case you would have earned it, even if the pay date is in July. Interestingly, if this is the case, and if you don't plan on going back, there is a chance that they are accruing a significant liability to you. At least in CA, if the Employment Commission decides that this is owed and is part of your regular earnings, withholding it would run serious penalties.

I don't know your particular status; it can be material on several levels if you took the leave, whether you had cause or not (such as infirmity of yourself or a dependent), or if they put you on leave. Additionally, with regard to this point it matters what size the company is. Larger companies have a greater duty to their employees in many cases.

So; hopefully you have your employment letter and the bonus plan. These two together will help determine, based on other factors, whether they are withholding pay illegally, or whether such pay is not technically owed at this point.

Finally, IMHO (and having been on either side of the table), if they are wrong then I wouldn't hesitate to call them on it.

(Caveat: I'm not a lawyer, and even if I were this is not legal advice).

Andy Low
Title: Senior Manager
Company: Top Consultancy
(Senior Manager, Top Consultancy) |

Thanks Keith for your detailed response. It is a catch-22 situation. I will probably wait for them to respond & follow up on the same again in a while

Robert Honeyman
Title: CFO
Company: Advanced Predictive Analytics
(CFO, Advanced Predictive Analytics) |

Andy,

What does your direct supervisor say? Presumably, your supervisor's the one who told you the good news about the bonus and is your advocate. That's where I'd start to try and determine not only what went wrong but to determine if there's any future in the firm. Also, consider getting advice from a labor attorney to lay out a strategy to pursue your rights without necessarily destroying your potential with the firm.

There are two possibilities: you may return to active status or you may leave the firm. If you return to active status, there are two possibilities: they may pay you or they may not.

If you choose not to return to the firm, your ability to collect your bonus will be linked to how formal the bonus policy is. The more formal, the easier to determine if the policy has been circumvented. If less formal, a suit may require softer evidence, including emails and assertions of conversations.

On the other hand, if you choose to return, the first thing you'll want to determine is the status of the bonus. If it is due to be paid, a formal deadline will exist. If it's paid, done. If it's not paid, or if there's no clear intent to pay, you'll have to consider the legal approach.

In the end, you need to assess your desire to return. If it's strong, a soft approach is in order. If weak, be aggressive in asserting your rights.

Topic Expert
Malak Kazan
Title: VP, Special Projects
Company: ERI Economic Research Institute
(VP, Special Projects, ERI Economic Research Institute) |

Typically for any compensation action (whether it is a merit increase or variable compensation payout) most companies require the employee to be "active" and on payroll. If you are on unpaid leave this may be the issue. I would double check with HR the reason for delay in payment all else being in good standing.

Topic Expert
Malak Kazan
Title: VP, Special Projects
Company: ERI Economic Research Institute
(VP, Special Projects, ERI Economic Research Institute) |

The additional comment would be since it is not an incentive or commission plan (it is a "discretionary" bonus), there is no legal obligation to pay it out. Unfortunately, if you do not return from your leave, the company can use the discretion and not pay the bonus. Double check the company policy and past practices (that you are aware of). Good luck.

Jim Schwartz
Title: Corporate financial advisor
Company: Wabash Financial Strategies
(Corporate financial advisor, Wabash Financial Strategies) |

Andy,

I'm sorry to hear about your bonus. Others have offered sound advice. If you're lucky, there is a written policy (and there should be if this is truly a "top" consultancy) and you can obtain a copy. Regardless of whether it supports your case, at least you'd know the "rules" and perhaps assess whether they're consistently applied.

You don't say how much money is involved. From personal experience, attorneys are expensive and employment law matters can take time to resolve. You'll typically be required to pay as you go, not upon resolution of your claim or on a contingency basis. Even if you believe you have clearly been wronged, you should consider carefully whether it's worth the time, energy, financial risk, net financial benefit and distraction to pursue the matter.

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