Bonus Clawback

[surveyor]

My brother works for a fairly sharkish outfit and needs help!

He has a new job and subsequently gave one months notice. He has rather forced the point as he is on a three month notice period. New employer would not wait that long. Current employer has to be fair worked with it - although their level of compliance in this regard has been surprising.

He has now been told that his current employer is looking to clawback some bonus from his final pay for invoices that have not yet been paid. The bonus scheme is discretionary and if there are any rules no staff have seen then. He has no involvement in the invoice process and as far as he is aware the bonus has always been paid at invoice.

So any views on this would be helpful?

[Vaud]

So he is on 3 months notice - i.e. either party has to give 3 months notice?

And he wants 1 month.

And they are withholding elements of a discretionary bonus?

[surveyor]

Vaud said:

So he is on 3 months notice - i.e. either party has to give 3 months notice?

And he wants 1 month.

And they are withholding elements of a discretionary bonus?

Not withholding - he expected no bonus, but actually clawing back bonus paid.

[SteveS Cup]

Commission being paid on invoice is normal and clawing back any commission paid on an unpaid invoice is perfectly normal as well.

Not paying commission to an employee who is leaving when the invoice hasn't been paid is normal, some companies won't pay commission to anyone currently serving a notice period at all.

In one previous job I had a £76k deal going through but there was a 6 month period between doing the deal and the invoice being sent then 30 day payment terms plus a 3 month rebate period. Low and behold 10 months later, 9 months after leaving the company I received a very nice surprise which was my commission on the deal!! I had forgotten about it and when I left I had accepted that I was unlikely going to receive it.

[SteveS Cup]

Hit post before finishing!

How do you expect his current employer to claw back commission if the invoice doesn't get paid once they've paid him his final payment?

[surveyor]

SteveS Cup said:

Hit post before finishing!

How do you expect his current employer to claw back commission if the invoice doesn't get paid once they've paid him his final payment?

It's not commission(he is not in a sales role) - it is discretionary bonus.

No-one outside of management is aware of how the scheme works, but it is related to the fee earning that the individual carries out. The organisation is not particularly liked by its customers and it's not unusual for them to have to 'persuade' their clients to pay. It is the first time he has heard of clawback.

The proposal is that they will take it out of his final salary.

[SteveS Cup]

surveyor said:

SteveS Cup said:

Hit post before finishing!

How do you expect his current employer to claw back commission if the invoice doesn't get paid once they've paid him his final payment?

It's not commission(he is not in a sales role) - it is discretionary bonus.

No-one outside of management is aware of how the scheme works, but it is related to the fee earning that the individual carries out. The organisation is not particularly liked by its customers and it's not unusual for them to have to 'persuade' their clients to pay. It is the first time he has heard of clawback.

The proposal is that they will take it out of his final salary.

It's a bonus paid based on an invoice, if the invoice didn't exist the bonus wouldn't... Call it want you want. My administrator gets a bonus based on what we've billed - she has FA to do with sales but it will be clawed back if the invoice doesn't get paid.

Forgetting that he's leaving... If he receives a bonus based on a fee to a company, the client goes tits up and they never receive the fee would they not claw back the bonus that related to that fee?

I don't know where the shock comes from. It sounds like this dodgy outfit has acted professionally and fairly.

[surveyor]

SteveS Cup said:

surveyor said:

SteveS Cup said:

Hit post before finishing!

How do you expect his current employer to claw back commission if the invoice doesn't get paid once they've paid him his final payment?

It's not commission(he is not in a sales role) - it is discretionary bonus.

No-one outside of management is aware of how the scheme works, but it is related to the fee earning that the individual carries out. The organisation is not particularly liked by its customers and it's not unusual for them to have to 'persuade' their clients to pay. It is the first time he has heard of clawback.

The proposal is that they will take it out of his final salary.

It's a bonus paid based on an invoice, if the invoice didn't exist the bonus wouldn't... Call it want you want. My administrator gets a bonus based on what we've billed - she has FA to do with sales but it will be clawed back if the invoice doesn't get paid.

Forgetting that he's leaving... If he receives a bonus based on a fee to a company, the client goes tits up and they never receive the fee would they not claw back the bonus that related to that fee?

I don't know where the shock comes from. It sounds like this dodgy outfit has acted professionally and fairly.

To be clear.

1, Never been any suggestion of clawback in the past to brother or any of multitude of leavers.
2. Employee's do not have sight of invoices, nor any involvement in payment process. The bonus bears no relation to revenue in terms of what is invoiced. Each person has no idea of their fee earning.
3. Easy to say not been paid we are helping ourselves to £2k* of your pay. How do you know?

• They've not said how much as yet....

Edited by surveyor on Friday 21st November 21:13

[SteveS Cup]

I'm no employment law expert so maybe someone on here can give advice in relation to the law on this matter.

It's an interesting topic the more I think about it / understand the situation.

Ultimately they'll do whatever they think they can get away with. I'd tell him to go to a lawyer if it's going to effect him.

I would think they'd have to prove that the bonus was paid in relation to an invoice that they've not received payment for - if they can then he may not have a leg to stand on.

[johnfm]

SteveS Cup said:

I'm no employment law expert so maybe someone on here can give advice in relation to the law on this matter.

It's an interesting topic the more I think about it / understand the situation.

Ultimately they'll do whatever they think they can get away with. I'd tell him to go to a lawyer if it's going to effect him.

I would think they'd have to prove that the bonus was paid in relation to an invoice that they've not received payment for - if they can then he may not have a leg to stand on.

It is a discretionary bonus. They don't have to pay it at all.

He wants to breach contract. Not sure why they aren't entitled to withhold bonus that they are not obligated to pay at all in order to waive his breach.

[SteveS Cup]

johnfm said:

SteveS Cup said:

I'm no employment law expert so maybe someone on here can give advice in relation to the law on this matter.

It's an interesting topic the more I think about it / understand the situation.

Ultimately they'll do whatever they think they can get away with. I'd tell him to go to a lawyer if it's going to effect him.

I would think they'd have to prove that the bonus was paid in relation to an invoice that they've not received payment for - if they can then he may not have a leg to stand on.

It is a discretionary bonus. They don't have to pay it at all.

He wants to breach contract. Not sure why they aren't entitled to withhold bonus that they are not obligated to pay at all in order to waive his breach.

They're not withholding a bonus - they want to take back a previous bonus out of his final basic salary payment (from what I understand).

[jeremyc]

What does his Employment Contract say with respect to the bonus and under what conditions it is paid (or clawed back)?

If it is silent on the matter then I suspect there is nothing he can do.

I've previously had a bonus clawed back from my bank account after leaving. As far as I remember the company's get out was that the bonus was purely discretionary, and that they decided they I had been paid it in error.

[Sheepshanks]

surveyor said:

2. Employee's do not have sight of invoices, nor any involvement in payment process. The bonus bears no relation to revenue in terms of what is invoiced. Each person has no idea of their fee earning.

...and additionally they have no idea how it works?

What a very strange set-up.

[SteveS Cup]

jeremyc said:

What does his Employment Contract say with respect to the bonus and under what conditions it is paid (or clawed back)?

If it is silent on the matter then I suspect there is nothing he can do.

I've previously had a bonus clawed back from my bank account after leaving. As far as I remember the company's get out was that the bonus was purely discretionary, and that they decided they I had been paid it in error.

That's impossible AFAIK. They can take it out of your salary - not your bank, no employer would have the details needed to do this.

[jeremyc]

SteveS Cup said:

That's impossible AFAIK. They can't take it out of your salary - not your bank, no employer would have the details needed to do this.

Nope. They requested the bank adjust the amount of the payment they had just made (by BACS or similar).

I didn't believe it at the time, but was assured by the bank that it was possible if the company had paid the wrong amount in error.

[surveyor]

SteveS Cup said:

They're not withholding a bonus - they want to take back a previous bonus out of his final basic salary payment (from what I understand).

Correect

jeremyc said:

What does his Employment Contract say with respect to the bonus and under what conditions it is paid (or clawed back)?

If it is silent on the matter then I suspect there is nothing he can do.

I've previously had a bonus clawed back from my bank account after leaving. As far as I remember the company's get out was that the bonus was purely discretionary, and that they decided they I had been paid it in error.

I believe (and could be wrong - he's gone to bed!) that it is silent. We've had this discussion in the past and in theory the company could not pay anyone any bonus, although they would not have staff for long.

Sheepshanks said:

...and additionally they have no idea how it works?

What a very strange set-up.

They have vague ideas all related to some sort of performance grid. Exactly how the grid works and how it relates to individual invoices I think is pretty hard to fathom.

As I've said he's not expecting any more bonus. It's clawing back bonus already paid that is the issue.

[schmunk]

Discretionary or not, one it's been paid it's his, and the employer will need to demonstrate a contractual right to be able to claw it back, either in his employment contract or in a published employee policy.

https://www.gov.uk/understanding-your-pay/deductio...

[anonymous-user]

Doncha love the OP suggesting it's the employer that is sharkish when his brother is flouting the contract?

The employer may have either a contractual or restitutionary claim re the bonus, but the facts stated are too skimpy to form a view on. In any event the employer could sue for any extra cost incurred by the employee's departure in breach of contract.

[surveyor]

Breadvan72 said:

Doncha love the OP suggesting it's the employer that is sharkish when his brother is flouting the contract?

The employer may have either a contractual or restitutionary claim re the bonus, but the facts stated are too skimpy to form a view on. In any event the employer could sue for any extra cost incurred by the employee's departure in breach of contract.

Afternoon Breadvan. I can't name the outfit. If I could you would agree that they are sharkish. I agree brother is slightly out of order, and he is also aware where he stands legally.

What's taken him by surprise is his employers position that they can conjure up rules and dip into his pay. The rules may exist - but they have never been published or staff advised etc.

[SteveS Cup]

Any update? I'm intrigued.