Remuneration is obviously an important aspect of any employment relationship. A clear and well-structured rewards programme can deliver a significant return from employees in terms of staff motivation, productivity, goodwill and loyalty. Conversely, a remuneration scheme that is badly drafted or inconsistently applied can be a source of resentment, uncertainty, disputes and claims.
Many bonus schemes rely on calling themselves discretionary as a ‘get out of jail free card’ on any point of dispute. But this can lead to complacency and potential problems, as any such discretion must still be exercised in good faith. Get it wrong, and you risk claims for breach of contract, constructive dismissal or discrimination. To ensure fairness and transparency, consider whether your bonus scheme is clear on matters such as: when the scheme will apply; what are the criteria to meet; how will the payments be calculated; when do the payments accrue; when do they get paid; and what happens in respect of unpaid bonus when the employee leaves employment?
Other aspects of ‘pay and benefits’ which are currently causing problems for employers include:
- The introduction of the Living Wage, which has put financial pressure on many sectors. There remains significant uncertainty surrounding its application to matters such as staff accommodation, travelling time and ‘on-call’ work.
- Mandatory Gender Pay Gap Reporting, which from 2018 will require companies with more than 250 employees to start publishing data about the levels of pay and bonuses awarded to their male and female staff. If this affects your business, you need to act now to avoid the risk of being ‘named and shamed’.
- Holidays, the calculation of which has become increasingly difficult following legal decisions that require holiday pay to potentially include commission and overtime payments. The maths gets harder still if dealing with part time workers or staff with irregular working patterns.
TJD Law can assist with:
- Drafting commission and bonus schemes to inject greater certainty and reduce the scope for potential claims
- Disputes regarding National Minimum Wage, Working Time and Rest Breaks
- Claims for unlawful deduction from wages
- Contractual disputes relating to pay or benefits
- Recovering training costs or other debts owed by an employee
- Calculating holiday pay and the resolution of holiday pay disputes
- Gender pay gap reporting