Executive Contract Disputes and Bonus Claims

Disputes with senior employees can become a long, protracted process principally because of the reputational and financial issues that are at stake.

Executive Contract Disputes, Edinburgh & Wick

As an executive director, you run a company on behalf of the shareholders. Directors can have different rights and responsibilities from employees and may not be afforded the same protection as employees under UK employment law. Therefore, where an executive employment dispute arises it can be a fairly complicated manner.

An executive director is generally classed as an office holder in UK employment law as they have been appointed to a position by a company and may not have a contract of employment or receive regular remuneration for their role. An office holder is not necessarily an employee or a worker, however it is possible for someone to be both an office holder and an employee if they have a contract of employment with the same company or organisation.

At BBM Solicitors we have a great deal of experience in resolving executive contract disputes. If you are an executive director of a company involved in an executive contract dispute and you feel you have been treated unfairly, contact us today. With our expertise in this area we can advise you on your rights and the possible way forward.

Bonus Claims

There are two main types of bonuses available to employees; discretionary and guaranteed bonuses. In a discretionary bonus scheme, employers have a choice to decide who will be eligible and the amount payable under the bonus scheme. An employer must exercise their discretion in a way which is not irrational nor perverse. What is a fair and reasonable way to exercise discretion will be examined in relation to the facts of the case and assessed in comparison with how other employees have been treated. A guaranteed bonus is a bonus scheme in which your contract guarantees you a bonus regardless of individual performance.

Guaranteed Bonus

With a guaranteed bonus, there is no element of discretion involved, as it is contractual in nature. Therefore, if your employer fails to pay your contractual bonus you will be able to claim for recovery of a debt. There is a time limit to make your claim of 5 years from the date the bonus should have been paid.

Discretionary Bonus

Claims relating to a dispute involving a discretionary bonus can be more complicated. It may be possible to recover a discretionary bonus through a claim of breach of contract, although this can be difficult to prove and may only be successful where your employer has written to you explicitly stating that a bonus would be paid.

If the dispute proceeds to court, when deciding whether entitlement to a discretionary bonus has been assessed in the appropriate manner, the court will consider, for example:

  • What the contract says about the relevant performance factors.
  • The performance of the department.
  • The employee’s performance.
  • The treatment of similarly performing employees.
  • Industry custom and practice.

Actions taken in relation to discretionary bonuses are complicated and you should seek legal advice before taking any action. If you think you have been awarded an unfair bonus based on your performance, race, gender, sex or disability you may have a claim.

What happens next?

A number of bonuses are calculated based on the employee hitting certain targets. This element may be contractual, however, how these targets are calculated can be at the employer’s discretion. However, before lodging a court action the employee should attempt to settle the dispute by engaging in settlement discussions, such as a settlement meeting or mediation.

The majority of bonus schemes will lapse upon termination of employment, therefore if you are thinking of resigning due to a bonus claim dispute, you should be aware that doing so may damage any potential future claim and this should be taken into consideration.

Contact BBM Expert Contract Disputes Lawyers, Edinburgh & Wick

At BBM Solicitors, our employment lawyers are experts in executive contract disputes and bonus claim disputes. We understand it can be frustrating when you do not receive your expected bonus. For clear advice and assistance about employment law disputes, contact the team at BBM solicitors by calling us at Edinburgh 0131 526 3280, Wick 01955 698118 or by filling out our enquiry form.

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