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Good documentation and contemporaneous information of bonus decisions are particularly necessary where discretion is exercised, as tribunals will often rely on the employer’s records to evaluate whether or not selections have been honest, rational and constant. Where schemes have been operated informally for a really lengthy time, employers ought to consider whether a contractual entitlement has arisen by way of conduct and will take advice earlier than making modifications. Employers also wants to evaluate their inner practices to make sure managers don’t inadvertently create the impression that bonuses are guaranteed. A recurring threat for employers is that repeated fee of a discretionary bonus, or ambiguous scheme wording, can cause the bonus to turn out to be an implied contractual time period. Employers should have the flexibility to clarify the decision-making course of, apply constant reasoning and guarantee records are kept to indicate why choices were made. The criteria might take account of particular person efficiency, group output or total enterprise performance, but they don’t appear to be fixed upfront in a means that guarantees a fee.
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