Many employers routinely consider the award of bonuses to their staff at this time of year and inevitably this leads to disputes with some staff members about the failure to award a bonus to them at all or at a particular level. In this blog, we set out some factors of which employers should be mindful when making bonus-related decisions.
Entitlement to a bonus
The contractual status of a bonus is a significant factor to consider. Generally, offer letters and employment contracts outline eligibility to earn a bonus without explicitly guaranteeing it. They often state that the bonus scheme's operation and the amount awarded are solely at the employer's discretion. Bonuses are typically contingent upon the employer's business performance, the employee's work performance, or a combination of both during the previous year.
Even if bonuses are described as discretionary, there might still be a contractual entitlement to them implied in the employment contract. This could happen when an employee consistently receives a bonus at a particular level over an extended period due to custom and practice. If a contractual entitlement exists and the employer fails to pay the bonus, it could lead to a breach of contract claim or a complaint about an unlawful deduction from wages. It may also contribute to a constructive dismissal claim. In some cases, bonuses might be factored into loss of earnings awards in unfair or constructive dismissal cases.
The entitlement to a bonus may be contingent upon the employee remaining employed (and not serving notice) at the time of the award and not facing any performance or disciplinary issues. However, in instances where no express condition exists, courts have rejected implying such terms.
Employers should be aware that even if they have the discretion to terminate a bonus scheme, they cannot withhold bonuses that employees have already earned and accrued under the scheme as it was at the time. This means that once employees meet the conditions for earning the bonus, they have a right to receive it.
Exercising discretion to award a bonus
Bonuses are typically evaluated based on objective individual and/or business performance criteria. Employers must clearly define the criteria and decision-makers responsible for awarding bonuses at specific levels. Bonuses may come in various forms, including stock options, subject to the scheme's terms. However, caution should be exercised to avoid conditions that could be seen as a restraint of trade or penalty clause, as these might be deemed void due to public policy considerations.
In cases where bonuses are discretionary, employers cannot exercise their discretion arbitrarily or unfairly. The decision-making process must be carried out in good faith, consistently, and in line with the implied duty of trust and confidence. While equality laws do not require identical treatment of employees, employers should be especially cautious not to discriminate based on any protected characteristics. Ensuring fairness and transparency in bonus allocation fosters a positive work environment and reinforces the employer-employee relationship. Employers should be mindful to avoid any discrimination amongst employees based on any protected ground(s):
Employees on leave
Care should be taken regarding employees absent on sick leave during the performance year.
The general principle in relation to maternity leave is that where a bonus comprises payment for work done, an employer is entitled to make a pro rata reduction in the bonus award for an employee’s absence on leave. However in many cases, there is scope for dispute about whether bonuses are in respect of work done. This area can be fraught with risk, and close consideration should be paid to whether a bonus is expressed to relate to company performance only or in combination with individual employee performance.
What are reasonable adjustments for mental health?
Reasonable adjustments are changes an employer makes to remove or reduce a disadvantage related to someone's disability.
Some people might not recognise their mental health condition as a disability, but it's important that employers are aware that it could be. Disability is defined as a mental or physical impairment that has a substantial and long-term adverse effect on a person's ability to carry out day-to-day activities.
Employers must make reasonable adjustments for:
Employers must make reasonable adjustments when:
Employers should try to make reasonable adjustments even if the issue is not a disability. Often, simple changes to a person's working arrangements or responsibilities could be enough to help them stay in work and work well.
Making reasonable adjustments for mental health
Mental health includes our emotional, psychological and social wellbeing. It affects how we think, feel and behave. If an employee has a mental health problem, it's important their employer takes it seriously and with the same care as a physical illness.
Mental health problems can:
When making reasonable adjustments for mental health it's helpful to remember that:
Employers and employees should work together to agree and review reasonable adjustments over time to make sure that the adjustments work well.
Benefits of reasonable adjustments for mental health
Reasonable adjustments for mental health can help employees to stay in work while recovering from or managing a mental health condition. They can also help employees work safely and productively.
Reasonable adjustments for mental health can help employers to:
Responding to reasonable adjustments for mental health requests
As an employer, you should work together with your employee to agree reasonable adjustments for mental health.
Everyone's experience of mental health is different, and mental health can fluctuate over time. This means that identifying, agreeing and monitoring reasonable adjustments can take time. It also relies on you and your employees talking openly so that everyone's needs can be met.
Preparing for a meeting to discuss reasonable adjustments for mental health
Many people find it hard to talk openly about mental health, especially when they are under pressure.
It can be helpful for you to:
What to think about before responding to a request for reasonable adjustments
You should take time to prepare for a conversation with someone about reasonable adjustments.
It's normal for people who are experiencing mental health problems to be unsure about what they need to manage their mental health. Many people might not feel ready to decide what adjustments to suggest. This is why it's helpful to take a flexible approach, regularly monitoring and reviewing what works, and what does not.
There are several things you can think about which could help with deciding what reasonable adjustments will be possible.
3. Get advice from an occupational health professional
4. An occupational health professional can give you advice on what adjustments might be suitable.
Have a conversation and agree a plan with your employee
You should meet with your employee to discuss reasonable adjustments and agree a plan.
Before the meeting you should:
Some people with mental health conditions find it difficult to concentrate or remember things. It can sometimes be helpful for employees to bring a trusted person to take notes on the conversation for them to refer to after the meeting.
The meeting might include:
After the meeting
After the meeting you should confirm the agreed reasonable adjustments in writing.
Trial and monitor the reasonable adjustments
It's useful to monitor reasonable adjustments once they're in place.
You might sometimes find that reasonable adjustments:
Monitor the reasonable adjustments using the approach agreed during the meeting and keep a record of any changes made over time.
Put in place ongoing support and a process to review the reasonable adjustments
Mental health problems can last for a few weeks, months or longer-term. It's important that reasonable adjustments are reviewed on an ongoing basis.
You might find it useful to arrange follow-up meetings to discuss how the work adjustments are working. These meetings might be weekly, monthly or less frequently depending on the situation.
Before the meeting it can be helpful to:
General Data Protection Regulation (GDPR) is a hot topic right now. GDPR is the toughest privacy and security law in the world. Even though it was drafted and passed by the European Union (EU), it imposes obligations onto organisations anywhere, so long as they target or collect data related to people in the EU. Under GDPR people have a fundamental right of access to their personal data from data controllers.
Types of data processed
In business there are 3 main types of data that is processed regularly. These are:
• Customer data
• Employee data
• CCTV
When dealing with this data the three key principles to remember are:
• Lawfulness
• Fairness
• Transparency
How to treat the data you process
• Purpose limitation
Personal data should only be collected for specific, explicit and legitimate purposes and not further processed in manner that is incompatible with those purposes.
• Data minimisation
Processing of personal data must be adequate, relevant and limited to what is necessary in the relation to the purpose for which they are processed.
• Storage limitation
Personal data should only be kept in a form which permits identification of data subjects for as long as is necessary for the purpose for which the personal data are processed.
• Integrity and confidentiality
Personal data should be processed in a manner that ensures appropriate security and confidentiality of the data, including protection against unauthorised or unlawful access to or use of personal data and the equipment used for the processing and against accidental loss, destruction or damage, using appropriate technical or organisational measures.
The four main breaches of GDPR are:
• Unauthorised disclosures
• Unauthorised access
• Hacking
• Integrity
GDPR Guidelines
1. Know what data you have, where you have it and why you have it
2. Be transparent
3. Identify any risks
4. Know your processors
5. Manage any risks
Bright Contracts contains a 'Data Protection' section of the Company Handbook which can be viewed under the 'Introduction' tab. Download a trial of our software to see a sample of this content.
Employee wellbeing is essential to ensure employees are happy in their job. It is the way employees’ duties, expectations, stress levels and working environments affect their overall health and happiness.
Employee wellbeing involves several categories of wellness, such as:
To check how your employees feel with the wellbeing in the workplace, employers should send out a survey to find out information on how employees currently feel as well as what they think can be done to improve wellbeing.
Some ways in with employers can improve wellbeing is by:
Employees wellbeing initiatives are something that need to be done all year round in order to keep your employees wellbeing at a high.
For more information on wellbeing check the blog below:
With summer coming along soon, annual leave requests may be more frequent however when does an employee’s time-off become an issue? How should managers handle the discussion? Here’s what you need to know and do.
Firstly there are 3 things to consider.
There are also some times when you may need to speak with your employees regarding their requests. Consider talking directly with them under any of these circumstances:
You should ask yourself some questions as well to establish annual leave rules that meet both your business needs and the needs of your employees.
You can find more information on annual leave requests here.
Resignation does not need to be in writing (although it should be if that is required under the contract of employment), it can be given orally or in some cases via conduct. When a resignation is clear and unambiguous there is no obligation on the employer to double check the employee's intentions. However, if the employees resignation is unclear and an employer proceeds in treating the employment as having ended then there may be trouble ahead.
In Cope v Razzle Dazzle Costumes Limited the claimant was a factory worker. She fell out with a colleague who subsequently resigned, accusing the claimant of bullying. When the claimant was made aware of the allegations she requested a meeting with her employers, Mr and Mrs Parker, and said she would resign if things were not sorted out properly. The following day the claimant made two attempts to speak to Mrs Parker who was unavailable on both occasions. On being told this for the second time the claimant said "I'm done", left her factory keys on the counter top and left the building.
The employee whom the claimant had said this to subsequently advised Mr and Mrs Parker that the claimant had resigned. No attempt was made to clarify the situation, despite the claimant texting Mrs Parker later that day to indicate she had attempted to speak to her but couldn't stay at the workplace any longer. The following day she handed in a two week sick note, and a week after that she requested a meeting with the Parkers which took place. It was at that meeting that the claimant was informed that her employers considered her to have resigned and they did not agree to her returning. By this time the employers had also re-employed the employee who had made the bullying allegations.
The claimant was successful in claims for both unfair and wrongful dismissal. The tribunal was of the view that no reasonable employer would have concluded that the claimant had unambiguously resigned, and her subsequent behaviour, in particular the submission of a sick note, was not consistent with a resignation. The tribunal took the view that the employers chose to treat the claimant's actions as a resignation because dealing with a dispute between two employees was disruptive to the business.
It is easy to see why the tribunal came to the conclusion that it did. While announcing she was "done" and handing in her keys may, in some circumstances, reasonably be seen as a resignation, in this case the claimant was due to have 3 days off and she had in the past handed in her keys when off on holiday. The evidence also suggested that the claimant had been in a highly anxious state when she walked out and the act of obtaining a sick note is clearly not consistent with resignation. Treating it as such, to avoid dealing with the allegations of bullying, may have seemed like the easier option at the time but the award of nearly £7,500 in compensation together with the management time and any legal fees involved in defending the tribunal claim has likely given the employers a different perspective on the matter.
The advice for employers is if in doubt check it out. If it is unclear what has happened, or if words may have been said in haste then ask the employee to confirm what their intentions were/are. If words were said in the heat of the moment then consider giving the employee a short period of time to cool off and reconsider. If the contract requires written notice and this has not been given then ask for the resignation to be put in writing. This will avoid any subsequent dispute and a possible Employment Tribunal claim.
As unpredictability in the global economy continues, company layoffs remain in the news. While layoffs may be necessary and appropriate, in many cases they cause more damage than benefit. Some leaders taken actions to reduce risks to company performance, reputation and long-term viability. What can we learn from these actions?
1. Be clear in the reason for layoffs
When it comes to lay-offs, some are strategic and forward-looking with higher valuations and others are focused solely on cost cutting. Examples of strategic reasons for lay-off include exiting less profitable sectors, products or markets due to changing customer habits. Businesses who are transparent regarding the reasons for layoffs see an increase in investor, customer and employee trust and engagement.
2. Use layoffs as a last resort
Most organisations that conduct layoffs do not see improved profitability, especially those that are highly reliant on innovation and growth. Leaders often underestimate the negative impact of layoffs on productivity, employee engagement, retention and brand reputation.
Effective leaders know that they should pursue all possible alternatives before embarking on layoffs, including temporary furloughs, redesigning jobs and work models, moving some workers to contractor status and offering more flexible benefits to create cost and operational flexibility.
3. Act fairly
Layoffs historically have had a negative impact on women and underrepresented employees. Recent news stories show the effect of layoffs among employees on maternity and health leave, as well as those in vulnerable positions with visas.
Reasons cited as acceptable for determining who is laid off include factors such as employee performance, tenure, experience and skill set. Effective leaders know that evaluating performance, skills and other factors is difficult and time-consuming, and that maintaining ongoing performance evaluation and review processes can position companies well for both ongoing and unanticipated events.
4. Know the people being laid off
Great leaders spend the time and thought required to understand not only who they are laying off but also why and the potential impact. They conduct workforce planning exercises using data science to understand employee performance, skills, networks and collaboration patterns to safeguard against losing key talent and creating unintended consequences.
5. Take responsibility and show appreciation
Leaders must ensure they take responsibility for layoffs and show appreciation for those impacted. They demonstrate their empathy and compassion through all communications. They understand their audience, allow opportunity for employees to process the information and share their feelings, and provide support and resources.
While layoffs are difficult for all involved, effective leaders handle them with care to avoid unravelling company purpose, culture and performance.
Performance Improvement Plans (PIPs) are an increasingly common tool utilised by employers to manage cases of poor work performance. A PIP is not a legal requirement and there is no legal definition of same. A PIP can be understood to be a documented plan which outlines the improvements in performance required from an individual employee and the timeline for achieving these improvements.
Below are three top tips for employers when placing employees on a PIP.
1. Clarity on objectives
The objective of a PIP process is to make the employee aware of the concerns you have regarding their performance and give them a set timeframe in which to improve. It is important that employees are fully aware of the process involved and clear on what they are expected to achieve according to the PIP. When implementing any type of PIP, the goals and targets set should be SMART (Specific, Measurable, Achievable, Realistic and Time Bound).
2. Time to improve
A PIP of reasonable duration should ensure that the employer meets this requirement. This time may also allow the parties the opportunity to explore alternatives to formal disciplinary action such as transfer or demotion where it is apparent that the employee’s skillset is not appropriate to the role.
In deciding on the appropriate timeframe between performance reviews the business should consider the complexity of the role and if the employee will have had ample opportunity to meet the goals as per the PIP. It would also be advised that this timeframe should be agreed with the employee from the outset and that they consider it fair and reasonable based on their role.
3. Support and training
It is important to remember that PIPs only work where the appropriate surrounding structures are in place. These include a proper induction and *ongoing* training, clear role descriptions and clear documented targets/goals, managers who are willing to tackle underperformance and a means of objectively measuring performance. All supports provided should be documented by the employer.
Following the above steps will greatly assist an employer in showing that the performance management process conducted by the employer was procedurally fair and that any subsequent terminations on the basis of competency were justified in the circumstances. It is important to note PIPs are not a replacement for formal disciplinary action. Not all employees will show the necessary improvements following the PIP process, if this is the case, employers will need to initiate the Company disciplinary procedure. Employers must manage this process in line with the Company’s disciplinary policy, whilst adhering to the ACAS Code of Practice on Disciplinary and Grievance Procedures.
Incase you missed it, a recent headline in the news revolved around Gary Lineker where his politicised tweet criticised the UK Government's new immigration policy. The tweet saw the BBC Match of the Day presenter removed from his presenting duties pending an investigation as to whether he had broken the BBC's *'Guidelines on Impartiality'* and *'Guidance on Individual Use of Social Media'*. The BBC subsequently reinstated Mr Lineker following the investigation. The difficult position the BBC found itself in is a timely reminder that employers should have effective social media policies in place to deal with such incidents.
What can we learn from BBC’s approach?
Reputational risk & disproportionate response
The BBC could not ignore the public backlash which followed Mr Lineker's removal and its impact on the organisation's wider reputation. It was widely felt that the decision to remove him was disproportionate to the purported breach of the BBC's policies.
Social media provides a place where public backlash can gain momentum and damage an organisation's reputation. This reputational damage could come from the employee or contractor's comments or, as we have seen in this instance, from the organisation's handling of subsequent disciplinary action.
Employers must have comprehensive policies to mitigate the risk that public remarks could adversely affect their reputation. Objective and fair investigation and disciplinary procedures must be in place where an employer feels an employee or contractor has breached these policies, and should a sanction be applied, it must be proportionate to the breach committed.
Solidarity boycott
Mr Lineker's colleagues announced a boycott of their duties in solidarity with Mr Lineker. This boycott forced the BBC to rethink its decision as it heavily impacted scheduled programming.
The BBC has since announced an independent review of its guidelines.
Key takeaways
The Gary Lineker story focuses on the difficulties that can arise for organisations in the social media age and shows us that the line between professional and private life is not always clear. It is a wake-up call for individuals to be wary of what they post online and for organisations to have clear social media policies in place so appropriate action can be taken where an individual does cross that line.
In summary, a social media policy should:
- Establish clear guidelines and standards on the accepted use of social media in the workplace.
- Contain clear information about disciplinary procedures for breaches and the potential consequences for such breaches.
- Warn individuals that employers may take disciplinary action with posts on their personal social media accounts where a connection can be drawn to their workplace.
Other blogs:
The year ahead see's changes to rates of pay, major reforms to EU law and details on the much-awaited Employment Bill.
1. Increased Rate Changes
The new year welcomed various rate changes. Here is what you can expect:
23 years or older | Increase from £9.50 per hour to £10.42 per hour |
21 – 22 years old | Increase from £9.18 to £10.18 per hour |
18 – 20 years old | Increase from £6.83 to £7.49 per hour |
16 – 17 years old and apprenticeships | Increase from £4.81 to £5.28 per hour |
2. Retained EU law (Revocation and Reform) Bill
The Retained EU Law Bill will repeal all EU law unless new legislation keeps it in place. The introduction of the Bill could see changes to:
- Transfer of Undertakings (Protection of Employment) Regulations
- The Working Time Regulations
- The Agency Workers Regulations
- Fixed-term Employees Regulations
- Part-Time Workers Regulations
- The Information and Consultation of Employees Regulations
- Various health and safety regulations
- Maternity and Parental Leave Regulations
3. Employment Bill
The much-awaited Employment Bill, mentioned in 2019, is likely to come in to force in 2023. The Employment Bill is said to include some of the following:
- Changes to the existing right to request flexible working. Employees no longer need 26 weeks of service to request flexible working; they can do so right away.
- Proposals to provide job security for new and expectant mothers for up to 6 months after their maternity leave ends.
- Introducing the right to receive up to 12 weeks’ paid neonatal leave for parents of babies needing neonatal care.
- Providing employees who are carers the day one right to receive one week’s unpaid leave per year.
- Allowing workers on variable hours the right to request a more predictable and stable work contract after 26 weeks’ qualifying service.
- Proposals making it unlawful for employers to withhold tips, gratuities and service charges from workers.
- Imposing a new duty on employers to prevent sexual harassment at work (extending to third parties). There are also proposals to extend the time limit for claims to 6 months.
Also in 2023, the Harbours (Seafarers’ Remuneration) Bill will come into effect, giving UK ports authority to deny access to ships that pay their crew members below the national minimum wage.
The Transport Strikes (Minimum Service Levels) Bill will likely take effect in 2023. It requires employers and unions to agree on a minimum service level during transport strikes for three months. It will also remove the automatic unfair dismissal protection available to employees who participate in strike action during that period.
The new standard in payroll software, now available for employers in the UK and Ireland.
Create tailored professional employment contracts and staff handbooks. Available for employers in the UK and Ireland.