Ask LH: What Can I Do When My Employer Won't Pay My Bonus?

Hi Lifehacker, My employer offered me a bonus on completion of a project, but now that the project is nearly completed, they have reneged on the arrangement. The bonus is mentioned in numerous emails about the project, which has been running for almost two years. Are they obliged to honour the agreement? Thanks, Bonus Deprived

Fuming employee picture from Shutterstock

Dear BD,

Morally, you are 100 per cent entitled to the bonus that was promised. Unfortunately, most businesses are more interested in maximising profits than moral decision making. Enforcing a payout could therefore be quite tricky.

By their very nature, bonuses are discretionary payments that are dependent on a range of factors including annual turnover and/or personal performance. For a bonus payment to be guaranteed, the terms need to be clearly outlined in your employment contract, industry award or enterprise agreement. It sounds like your bonus arrangement was considerably less formal than this.

Was the bonus ever properly documented in a signed piece of paperwork or was it only ever discussed via conversation and emails? If nothing was signed, your employer has no contractual obligation to pay up. It was essentially a gentlemen’s agreement and your manager turned out to be less than gentlemanly. Them’s the breaks.

With that said, you might still have a case if you can prove the bonus was an entitlement that was unreasonably denied. We'd start by requesting a meeting with management and presenting them with the aforementioned email evidence. Explain precisely how the bonus was conveyed to you: were you led to believe the payment was a sure thing when you agreed to take on the project?

If you lay it all out on the table in plain English, it's possible your employer will reconsider its position. This may require some back-and-forth negotiation and willingness to compromise: for example, if the company is struggling financially perhaps you could elect to have the payment deferred to a later date. A postponed bonus is better than no bonus at all.

On the other hand, the employer could continue to play hardball. Presumably, the project was completed during normal work hours which means you were technically paid in full for your services. Again, it all comes down to how the bonus payment's criteria was presented to you and how much "wriggle room" your employer gave itself.

In the event that you remain unpaid, you'll have to weigh up the pros and cons of taking things further. One option is to write a letter of demand. This is nominally a record of what is owed but is really a declaration of intent: it lets your employer know that you intend to litigate if they refuse to pay up.

Naturally, this is likely to make things very uncomfortable at work, so only go down this route if you're willing to face the fallout. You should also seek legal advice beforehand to ensure your case is viable -- which is far from certain for the reasons we outlined above. You can contact the Fair Work Ombudsman for advice and assistance in this area. Good luck!

Cheers Lifehacker

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    I would also recommend they forward the emails to an account that they only have control of, and to print out hardcopies, cause the emails might just go "missing".

    Weigh up how much the bonus is - that's how much effort you should put into recovering it. Regardless, alarm bells should be ringing for you to jump ship after securing your entitlements.

    If others are also owed a bonus, it's less likely they will make a special case for you - then they need to pay everyone.

    I don't know if the answer is strictly correct. If the bonus has been talked about over a period of time, then it's possible that it could be classified as an entitlement of employment even if it isn't mentioned in the employment contract. I say this because I have a friend who has successfully worked with a union on negotiating payment from employers in similar situations. So, if the letter writer is a member of a union, then get in contact with them. Otherwise, if the bonus is large enough, go talk to an Industrial Relations lawyer.

      +1 for unions, often it just takes a letter or phone call to get it sorted.

      "Was the bonus ever properly documented in a signed piece of paperwork or was it only ever discussed via conversation and emails? If nothing was signed, your employer has no contractual obligation to pay up."

      Potentially incorrect. The fact that it is in writing, and coming from that person's email (access controlled), means that it is a legal document, and could be argued an enforcable contract or entitlement of employment.

    Let's face it, sometimes bonuses schemes are just excuses to hold a portion of your salary to ransom. My current employer pays the laziest person at the same rate as me. They will choose not to pay it if the company has a bad year. It is a crock of shit.

    Well this sux. Perhaps you could make the case that you stayed on and helped complete the project based on the bonus. Perhaps you could just offer to undo the project and leave..?

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