REWARDING TALENT AND INCENTIVISING FINANCIAL SERVICES EMPLOYEES
The word “bonus” has become a dirty word in some circles. But what is wrong with rewarding success?
There are often disputes over whether to pay bonuses and how much to pay. This is when unfortunate media headlines are made and employers and employees fall out. Often this is because bonus and incentive schemes are poorly drafted or because other documents (including contracts of employment) referring to bonuses don't reflect what the employer intended or the employee expected.
Commonly the problem is that even if participation in a bonus scheme is referred to as being “discretionary” this will not usually be enough to enable employers to decide what and when to pay out. Often employers find that they have restrained their discretion by referring to certain issues which they will take into account in deciding on bonus so precluding them at law from taking into account other factors which are not provided for. In addition many employer schemes may not include sufficient discretion as regards the actual amount of any bonus, and various customs and practices over time may also raise expectations beyond that which employers intend. Redundancy and termination of employment also give rise to problems and employers and employees are urged to get a legal health check on their bonus paperwork.
Perhaps its time for share option schemes to be revisited. Whilst these have had a bad press during the recession with many employees finding that there is no value in their current option entitlements, looking to the future new schemes should enable talent and effort to be rewarded now at little immediate cost to a business with the potential for employees to justifiably benefit from the hoped longer term improved performance of the financial services sector.
For more information or to discuss any employment, reward, incentive or contractual issues please contact Jeanette Wheeler, Partner and Head of Employment at Birketts’ Norwich office on jeanette-wheeler@birketts.co.uk or 01603 756427.
For more information please visit http://www.birketts.co.uk/services/services-to-business-and-industry/corporate-services/employment.aspx
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