Bonus payment

If a bonus scheme is genuinely discretionary then how it operates will to some extent be down to management. However, often management will claim that a bonus scheme is discretionary when in fact it is not.

The points to consider in establishing what the position is include — of course — what the written terms say. Is there a bonus policy and does it state that the bonus is discretionary or non-contractual? And what does it state in your contract?

Just because a bonus is labelled as being discretionary doesn’t meant that it can’t in fact have become non-discretionary.

Has the bonus always been paid, and paid automatically (such as to be an expectation), uninterrupted year after year without reference to any of the criteria or exercise of discretion that the written policy sets out?

Even where a policy is found to be discretionary, it is not necessarily the case that the employer can decide how to operate the bonus scheme without reference to any process at all.

It may well be under an obligation not to act perversely or irrationally in the exercise of its discretion.