Is it unlawful for an employer to deduct a bonus he doesn't owe to an employee?[Thanks to Simon Oakes of Outer Temple Chambers for providing this case summary]
Is it unlawful for an employer to deduct a bonus he doesn't owe to an employee? No (rather obviously), said the EAT in Hellewell v AXA Services .
Before even beginning to consider whether deductions from employees' wages are authorised by statute, or contractually agreed by the parties (ss.13(1) and (2) Employment Rights Act 1996), Tribunals will first have to decide whether the claimant had a legal entitlement to such a payment.
In this case, the claimant employees argued that their employers were contractually obliged to give them bonus payments. The EAT disagreed, because of the wording of the contractual provisions on which the employees tried to rely. First, the relevant provision did not oblige the employers to pay a bonus, but rather provided for the conditions to be met before an employee would be considered for a bonus. Secondly, the contract relieved the employers of any obligation to pay bonuses where, as was the case here, employees had committed gross misconduct.
So, if an employer doesn't have to pay, well, an employer doesn't have to pay.