Now that the ‘-ber’ months is coming, we usually think of bonus, among other things. And when we talk of bonus; the issue of whether the same is discretionary or non-discretionary will come into picture.
Determining whether your bonus is discretionary or not, is important. The legal implication with each kind varies.
Discretionary bonus, as a rule, can be withheld from the employee provided it is done in good faith. Non-discretionary bonus, again as a general rule, cannot be withheld.
Issues branch out when we speak of discretionary bonus. Questions arise like have the employers all the power to withdraw discretionary bonus because in the first place, it is that – discretionary?
Can the employer exercise discretion in not paying discretionary bonus?
In both instances, the employer cannot. As mentioned, the exercise of discretion to withhold the bonus must be made in good faith. It must not be withdrawn from the employee capriciously or irrationally.
The discretion to mean at employer’s will and want is not absolute after all. An employer must always be fair and just in his dealings with his employees. His rights, though clearly his, must be exercised in good faith and in reasonable grounds.
Lack or absence of good faith and reasonable ground would constitute a cause of action against the employer by the employee. For those who have been unfairly treated and denied discretionary bonus, it is imperative to speak with a labor or employment attorney right away and stand for your right.
Determining whether your bonus is discretionary or not, is important. The legal implication with each kind varies.
Discretionary bonus, as a rule, can be withheld from the employee provided it is done in good faith. Non-discretionary bonus, again as a general rule, cannot be withheld.
Issues branch out when we speak of discretionary bonus. Questions arise like have the employers all the power to withdraw discretionary bonus because in the first place, it is that – discretionary?
Can the employer exercise discretion in not paying discretionary bonus?
In both instances, the employer cannot. As mentioned, the exercise of discretion to withhold the bonus must be made in good faith. It must not be withdrawn from the employee capriciously or irrationally.
The discretion to mean at employer’s will and want is not absolute after all. An employer must always be fair and just in his dealings with his employees. His rights, though clearly his, must be exercised in good faith and in reasonable grounds.
Lack or absence of good faith and reasonable ground would constitute a cause of action against the employer by the employee. For those who have been unfairly treated and denied discretionary bonus, it is imperative to speak with a labor or employment attorney right away and stand for your right.
