Key point: employer was not allowed to unilaterally change the bonus scheme.
District Court Midden-Nederland (Utrecht location), 13 December 2023, ECLI:NL:RBMNE:2023:6876
A ruling from November 2023 by the Utrecht subdistrict court illustrates the possible unwanted consequences of unilaterally changing bonus schemes, and the value of clear communication and consistency in the workplace.
Background
The employment contract between the employee and employer contained a clause on the bonus scheme, reading: “The employee is eligible for an annual bonus, depending on predetermined targets. The employee will be informed of the details individually by letter.” In January 2021, the employee was informed of that year’s bonus scheme. On 8 April 2021, however, the employer presented the employee with an amended bonus scheme for 2021. The employee disagreed with the amended scheme, since it would result in a lower bonus payout for her. In October 2021, she left the company. The subdistrict court subsequently ruled that the employer had not been entitled to unilaterally amend the bonus scheme. The original bonus scheme from January 2021 remained in force for that year.
For the full ruling, click here (in Dutch).
Bonus schemes
A bonus scheme sets out whether, and when, an employee is entitled to a bonus. An employer is free to determine the conditions for payment and the amount of the bonus. An employer is, however, legally required to act as a “good employer”.
The conditions or targets an employer attaches to a bonus must be spelled out concretely. From the outset, the employee must be clear on exactly which targets need to be met to become entitled to a bonus.
In addition, as this ruling also shows, an employer may not simply change a bonus scheme at will. Employees must be able to rely on the scheme agreed with them.
Still want to make a change?
It is essential to handle bonus schemes in employment contracts with care. Conditions should be agreed clearly and concretely in advance. Communicate any changes in good time and transparently to employees. Maintain consistency and respect the original agreements as far as possible.
Do you have questions about changing your bonus scheme? We are happy to help. Please feel free to contact one of our employment lawyers.
