× Hello, this site is currently undergoing improvements. We apologise for any inconvenience.

If an employee has not had any KPIs set by his manager, is he entitled to the bonus?

Posted in : Seamus Says - Employment Law Discussion on 6 July 2018
Seamus McGranaghan
O'Reilly Stewart Solicitors

Q. We have employees who are contractually entitled to a bonus based on the achievement of KPIs." That's key performance indicators. "If an employee has not had any KPIs set by his manager, what is he entitled to in terms of a bonus payment, if anything?"

Seamus: This is a situation that I would come across from and time to time. As was the case, only here is that we're reading in the question that there is a, like a contractual entitlement to this bonus. And it's based, obviously, on the key performance indicators. There's something that has gone awry here in the sense that the employee hasn't been provided with the KPIs, and the likelihood is then that the employee is going to have an expectation for a bonus. But how then do we work through that process in terms of assessment of what the bonus will be?

The key thing is go back to the contract and look at the contract, look at what the terms of the contract are. If the contract does provide for the employee to have a KPI, and that's why the bonus is set out, it's formulated, then there will be a problem here for the employer, and certainly the employee would be coming and saying, "Maybe my colleagues have got bonuses. They were set a KPI and I wasn't. I'm at a disadvantage and at a detriment here compared to my colleagues.

So there would be that aspect of if the colleagues have been provided with KPIs and that employee hadn't.

Scott: You could almost say that the issue could be the manager hasn't done their job, if it, indeed, it's the manager who hasn't set the targets in this particular instance, and therefore there's nothing for the employee to hit.

Seamus: Yes. There's a feeling there in terms of that, and that would need to be addressed, as to why that has happened. It might be one that had slipped through the net or it could be more of a larger issue in terms of the manager issue with the employee.

But it's important, even if there was, perhaps, underperformance with the employee, that there has to be some sort of indicator there of how the employee is performing in order to assess that and to be fair to the employee and able to say to the employee, "Here's the improvement that we require."

But my view would be that just in the circumstances of this one, that it's likely that if there was no bonus pay because the company was saying, "Well, there was no KPI there, sorry, we can't pay a bonus," that the employee's going to have a problem with that. You're probably going to end up in a grievance procedure. Or worse than that, it could end up at some sort of equal pay claim or something along those lines.

So in the circumstances where maybe that's, say we take a situation where this has genuinely been forgotten about and there's just been, it's just been missed, it would be important, I think, to carry out a review of the employee's performance and maybe apply a comparative process as to what has been applied to colleagues.

And it may be, perhaps in various settings, everybody is on the same target and everybody knows what the KPI is. It could be on a department basis and other types of employment, whereby there are different indicators. So it's about looking at something that would be fair and reasonable but yet comparative in terms of other employees. I think that would be the way that the employer would need to handle that one.

 

This article is correct at 06/07/2018
Disclaimer:

The information in this article is provided as part of Legal-Island's Employment Law Hub. We regret we are not able to respond to requests for specific legal or HR queries and recommend that professional advice is obtained before relying on information supplied anywhere within this article.

Seamus McGranaghan
O'Reilly Stewart Solicitors

The main content of this article was provided by Seamus McGranaghan. Contact telephone number is 028 9032 1000 or email seamus.mcgranaghan@oreillystewart.com

View all articles by Seamus McGranaghan