An email agreement on the application of the bonus structure gave rise to an interpretation that the claimant was not entitled to a bonus for the AstraZeneca contract.

The claimant commenced employment with the respondent in April 2021 and ended in August 2024.  The remuneration package included a basic salary plus an opportunity to earn performance bonuses known as the ‘Incentive Compensation Plan’. This plan had been updated in 2023 and signed by the claimant.

The respondent stated that the Updated Plan provided for the calendar year and that the bonus opportunity was related to the quarterly total contract value delivered against set targets with a yearly bonus related to the actual contract value, if attained. Payments were made on the basis of 50% on signing eligible contracts and 50% on delivery/invoicing of the contracted work.

The issue for the claimant was that he had one account, AstraZeneca.  Due to its nature it was set out as an Enterprise Deal contribution and the argument was that any quarterly target was in addition to and not inclusive of the Enterprise Deal contribution. The claimant contended that he was owed additional bonus in respect of the Enterprise Deal stating that he should achieve the ‘TCV milestone’ as it exceeded $10 million. However, the respondent argued that this would amount to double counting.   The email correspondence between the claimant and respondent clearly stated that there was a decision to lower the quarterly target for the claimant as the AstraZeneca contract was a ‘big deal’ and it would mean that there would be less space for the claimant in terms of overall sales capacity beyond that.  The claimant clarified a number of matters around this and then agreed it. As a result, the claimant claimed for unlawful deduction from wages arising from the issues with the bonus.

The Tribunal acknowledged that this case focused on a quite complicated bonus structure within the respondent and that it came down to the contractual interpretation of the claimant’s contract and related documents to the bonus structure.  The Tribunal acknowledged that in employment cases the parties do not intend the whole bargain to be contained purely in one specified document. There will be oral exchanges, letters and other communication which feeds into determining the correct contractual interpretation.  The claimant argued that there was nothing in the contractual document to support the respondent’s interpretation but the email correspondence and agreement was in line with the respondent’s view. Taking this into account it demonstrated that there was agreement in relation to the respondent’s interpretation of the application of the bonus structure. As a result, the case was dismissed.

This case involved a fairly complex bonus structure within the respondent.  When it comes to any complex contractual arrangement the most important aspect is ensuring that there is absolute clarity between the employee and employer in terms of its operation.  This was attempted by the respondent with the email exchange but still led to the Tribunal action.  However, the respondent was able to firmly put focus their argument on that email exchange and agreement and ultimately led to them being successful.  Therefore, if there is a doubt in relation to some aspect of a contractual right or obligation it is best to try and deal with it locally with an agreement with the employee(s).

NI Tribunal decisions are available on the OITFET website.