Paralegal who resigned was entitled to £14,000 bonus, tribunal rules

7 Sep 2017 By PM Editorial

Judge finds employer could not unilaterally change pay agreement

A paralegal who handed in his notice before receiving his bonus was entitled to the five-figure payout, a tribunal has decided.

Watford Employment Tribunal heard that Cemal Yucetas started working part time for Ersan & Co Solicitors, a north London-based law firm specialising in personal injury matters, in April 2014.

Yucetas told the tribunal, which accepted his evidence, that it was agreed at the start of his employment that he would be entitled to a 5 per cent bonus of the amount by which his ‘profit costs’ exceeded six times his ‘gross income’ between May 2014 and April 2015, which would be paid as a lump sum as soon after the financial year as possible.

At some point in May 2015, the firm’s paralegals were called to a meeting with the managing director to discuss several matters, including bonus arrangements. According to one of Yucetas’s witnesses, it was agreed at the meeting that the bonus amount for May 2015 to April 2016 should be increased to 10 per cent, and the profit costs target multiplier should be reduced from six to five. A witness also said that at no point during the meeting was it decided that an employee would be ineligible for the bonus if they were on their notice.

After the meeting, the company sent around a template contract, which stated bonuses would be paid in instalments and an employee would be ineligible if they were on notice. Yucetas refused to sign the contract as he felt it did not accurately reflect what had been agreed at the meeting. Nobody at the firm chased him to sign it.

Yucetas handed in his notice on 29 April 2016. In his resignation email, he said he could stay for a week should the firm wish, otherwise he would make that day his last. The company’s management agreed that he could leave as soon as he had finished creating a list of all his files.

When Yucetas later emailed about bonus pay, he was told he had not been employed at the right time of the financial year to be eligible. Yucetas also claimed the firm had not paid him his last week’s salary.

Allowing the claim, Judge Wyeth noted that the company could not unilaterally alter what was agreed at the meeting by issuing the draft contract with different terms.

The legal firm was ordered to pay £13,830.50 to cover the unpaid bonus, along with £290 for one week’s worth of unpaid wages and £390 to reimburse the paralegal for the tribunal fees paid.

“Should an employer want to vary a contract it should always seek to do so with a written and signed variation,” Barry Stanton, head of employment law at Boyes Turner, told People Management. “Even then it needs to ensure that there has been some practical and real consideration (money or something of value to the employee such as additional holiday, benefits etc) given to the employee to ensure that the variation has contractual effect. Simply continuing employment will not be sufficient.”

Keely Rushmore, senior associate at SA Law, added that, ideally, all contractual terms should be agreed in writing before the start of employment. “Despite this, it’s not uncommon for an employer to promise a bonus scheme with precise details ‘to follow’,” she said. “If this can’t be avoided, it’s advisable that at least any outline terms (such as a bonus not being payable if the employee is serving notice at the payment date) are set out in the employment contract and so are clear from the outset.”

A spokesperson for Ersan & Co Solicitors said: “The original contract of employment was prepared by professional advisers. The firm was represented by a specialist law firm and followed their advice to contest the matter at a hearing. We were disappointed by the tribunal decision and we have made a formal complaint about the advice given to us.”

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