A contract that allows for a discretionary bonus can be varied so the employee becomes contractually entitled to that bonus, the Employment Appeal Tribunal (EAT) has ruled in the case of Bluestones Medical Recruitment Ltd v Swinnerton.
However, a claim on that basis cannot succeed unless the tribunal reaches clear findings on how that variation occurred.
Swinnerton brought the case having worked for Bluestones in various jobs before becoming general manager. In his previous roles, his contract allowed for discretionary bonuses. When he became general manager, the intention was for him to be paid a monthly bonus, based on the company's profits, and for him to become a shareholder. The bonus payments were made as loans, which he would later repay from his dividends.
However, before becoming a shareholder, Swinnerton was suspended and subsequently dismissed. During his suspension, Bluestones ceased paying the bonuses, which the Employment Tribunal deemed to be an unlawful deduction of wages.
The EAT found the tribunal hadn't adequately identified the legal mechanism through which the contract was changed or what the new contract required. This meant there was no proper conclusion on whether the payments should be classified as loans and therefore not considered deductions from wages. The case has remitted to a fresh tribunal.
