Does an employer have to pay a bonus to a former employee? When yes and when no? We will explain this in a short article.
Bonus Payment to a Discharged Employee?
Practical Example
Example from practice: A former employee sued her former employer. She was demanding a bonus payment that other employees received (and she did not). The plaintiff worked for the employer from 2020 to 31 December 2021. In March 2022, the employer made a decision to pay its employees an extraordinary reward for good economic results achieved in 2021 (bonus for contribution to profit 2021). The bonus was also supposed to act as a motivation for existing employees for the next period. However, as one of the conditions for the bonus, he stipulated the duration of the employment relationship as of 5/31/2022.
The former employee objected that even the extraordinary bonus is a wage for work performed. The payment of wages for work cannot be conditioned on whether the employee remains in the employment relationship until a certain future date. Therefore, if she did not receive a bonus, the employer breached its duty to ensure equal treatment of all employees when remunerating for work. She therefore requested damages in the amount of the bonus and interest for the delay.
However, the Czech Supreme Court ruled in favour of the employer. It held that the former employee was not in the same position as other employees.
1) At the time of the decision on the employee's bonus, she was no longer employed by the employer.
2) The bonus was awarded to existing employees (among other things) as an incentive for the next period. While the salary is indeed a reward for work already done, a bonus over and above the guaranteed salary may also have a future incentive function - even for existing employees only.
3) However, if the employer were to award a bonus to another employee who has already been dismissed, the situation would be different: the employer would be engaging in unequal remuneration.
Conclusion
It often happens that the employer pays employees an extraordinary remuneration. Just before the bonus is paid, an employee is dismissed. The important thing is whether:
Employers must ensure equal treatment when rewarding their employees for their work. This is the principle of equal pay. However, equal treatment must be ensured for employees in the same or comparable position (situation).
This case highlights how important it is for employers to clearly define the conditions for the payment of extraordinary bonuses.
From the employee side, it appears that it makes sense to address the conditions for bonus payments - and to keep them in mind when planning career changes.
We are specialists in employment law. If you need advice, please do not hesitate to contact us.
