Western Australian Industrial Relations Commission

Employee unsuccessful in establishing entitlement to bonus payments

The Commission has dismissed a sales manager’s claim for denied contractual entitlements in the sum of $221,081.44. The employee maintained it was an oral term of his employment contract that the company would sponsor him to work in Australia and pay the costs associated with obtaining permanent residency. The employer accepted it agreed to pay the costs associated with the transfer of the employee’s Temporary Business Visa, but did not agree to pay for his permanent residency costs.

The Senior Commissioner found that in the employee’s mind, any “sponsorship” of him in relation to his permanent residency necessarily meant the employer paying all of the costs associated with it. However, there was no direct evidence of an agreement to this effect, or that that was what the employer had in mind too. The Commission was not persuaded that it was a term of the employee’s contract of employment that the employer was responsible for all of his permanent residency costs.

The employee also maintained he was entitled to a bonus payment for the 2012, 2013 and 2014 financial years. In relation to the 2012 financial year, the employee claimed his contract was varied to incorporate the terms of an email from the Sales Director in relation to bonuses. The respondent submitted the bonus scheme was not included as a term of the contract, and was not accompanied by any form of consideration. In any event, it claimed the distribution of the bonus was subject to agreement between the Sales Director and/or Managing Director. It reserved to itself a discretion, which it exercised having regard to the overall health and profitability of the business. The Commission found there was no evidence that a distribution was agreed between the Sales Director and/or Managing Director. Accordingly, it was not persuaded that the employee had established an entitlement under the 2012 scheme.

In relation to the 2013 financial year, the employee maintained he specifically requested the inclusion of a bonus scheme in his new contract in May 2012. He submitted that in the absence of a new structure being agreed, the parties were bound by the 2012 bonus scheme. The employer submitted that in exercising its discretion, it decided not to make any bonus payments in the 2013 financial year. The Commission found there was no basis to conclude that the terms of the 2012 bonus scheme would simply carry over into the new contract of employment. It was not persuaded that the implication of the 2012 scheme would be necessary or reasonable for the effective operation of the contract for the employee’s new position. It noted that if the terms of the 2012 scheme could be said to have applied, its terms were not met in order to trigger any bonus payment entitlement.

The employee maintained a new scheme was introduced in the 2014 financial year, with the “trigger” points being the achievement of overall group budget, and the achievement of individual branch budgets. The employee submitted the Sales Director later varied the bonus scheme, such that the failure by the Victorian branch to reach its gross profit target would not be fatal to an entitlement to be paid a bonus. The respondent denied any such variation, and submitted the entitlement would not be triggered unless all of its areas of operation and branches in Victoria, Queensland and WA achieved their gross profit budget both individually and collectively. The Commission was not persuaded that the scheme was varied as contended. It found the requirements of the bonus scheme were crystal clear, and was not persuaded the employee established an entitlement to be paid a bonus.

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