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Old 08.10.2019, 20:41
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Can employers withhold bonus payments from staff?

A quick background on my situation: I have been in the workforce for ten years and with my current employer for almost two years now. As part of my package with my current employer, I am eligible for a 15% performance bonus.

I met all agreed targets for 2018, but didn't receive a bonus in January 2019. When I asked my supervisor why I did not receive it, he told me that the company hadn't met the growth targets and that the payment of bonuses would be delayed indefinitely.

From what I have read, Swiss companies have the ability to withhold bonus payments from employees. However, my bonus is part of my contract: it specifically states that I am entitled to one, but the amount is based on both company and personal performance. Can the company really deny me the bonus payment in this case?

I guess I cannot quit my job yet. My understanding is that I would be heavily penalised or even not getting any "chômage" at all.

Thank you for the help.
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Old 08.10.2019, 22:41
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Re: Can employers withhold bonus payments from staff?

Welcome to the Forum.

From your own words - although you met your personal goals, the company didn't meet its targets. Therefore no bonus at this time. That's fairly common from what I understand.
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Old 08.10.2019, 22:43
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Re: Can employers withhold bonus payments from staff?

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As part of my package with my current employer, I am eligible for a 15% performance bonus.
Eligible does not mean that you get one.

Tom

Last edited by st2lemans; 09.10.2019 at 07:20.
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Old 08.10.2019, 23:00
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Re: Can employers withhold bonus payments from staff?

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A quick background on my situation: I have been in the workforce for ten years and with my current employer for almost two years now. As part of my package with my current employer, I am eligible for a 15% performance bonus.

I met all agreed targets for 2018, but didn't receive a bonus in January 2019. When I asked my supervisor why I did not receive it, he told me that the company hadn't met the growth targets and that the payment of bonuses would be delayed indefinitely.

From what I have read, Swiss companies have the ability to withhold bonus payments from employees. However, my bonus is part of my contract: it specifically states that I am entitled to one, but the amount is based on both company and personal performance. Can the company really deny me the bonus payment in this case?

I guess I cannot quit my job yet. My understanding is that I would be heavily penalised or even not getting any "chômage" at all.

Thank you for the help.
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Old 08.10.2019, 23:11
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Re: Can employers withhold bonus payments from staff?

Why the groan Tom?
It’s not evident to everybody how a work contract can be interpreted here.
His question is legit don’t you think?

Welcome OP, sorry to read your predicament.
Hope the loss of your bonus is not substantial part needed for your cost of living.
Maybe you can have a meeting and ask if they know when things will stabilize.
Yes you would be penalized if you left yourself.
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Old 08.10.2019, 23:37
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Re: Can employers withhold bonus payments from staff?

Hey, thanks for the answers!

To remove any doubt my contract states the following:

The Bonus will be based on the following terms:

* 5 % of Gross Salary based on Company performance during 2018 (X)

* 10 % of Gross Salary based on the employee’s individual performance during 2018 (Y)

Hence, I am obviously not entitled to a bonus no matter what, but I was expecting to receive a certain amount (anything from 0 to 15 % of gross salary) based on criteria X and Y. As the company didn't meet its target, it is clear to me that X equals 0. But I am having a hard time figuring out how Y is also zero in this particular case.

Oh well, c’est la vie.

Thanks again!
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Old 08.10.2019, 23:53
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Re: Can employers withhold bonus payments from staff?

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But I am having a hard time figuring out how Y is also zero in this particular case.
Y is zero because there is no money in the bonus pot.

The two conditions are linked. First the company must be profitable enough that there is money available for bonus payments. The company not making it's goals means that management cannot (or is not allowed to) allocate any money into a bonus pool. No X also means no Y. Individual performance can only be rewarded when there is money to do so.
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Old 09.10.2019, 03:14
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Re: Can employers withhold bonus payments from staff?

I'm sorry for your disappointment.

As a general principle in life (though there may be exceptions), do not resign from any job unless you have another signed contract for the next job. This, the more so, if your permit to be in the country (or anyone whom you may be financially supporting) depends upon your having a job.

Being unemployed and on "chommage" is a lot of hard work. They have many, many requirements for you to prove how much you are looking for a job. See the many threads under "unemployment" or the German term "RAV" on this forum. It is a certain form of safety net, that's true, and quite a good one, for a while, but not a stress to be recommended if you can avoid it.

Much better, if you are unhappy at work, to quietly and discretely have a look for another job while you are still getting a salary each month. In the meantime, keep your relationship with your management good. As far as you can manage to do so, now that you've understood about the value of X and Y, say simply that you're hoping for better company performance next year.
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Old 09.10.2019, 07:38
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Re: Can employers withhold bonus payments from staff?

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Y is zero because there is no money in the bonus pot.

The two conditions are linked. First the company must be profitable enough that there is money available for bonus payments. The company not making it's goals means that management cannot (or is not allowed to) allocate any money into a bonus pool. No X also means no Y. Individual performance can only be rewarded when there is money to do so.
I don't agree. The company will have accrued money to pay the bonus. If Y is part of the labor contract, then the employee would be entitled regardless the company results (assuming the employer has acknowledged the performance rating of the employee).

Problem is that if you would fight this, you'll probably be out sooner or later. Question is then if you want to continue working for the employer but also question yourself if the company has really performed that bad that it would need to take such measures.
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Old 09.10.2019, 09:08
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Re: Can employers withhold bonus payments from staff?

Very often there is a clause in the contract that a bonus can be paid, but not that it is something you are entitled to. The company can decide not to pay (legally).
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Old 09.10.2019, 13:02
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Re: Can employers withhold bonus payments from staff?

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Y is zero because there is no money in the bonus pot.

The two conditions are linked. First the company must be profitable enough that there is money available for bonus payments. The company not making it's goals means that management cannot (or is not allowed to) allocate any money into a bonus pool. No X also means no Y. Individual performance can only be rewarded when there is money to do so.
There is literally no reason to say that the conditions are linked from what he mentioned. If the contract states exactly what OP mentioned, the 5% is separated from the 10%.

The two questions which remain are:
  • Is there a clause somewhere else in the contract (i.e. "at the discretion of the company", "there should be no expectation of a bonus") that supersedes the bonus structure which OP mentioned
  • What exactly does the "employees individual performance in 2018" mean, and how is it quantified? Do you know for a fact that the weighting on this indicator alone is non-zero?

A labor contract between an employee and an employer is no different than between a company and its suppliersL: it's governed by terms, conditions and clauses. If there is "no money left over" because of the poor performance of the company, but the employee truly is entitled to a bonus compensation (if the contract deems it so), the company would/should need to raise debt to pay this off, just as it would to pay off a shipment of goods or any other services rendered. It's just a liability which would sit on their books.

Depending on your own personal circumstances, the size, attitude, culture of the company, I would definitely bring this up for clarification, if nothing else. I would not accept some off-handed explanation about how "there is no money kthxcya".
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Old 09.10.2019, 13:57
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Re: Can employers withhold bonus payments from staff?

I'm not in a position to say what is and is not legal. I'm no employment lawyer. But my feeling is that something is strange about the situation the Op describes.

I have known of people being fired for professional misconduct and gross incometence and still getting their bonuses. I have known of companies teetering on the brink of failure and still shelling out bonuses. The justification is always that the contract says they have to.
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Old 09.10.2019, 14:34
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Re: Can employers withhold bonus payments from staff?

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Y is zero because there is no money in the bonus pot.
If Y is zero because there is no money which could be paid out than the company seems to be bankrupt as it no longer can fulfill its contractual obligations.

https://www.kmu.admin.ch/kmu/en/home...creditors.html
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Old 09.10.2019, 15:31
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Re: Can employers withhold bonus payments from staff?

Thanks you very much for your help! I shall attempt to address all the questions that have been asked

* Is there a clause somewhere else in the contract (i.e. "at the discretion of the company", "there should be no expectation of a bonus") that supersedes the bonus structure which OP mentioned

There is no such clause in the contract. It states exactly what I mentioned, that the 2018 bonus would be paid by the end of January 2019 and that withholdings corresponding to taxes, pension plan, etc. would be deducted from the payment as I am holding a B permit.

* What exactly does the "employees individual performance in 2018" mean, and how is it quantified? Do you know for a fact that the weighting on this indicator alone is non-zero?

It is based on my performance during 2018 versus the targets agreed with my supervisor during Q1 2018. These defined targets, and many others established later, were largely met.

My supervisor initially told me that the company had poor fourth quarter results and that bonus payments would be delayed. But I don’t think there’s a single sign that the company is about to go bankrupt. They actually hired temp assistants and interns in the first quarter of 2019…

Thank you for giving me advice about how to handle the situation. I will definitely bring this up for clarification again.
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Old 09.10.2019, 15:39
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Re: Can employers withhold bonus payments from staff?

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My supervisor initially told me that the company had poor fourth quarter results and that bonus payments would be delayed. But I don’t think there’s a single sign that the company is about to go bankrupt. They actually hired temp assistants and interns in the first quarter of 2019…
Maybe I missed this earlier, but there is a big difference between delaying a payment and cancelling it.

My own payments have been delayed more than once. If you're worried, talk to HR and ask when you can expect to see the payment.
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Old 09.10.2019, 16:00
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Re: Can employers withhold bonus payments from staff?

Usually these decisions (i.e. whether the company will pay annual bonus or not) are communicated in advance.
Both on company level, in global corporate emails, announcements, floor talks, town halls, etc., and on individual level (managers inform their people).
So by the time the payment would be due, you should be very well aware that you'll get bonus (or not).
There was not a single piece of communication to you (before Jan 2019) that the company did not meet it's financial targets in 2018? You only learnt it when you've asked why you didn't get a bonus payment?
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Old 09.10.2019, 16:06
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Re: Can employers withhold bonus payments from staff?

Yes, henrikh, in large companies that is often the case. But for smaller ones, or those divided up into sections which decide autonomously, perhaps not.
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Old 09.10.2019, 16:48
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Re: Can employers withhold bonus payments from staff?

Many employers sets explicit bonus conditions, or claim their bonus is discretionary, or unable to be paid, and their assertions are frequently legally invalid - although not easy to challenge.

In addition to the employment contract, any legal case would consider the bonus plan rules (if they exist), email / verbal / written communications made about bonus throughout the year, and how bonuses were treated in prior years.
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Old 09.10.2019, 17:00
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Re: Can employers withhold bonus payments from staff?

I did not receive the end-of-year bonus and did not hear anything about it. That's the reason in February I asked my supervisor why I did not receive the 2018 bonus. As I have said from the very beginning, he told me that all bonuses were indefinitely delayed. Since then, I have not received a single piece of communication from HR or the management. Sure, payments can be delayed for various reasons. But we are approaching the year 2020… so there’s a risk such payment could be cancelled and the company didn’t ever bother to tell us. Who knows? Maybe the 2019 bonus is also at stake…
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Old 09.10.2019, 20:07
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Re: Can employers withhold bonus payments from staff?

Delayed implies to me the debt to you is on the books, but they're just not clearing it until they feel they can afford to.
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