Employee’s PG claim fails after contractual misunderstanding…

An employee resigned after his employer failed to pay him a loyalty bonus of $10,000. The loyalty bonus was written into the employee’s employment agreement and the terms of an offer letter. The employee was told by one of the employer’s staff that the loyalty bonus was an ongoing annual payment and was not one-off.

The Employment Relations Authority dismissed the employee’s personal grievance claim for unjustified disadvantage and unjustified constructive dismissal.

The ERA held that the employee had no entitlement to be paid an annual loyalty bonus. The ERA found that the employer intended the loyalty bonus to be a one-off payment, and that the clause clearly conveyed that the bonus was one-off.

The ERA noted that the communication to the employee that the bonus would be paid annually was an honest mistake made by one of the employer’s staff.

The ERA thus held that while the employee may have been disadvantaged by not receiving an annual loyalty bonus, the actions of the employer in not making the annual payment was not unjustified.

This case demonstrates how important it is for employees to ensure that they understand the terms of their employment agreements so that they avoid any misunderstandings as to their contractual rights and obligations.

Alan Knowsley

Employment Lawyer Wellington