Australia: MDC Legal win for employer against large bonus claims

Last Updated: 23 November 2016
Article by Ruth Collins

MDC Legal successfully defended an employer against an employee's claims for unpaid visa expenses and bonuses exceeding $200,000.1 The case highlights the importance for employers of having clear, unambiguous employment contracts and bonus schemes in place. Generally, the employer would be wise to state clearly that it reserves a discretion with respect to bonuses. It highlights the importance of claimants getting proper advice on their claims before embarking on costly litigation.

Background

Mr Bradley was employed Binder Group as their WA Industrial Sales Manager and later as its National Sales Manager.

After resigning, Mr Bradley sued Binder in the WA Industrial Relations Commission (Commission) alleging that he was owed contractual benefits of $8,043 in costs associated with Mr Bradley and his family obtaining permanent residency in Australia and three lots of bonuses totalling $213,038.88 for the three financial years 2011/2012 to 2013/2014.

All of Mr Bradley's claims were rejected by the Commission.

Permanent Residency

The Commission found that Binder had agreed to take over Mr Bradley 457 visa while he qualified for permanent residence, but rejected his claim that it was an oral term of his contract that Binder Group would pay the expenses of his application for permanent residency.

The Commission noted that it was "surprising to say the least" that Mr Bradley did not confirm the alleged agreement with Binder Group in writing given Mr Bradley's assertion that "the payment of costs for his permanent residency was so important to him."

Bonus Payment for the 2011/2012 Financial Year

Mr Bradley argued that he was entitled to a total payment of $121,604.44 for the 2011/2012 financial year under a bonus scheme provided via email. After he made demands during his employment he received a $40,000, given Binder said as a compromise settlement. But Mr Bradley argued that he was entitled to the balance of $81,604.44.

Binder Group said he had no such entitlement, arguing that there was no consideration to support the scheme and that scheme was also void for uncertainty. Finally, Binder argued the bonus scheme was discretionary. Binder Group also argued that the $40,000 payment to Mr Bradley was in full settlement and satisfaction of his bonus claim.

The Commission found for Binder on each of these defences but held here was consideration to support the bonus scheme, in the form or Mr Bradley working to achieve those bonus payments. Further, the Commission said in relation to the payment of $40,000 if Mr Bradley did not accept the payment in full and final settlement of his claim, he was obliged to tell Binder Group that.

Bonus Payment for the 2012/2013 Financial Year

Mr Bradley claimed that he was entitled to a bonus of $98,934.55 for the 2012/2013 financial year in his new position of National Sales Manager. He relied on a clause in his new contract that said a performance bonus would be provided separately. That clause also said it was subject to the Managing Director's discretion. No new scheme was provided. Mr Bradley contended that in the absence of an agreed bonus scheme, the parties were bound by the 2011/2012 bonus scheme.

Binder Group argued that by not implementing a new scheme it had exercised its discretion not to make any bonus payments. Further, Binder Group contended that the scheme was "so uncertain and so dependent on the initiatives and discretion of one party" that it did not create an enforceable obligation.

The Commission agreed with Binder Group that the terms of the previous bonus scheme would not "simply carry over" as an implied term to the new agreement, and that the terms of the bonus scheme were "uncertain, illusory and unenforceable".

Bonus Payment for 2013/2014 Financial Year

Mr Bradley argued that he was entitled to $32,500 under a new bonus scheme for the 2013/2014 financial year. Under that scheme Mr Bradley would receive a bonus if Binder Group achieved its overall budget and if each branch achieved its individual budget.

The national budget was achieved, but the Victorian branch did not make its individual budget.

Mr Bradley argued that the terms of the scheme had been varied by oral agreement to exclude the Victorian branch from the scheme.

The Commission again rejected Mr Bradley's claims that there was an oral variation, and agreed with Binder Group that the terms of the bonus scheme were "clear and unambiguous." Accordingly, the scheme made it "crystal clear" that both overall group targets and branch targets were conditions that needed to be met before a bonus was payable. As the Victorian branch had not met its profit target, the preconditions for Mr Bradley's bonus had not been triggered.

Mr Bradley's case was dismissed.

Footnote

1 Bradley v Binder Group Pty Ltd [2016] WAIRC 00731

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Authors
Ruth Collins
 
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