Bonuses and Commissions

Bonus and commission entitlements depend heavily on the specific terms in your employment agreement, company policies, and any separate incentive schemes. Unlike regular wages, these payments often come with conditions about performance, timing, and continued employment that can significantly affect your rights.

Contractual bonuses are those specifically promised in your employment agreement or formal company policies. These create stronger legal entitlements than purely discretionary bonuses, though even discretionary schemes must be administered fairly and in good faith. Commission structures typically link payments directly to sales or performance metrics, creating clearer entitlements once the relevant targets are met.

The distinction between earned and unearned bonuses is crucial. If you've already met the performance criteria or completed the work that triggers the bonus, you may have earned it regardless of subsequent events like resignation or dismissal. However, many bonus schemes include clauses requiring you to be employed on the payment date, which can complicate your entitlements.

Understanding whether your bonus or commission is truly discretionary or forms part of your expected remuneration package affects both your legal rights and the strength of any claim. Courts and the Employment Relations Authority will look at factors like regularity of payments, clear criteria, and whether the payments form a significant part of your total compensation.

The most frequent disputes involve employers refusing to pay bonuses to employees who resign before the designated payment date. Many employment agreements include 'clawback' clauses requiring continued employment, but these aren't always enforceable if they're unreasonable or if the bonus relates to work already completed.

Commission disputes often centre on calculation methods, attribution of sales, and changes to commission structures. Employers might dispute which sales qualify for commission, how team sales should be allocated, or whether commission is owed on cancelled or refunded transactions. These disputes can be particularly complex in industries with long sales cycles or team-based selling.

Changes to bonus or commission structures without employee consent represent another major source of conflict. Employers cannot unilaterally reduce commission rates or change bonus criteria in ways that significantly disadvantage employees. Such changes may constitute a breach of employment terms or even constructive dismissal if they substantially reduce earning potential.

Discretionary bonus disputes arise when employees believe they've met performance expectations but employers exercise their discretion not to pay. Even discretionary schemes must be administered reasonably and consistently. If there's evidence of bias, discrimination, or bad faith in bonus decisions, employees may have grounds for challenge.

Performance-based disputes involve disagreements about whether targets have been met, how performance should be measured, or whether external factors should excuse non-achievement of targets. These cases often require detailed analysis of performance data and the reasonableness of the targets set.

The specific wording in your employment agreement and any separate commission or bonus policies will largely determine your entitlements. These documents should clearly specify how bonuses are calculated, when they're paid, and what conditions must be met for payment.

Key terms to examine include the calculation methodology, performance criteria, payment timing, and any conditions about continued employment. Vague or ambiguous terms will generally be interpreted in favour of the employee, particularly if the employer drafted the agreement.

Commission policies should specify which sales qualify, how attribution works in team environments, and what happens with cancelled or disputed transactions. If policies are changed, employers must follow proper consultation processes and cannot apply changes retrospectively to disadvantage employees.

Many agreements include clauses about pro-rata payments for partial periods, treatment of bonuses during notice periods, and what happens if employment ends before payment dates. These clauses must be reasonable and cannot be used to unfairly deprive employees of earned entitlements.

If your employment agreement lacks clear bonus or commission terms, or if company practices differ from written policies, the actual practice may create contractual entitlements. Consistent payment patterns and clear communications about entitlements can establish contractual rights even without formal documentation.

Accurately calculating unpaid bonuses and commissions requires careful analysis of your employment terms, performance data, and payment history. Start by gathering all relevant documentation including employment agreements, commission policies, sales records, and previous payment statements.

For commission disputes, create a detailed record of all qualifying sales or activities, including dates, amounts, and any relevant performance metrics. Compare this against payments received to identify discrepancies. If commission rates have changed, ensure you're applying the correct rates for each period.

Bonus calculations may involve complex performance criteria, team achievements, or company-wide results. Document your individual performance against stated criteria and gather evidence of any achievements that should trigger bonus payments. If bonuses are discretionary, research payment patterns to other employees in similar roles.

Consider whether you're entitled to interest on unpaid amounts, as employment debts may attract penalty interest under employment legislation. Also factor in any tax implications, as bonus and commission payments are typically subject to PAYE and may affect your tax position.

For complex calculations involving multiple commission streams, team allocations, or performance adjustments, you may need professional assistance to ensure accuracy. Incorrect calculations can weaken your position in negotiations or formal proceedings.

Strong documentation is essential for successful bonus and commission claims. Start by securing copies of your employment agreement, any commission or bonus policies, and all communications about payment entitlements. These form the foundation of your legal rights.

Maintain detailed records of your performance, including sales figures, client interactions, project completions, or other relevant metrics. Email confirmations of deals, client testimonials, and performance reviews can all support your claim to bonus payments.

Document any changes to bonus or commission structures, including when they were announced, whether you were consulted, and how they affect your earnings. Keep records of company communications about bonus pools, performance targets, and payment schedules.

If you're disputing discretionary bonus decisions, gather evidence of payments to comparable employees, company financial performance, and any communications suggesting you met performance expectations. Inconsistent treatment compared to colleagues can support claims of unfair exercise of discretion.

For commission disputes, maintain comprehensive sales records including client contracts, deal progression, and any factors affecting commission entitlement. If working in teams, document your specific contributions to shared sales or projects.

Screenshots of company systems, email trails, and witness statements from colleagues can provide crucial supporting evidence. However, be careful about confidentiality obligations when gathering evidence from company systems or colleagues.

Begin by raising the issue formally with your employer through their internal processes. Many bonus and commission disputes can be resolved through direct discussion, particularly if there's been a genuine misunderstanding about entitlements or calculation methods.

Present your case clearly with supporting documentation, including your calculation of amounts owed and reference to relevant employment terms. Be specific about which payments you believe are outstanding and why you're entitled to them.

If internal processes don't resolve the dispute, you may need to raise a personal grievance for unjustified disadvantage or breach of employment terms. This must be done within 90 days of the issue arising, though the timing can be complex with ongoing payment disputes.

Consider whether mediation might help resolve the dispute without formal proceedings. Many bonus and commission disputes involve factual disagreements that can be resolved through assisted negotiation.

Document all communications with your employer about the dispute, including their responses and any offers of settlement. This creates a clear record of attempts to resolve the matter and your employer's position.

Be prepared for your employer to dispute your calculations or interpretation of employment terms. Having professional legal advice can help you assess the strength of your position and the best strategy for pursuing your claim.

Successful bonus and commission claims can result in payment of the outstanding amounts plus interest and potentially compensation for additional losses. The Employment Relations Authority and Employment Court have broad powers to order payment of unpaid wages and other employment debts.

If your employer has unilaterally changed commission structures or bonus arrangements, you may be entitled to compensation for lost earnings or, in serious cases, damages for constructive dismissal. The remedy will depend on the extent of the disadvantage and whether you've suffered ongoing losses.

Interest on unpaid amounts may be awarded from the date payment was due, and in some cases, penalty interest may apply for employment debt. This can significantly increase the total amount recoverable, particularly for large commission or bonus amounts.

If the dispute involves discrimination or bad faith in bonus decisions, additional compensation may be available for humiliation, loss of dignity, and injury to feelings. These awards recognise the personal impact of unfair treatment beyond just the financial loss.

Settlement negotiations often result in payment of a portion of claimed amounts plus agreement on future payment terms. This can provide faster resolution than formal proceedings, though you should carefully consider whether settlement offers adequately compensate for your losses.

Successful claimants may also recover legal costs, though this depends on the circumstances and the forum where the case is heard. The prospect of costs liability can influence settlement negotiations and your employer's willingness to resolve disputes early.

Seek legal advice early if your bonus or commission dispute involves significant amounts, complex calculation methods, or if your employer is refusing to engage with your concerns. Early advice can help you understand your rights and the strength of your position before taking formal action.

Legal assistance is particularly important if your employer has changed commission structures without consultation, as this may constitute constructive dismissal or breach of employment terms. These cases often involve complex legal analysis of contractual rights and employment obligations.

If you're facing time pressure due to the 90-day limit for personal grievances, get legal advice immediately. Missing this deadline can severely limit your options for recovery, though extensions may be possible in exceptional circumstances.

Complex commission structures involving team sales, multiple products, or performance adjustments often require professional analysis to ensure accurate calculations. Legal advisers can help you present your case effectively and counter any disputes about calculation methods.

Consider legal help if your employer is claiming bonuses or commissions are purely discretionary when you believe you have contractual entitlements. These cases often turn on detailed analysis of employment terms and company practices.

If settlement negotiations aren't progressing or your employer is making unreasonable offers, legal representation can help you assess whether formal proceedings are worthwhile and guide you through the process effectively.