Compensation policies are a major challenge in human resources, both in terms of attracting and retaining talent. Here are some best practices for creating an effective bonus plan.
A well-designed bonus plan can have a significant impact on employee motivation and retention. However, while many companies make the payment of certain bonuses conditional on the employee being present at the time of payment, this practice, although common, raises certain precautions that should be taken into account. It is therefore strongly recommended that you draft a clear and precise policy, ensuring that you follow the detailed recommendations below.
Do not rely solely on the employer's discretion
The condition relating to the employee's presence cannot rely solely on the employer's discretion. In legal terms, this is referred to as a ‘purely potestative condition’ – i.e. a condition that is fulfilled or not fulfilled solely at the discretion of one party.
The company cannot, for example, reserve the right to freely remove or modify the criteria for granting the bonus without objective justification, or to terminate the contract just before payment to avoid paying it. This type of clause would be considered abusive.
The departure of the employee does not depend exclusively on the employer's will. It may result from: resignation, mutual agreement, force majeure, dismissal for serious misconduct, etc. This has been confirmed again recently by case law, notably in a ruling by the Brussels Labour Court on 13 November 2024.
Write the clause in clear and explicit terms
To be valid, a clause making the bonus conditional on the employee’s presence at the time of payment must be worded precisely, clearly, and unambiguously. The employee must be able to understand under what conditions they are entitled to receive the bonus.
Vague or ambiguous wording may not only cause confusion but could also be interpreted against the employer in the event of a dispute. It is therefore essential to avoid unclear or overly general formulations such as “the bonus may be granted at the employer’s discretion” without further clarification. The more transparent the clause, the lower the risk of future disputes.
No obligation to prorate the bonus
In principle, a bonus is earned progressively, in line with the work performed. If an employee leaves the company partway through the year, they may, in the absence of a specific clause, be entitled to a prorated share of the bonus for the time actually worked. This is known as the “divisibility of remuneration.”
However, a company may validly state that the entire bonus will only be paid if the employee is still employed on a specific date — usually the payment date or the end of the reference period. In that case, no prorating applies, even if the employee worked for most of the year. For this exception to be enforceable, it must be clearly specified in a written clause, worded in a clear and explicit manner. Otherwise, the employee may claim a proportionate share of the bonus.
By Justin Lennertz, Lawyer at Claeys & Engels
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