Professionals Australia often receives queries from members who have been told by their employers that they will not receive a bonus or a pay rise for a financial year. Members often want to know whether they can challenge that decision if they feel that it is unjustified.
Most commonly, an employer will have absolute discretion to decide whether an employee gets a bonus or pay rise. However, an employee may have a right to claim a bonus or pay rise as a legal entitlement:
- under his/her contract;
- under a policy; or
- under an Award or enterprise agreement (generally applicable for pay rises only).
So, are you entitled to a bonus/pay rise under your contract?
Sometimes an employee will have clauses in his/her employment contract that deal specifically with bonuses/pay rises.
Unfortunately, the most common scenario is that these clauses often specify that the decision to give a bonus/pay rise is “at the absolute discretion of the employer” or similar. This usually means that the employee cannot force the employer to grant a bonus or pay rise.
However, in some cases the clause may make it sound like an employee must be given a bonus/pay rise if certain conditions are met.
If it looks like the employee has met those conditions, there may be a strong argument that he/she is entitled under the contract to receive a bonus/pay rise. Be on the lookout for language that appears to be imposing an obligation on your employer to do something if certain conditions are met.
What about under a policy?
Sometimes the rules for granting a bonus or pay rise are contained in a workplace policy, rather than an employment contract. It may come as a surprise that the terms of a policy can sometimes form part of an employee’s contract, and that an employee may then be contractually entitled to the benefits under a policy.
Employers often guard against this by inserting a clause into the contract that specifically says something like “The employer’s policies do not form part of the employee’s contract and do not operate to grant any contractual benefit to the employee”.
Even if there is no express exclusion, the terms of the policy must also contain “obligatory” language and the employee must have met all the conditions for achieving a bonus or pay rise under the policy in order for it to be enforceable as a contractual entitlement.
And if you’re under an Award or an Enterprise Agreement?
Finally, even if you do not have a legal entitlement to a pay rise under your contract or a policy, you may want to check your Award or enterprise agreement.
These generally contain terms relating to minimum wages for employees in particular occupations, as well as terms about minimum non-performance-based pay increases. In some cases, enterprise agreements may contain terms that govern how annual performance and pay reviews take place.
It is extremely important that you are aware of which Award or enterprise agreement covers you (if any).
What do I do if I am unsure about my entitlements?
If you are unsure about your entitlements, please contact Workplace Advice and Support on 1300 273 762. We can give you practical tips on how to raise any issues with your employer, as well as advice on your legal entitlements.
This publication is considered general information only and is not intended to be relied upon as legal advice or as a substitute for legal advice. If you require advice on your specific situation, please contact the Workplace Advice & Support team at Professionals Australia.
About the author: Natasha Sim
Natasha Sim is a lawyer and national industrial officer at Professionals Australia. Her primary focus at Professionals Australia is on individual employment law matters. Natasha has an LLB and BA from The University of Melbourne and a Graduate Diploma of Legal Practice from the College of Law.