He stayed the whole bonus year but left before payday
Patrik Varga joined PaperCut, a Melbourne software company, as a senior software engineer in February 2016. His contract put him in the employee bonus scheme but said 'the amount, terms and schedule of any bonus are entirely at the discretion of the employer and as determined by PaperCut Directors'. Company presentations described the bonus as profit share, under the heading 'Share the success'.
On 14 September 2017 he resigned, effective 13 October. The company asked him to withdraw his resignation, and a letter lifted his salary to $125,000 from 1 September; he still left. People at the company told him he would receive the full bonus for 2016/17 despite resigning, and the company did not dispute that. But the directors then decided that only people still employed when bonuses were paid would get one, and the bonus was paid on 31 October 2017. Seven people who had left before the payment date missed out, Mr Varga among them.
He brought a small claim. The court found the letter had varied his contract, so he was owed the difference in wages from 1 September at $125,000 and in his annual leave payout, plus $150 instead of interest: about $1,930 in all.
The bonus claim failed. Whatever he had been told, the bonus was for the directors to decide, and they had not finally decided who would be eligible until after the assurance was given. When they did decide, he was no longer employed on the payment date.
If your contract says a bonus is at your employer's discretion, a manager's assurance may not turn it into an entitlement. Before resigning with a bonus due, check whether you must still be employed on the payment date.
The small claims limit was $20,000 at the time. It has been $100,000 since 1 July 2023.
A published decision of the Federal Circuit Court of Australia, retold in plain English. Lawcaptain did not act in this case. Every outcome depends on its own facts. General information, not legal advice about your situation.
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