Bonus schemes

Case Ref: 6.2/May 2005

Summary of case

Our member Ms R is employed in the Civil Service. Her Department operates a staff bonus scheme. The scheme bonus rules state that the contents of this scheme do not form part of any employees' terms and conditions.

The rules also cover the position in respect of employees who are absent from work due to maternity leave. If this absence is in excess of 4 weeks the employees' bonus payment will be pro-rate'd. Bonuses are also subject to the annual performance review.

Advice requested

The PCS Bargaining Unit sought general advice on how the Maternity and Parental Leave Regulations applied and whether or not there was scope to merit a discrimination claim.

Legal advice provided by Thompsons

The general legal position on these matters was summed up in the following extract from the advice letter received from Thompsons: 

"The position regarding bonuses during maternity leave under the Maternity and Parental Leave Regulations 1999 (as amended) (the 'Regulations') and sex discrimination legislation is a little uncertain. Two cases, Lewen -v- Denda 2000 IRLR 67 ECJ, which concerned parental leave rather than maternity leave, and Gillespie and Others -v- Northern Health and Social Services Board and Others (Number 2) 1997 IRLR 410 ECJ, seem to establish that a bonus can be reduced proportionally to reflect the amount of time an employee was on maternity leave. However, this remains an uncertain area, and in particular in what circumstances a bonus will count as 'remuneration' as defined in the Regulations. 

"From the information provided, I certainly think that there are grounds to challenge the policy. First, you could seek to rely on the Maternity and Parental Leave Regulations. The Regulations provide that an employee who takes Ordinary Maternity Leave (OML) is entitled to the benefit of all the terms and conditions of employment which would have applied if she had not been absent, save that she is not entitled to receive 'remuneration'.

"You would seek to rely on an interpretation that this particular bonus payment is not remuneration as it does not fall within the category of sums payable to an employee by way of wages or salary. Although paragraph 1.1 of the policy describes the policy as not forming part of the terms and conditions of employment, this clause itself is unlikely to cause a difficulty in establishing a claim. Section 71(5) of the Employment Rights Act 1996 on which the Regulations are founded, adopts a wide interpretation of terms and conditions of employment, to include, 'matters concerned with an employee's employment whether or not they arise under her contract employment'. 

"In terms of making an Employment Tribunal claim, the claim form should seek to rely on Regulation 19 which provides than an employee is entitled not to be subjected to any detriment by any act, or deliberate failure to act, by her employer done because she took OML, and that second the failure to pay the bonus in full amounts to an unlawful deduction from wages. Third, you should claim that the part payment of the bonus amounted to an act of unlawful direct sex discrimination. 

"Each case will depend on the particular terms and conditions of the bonus scheme in question. The more the scheme is presented as part of the remuneration package the harder it is to argue that it is not remuneration."

Legal department comment

We have instructed Thompsons to act in this case and proceedings are ongoing. Whilst PCS remains opposed to bonus schemes per se and is in favour of better and fully consolidated increases, it is important that we expose arrangements where we can show they discriminate against sections of our members.

Updated 29 Jan 2017

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