What is the law regarding the cancellation of a bonus?
Question Details: My husband is a manager for a large, international company. When he was promoted to manager he was told there would be no overtime pay but he would receive an annual bonus to make up for it. He currently works 50 to 60 hours per week with no overtime. It was announced yesterday that there would be no bonuses this year, as stock prices had taken a hit. There will be no additional compensation either. Bonuses are canceled company wide. We, and all of the other employees, counted on the bonus as part of our annual income and depend on it. Is there any recourse?
If your husband had a written employment or bonus agreement guarantying him the bonus, then the employer was contractually obligated to pay him. If they do not, he could sue for "breach of contract" for the money.
However, without a written agreement for it, all bonuses are discretionary--at the will of the employer. The employer may, in this case, legally renege on a promised bonus and refuse to pay it. Only a written contract guarantees a bonus.