Nutshell
Mr Jiang was employed by a foreign-funded pharmacy company in Shanghai as a purchasing manager on Jan, 2016. Mr Jiang signed the Employee Handbook which provides that annual bonus is not guaranteed income, but the bonus on the base of the whole year performance which will be granted in March or April for the last working year.
Mr Jiang had a better job opportunity recommended by job hunter and therefore resign from the pharmacy company on November 10th, 2016. Mr Jiang was always thinking of the bonus after leaving. When he didn’t find any difference in the bank account on March to April, 2017, he called the human resource department. The head said he cannot get bonus because he didn’t work for a whole year upon resignation. But Mr Jiang thinks he is entitled to the bonus.
Mr Jiang raised arbitration after negotiation didn’t provide any result. He claimed for a 100000-yuan bonus for Jan 1st to Nov 10th 2016.
Issue
The issue of this case lay in whether the employee who did work over a year can get the yearly bonus by proportion. Mr Jiang thinks he is entitled to the yearly bonus by working 11 months. The regulation in the employee handbook that annual bonus is not guaranteed income, but the possible bonus on the base of the whole year performance is imparity clauses which shall not come into effect since breach the principle of equal payment under labor law. The pharmacy company thinks the yearly bonus is to stimulate the best performance of employee and keep them. The employee handbook clarifies that it is not guaranteed, but based on the year around performance. Therefore those who haven’t work over a year are not entitled to it. The agreement is legal and effective since there is no major misunderstanding or obvious imparity. Mr Jiang is not entitled to the yearly bonus by resignation on Nov 10th,2016.
Judgment
In this case, the arbitration thinks bonus is different from the fixed income, is incentive in nature, within the scope of autonomy of the company. The regulation regarding to yearly bonus in the employee handbook signed by the employee showed the true intention of the two parties is legal and effect without breach of law, therefore the two parties shall fulfill it. Mr Jiang is aware of the agreement, therefore Mr Jiang is not entitled to the yearly bonus by resignation on Nov 10th,2016.
Comment by Lawyer Tang
Yearly bonus is a kind of bonus granted by the employer by the end of a year according to its running condition and internal regulation or labor contract. According to the related regulations, yearly bonus is a kind of bonus in a narrow sense, and is also a part of the salary in a broader sense.
Although many company grant yearly bonus, in fact no direct agreement regarding to the method, standard or time of the grant. Since yearly bonus is surplus income, it is not mandatory for the company but applying the principle of priority. The current doesn’t provide any regulations on how to grant the bonus but leave it to the employer’s autonomy.
In practice, there are three ways to grant the yearly bonus: a. contract; b. regulation; c. the boss’s mind. The binding power to the employer is in descending order. Many companies don’t come into any agreement or regulation regarding to the grant of yearly bonus, usually the boss decide how to grant based on the performance of employee and yearly profit.
Also the company can put it into labor contract or regulations that in favor of the employer and act on it. If there is no previous agreement, the arbitration may rule according to the fact but not the employer’s autonomy, there are quite a few cases that ruled by proportion. The employer has the right to decide whether to grant bonus and the condition according to the operation and performance, but it shall fulfill the duty of notice in line with the principle of equality but not just liberty.
The employer can set the scope, condition and standard of the grant. It can clarify that only staff in service can get bonus but not the departing staff that dismiss on breach or leave before year-end. The general grant shall be avoided and applying the model of department profit.
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