Nutshell
Mr Jiang entered in a foreign pharmaceutical company in February, 2010 as a purchasing manager, where nice welfare is provided. The labor contract signed on the employment day provides that annual bonus is a non-guaranteed income counted according to the performance of the employee over the year, and will not be granted to the employees who resign or leave the company for any other reason before the grant day.
Mr Jiang reigned on Nov 10, 2010 for another job opportunity recommended by head hunter, and the pharmaceutical company issued the termination certificate on the very date. Mr Jiang has been thinking about the bonus on leaving the pharmaceutical company. On March, 2012, Mr Jiang paid a close attention on the major remit on the salary bank account from the pharmaceutical company. With no result over waiting, Mr Jiang called the human resource department. Being told that he bonus was not granted on his resignation date, he raised labor arbitration.
With no result of negotiation, Mr Jiang claim for 100000 yuan bonus for Jan 1,2011to Nov 10, 2011 from the labor arbitration.
Issue
The issue of this case lies in whether the employee is entitled to annual bonus in proportion
Mr Jiang holds that the pharmaceutical company made a reasonable promise and a legal agreement in the labor contract and employee handbook that the annual bonus shall be counted in proportion for those who work less than a year, but the regulation that annual bonus is a non-guaranteed income and a possible high grant that will not be granted to the employees who leave the company before grant day is void by breaching the equal pay for equal work principle in labor law.
The company holds that the annual bonus is granted to award good performance and keep the talented employees. It is specified in the handbook and labor contract that annual bonus is a non-guaranteed income and a possible high grant that will not be granted to the employees who leave the company before grant day. It is legal and valid since there is no significant misconception and obvious unfairness involved in the agreement. Mr Jiang is not entitled to the bonus since he resigned on Nov 10, 2011.
Judgment
The labor arbitration tribunal did not support Mr Jiang claim after hearing.
Comment by Attorney Tang
Annual bonus in narrow sense is a kind of bonus and in board sense a part of income which granted by the employer after a year work according to the operation situation itself by the method prescribed in the company regulation, labor contract or otherwise.
Generally there are three principles to determinate the annual bonus in practice: firstly, labor contract prescription; secondly, company regulation; thirdly, discretion by the boss. The binding force of the three principles is in descending order. Most employers don’t make any official rules for the grant of bonus in contracts or regulations but decide the grant according to the performance and profit.
The grant of annual bonus can be set previously in the labor contract or employee handbook in favor of the employer to be implemented accordingly. However, without prior agreement, the dispute arisen shall be judged according to reality instead of decided unilaterally by the employer, sometimes settled in proportion. The employer is entitled to grant bonus at its discretion according to its operation and the performance of the employee, etc but by the principle of fairness and reasonability and inform the employee in advance, but not to expand the management without boundaries. So long as the agreement is made, any amendment to the major clause of the contract without consent by the other party shall be deemed void. The Labor Law still rules in the grant of bonus.
According to the current legal practice, company regulation is the main reference in hearing. The employer shall bear the responsibility of evidence of grant condition, remittance and sum of the annual bonus, however the precondition is the existence of agreement or tradition of annual bonus between the two parties. If the employer denies the agreement and the employee cannot provide other evidence to show the agreement or provide evidence on the grant of other employees, his claim would usually not be supported by legal departments .
The setup of annual bonus shall specify the scale, condition, standard. As to the scale, it can be specified that only employees in-service can be granted and those who is terminated by major breach of handbook, or resign before the year-end for example cannot be granted. As to the standard, it is suggested that the performance based together with the profit, general standard shall be avoid.
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