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NSW Bonus Scheme - Unattainable Structure?

Discussion in 'Employment Law Forum' started by Nagoh, 26 November 2014.

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  1. Nagoh

    Nagoh Member

    26 November 2014
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    I am currently employed on a relatively low salary, comparatively to similar roles in my field (perhaps only 50% of the current market wage).

    I have been employed on the basis that I am entitled to share in gross revenues of the company. The company is effectively a non-for-profit (while not technically setup as such) - which is why I have been entitled to a revenue share, as opposed to profit share.

    However, I am finding that the bonus component of my income is significantly lower than what the bonus structure suggests I would be working towards. The structure is based on a threshold. I.e. company revenues = x, then bonus = y% of revenue. I have 4 thresholds of revenue which impact my bonus %.

    However the revenues of the company are far lower than what had been suggested, both through verbal suggestions from their part, and through the bonus structure thresholds.

    Currently the revenues of the company would need to increase 16x-fold before I reach my first threshold.

    While I feel I have taken a risk in accepting this offer with the promise of great reward, I also believe I may have been lead down the garden path with regard to how much I should expect to be earning as part of a bonus component of my wages.

    Question is - do I have a legal leg to stand on under employment law, or is it simply a case of tough-luck?
  2. Rod

    Rod Well-Known Member

    27 May 2014
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    Me thinks tough luck, though it may depend on what kind of role you took on (CEO, cleaner, etc?) and whether or not your wage/salary is above minimum award rates or adult minimum wage.

    Sounds like you knew there was a possibility of a reward and were willing to share the reward if it came about but not share the burden if the revenue didn't materialise. You are always free to leave and seek a better paying job.

    If you are not happy in your job at the pay you are on, recommend you seek alternative employment rather than invest emotional time and energy in trying to change current circumstances.
  3. Sarah J

    Sarah J Well-Known Member

    16 July 2014
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    Hi Nagoh,

    Like Rod, I also believe this is a case of bad luck. When accepting to forfeit part of one's pay for bonuses, there is always the risk that you do not get the expected bonus. Unless you have something in your employment agreement that guarantees a minimum bonus amount or guarantees a revenue threshold, there is not much legally you can do.

    The closest action would be misrepresentation. You would need to prove that (1) there was misrepresented information made by the employer (unless you have documented evidence of the employer making the misrepresented expected revenue, this would fall on the facts presented by each party); (2) you relied on the misrepresentation and this was a material reason why you took up the job; (3) you suffered loss because of the reliance. In considering this, the court may look at how reasonable it would be to rely on representations of expected bonuses.

    I suggest speaking with the Fair Work Ombudsman first and seeing if they have any advice regarding misrepresentations of revenue/bonuses.

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