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Chris The Lawyer
Chris The Lawyer, Lawyer
Category: New Zealand Law
Satisfied Customers: 22893
Experience:  38 years qualified as a lawyer; LLB, MMgt and FAMINZ.
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I have recently moved to another company after 8 years as a

Customer Question

I have recently moved to another company after 8 years as a Technical Director. My previous company has refused to pay me my performance related bonus, stating that because I have moved to a competitor I am not entitled to a bonus. I worked for 11 out of 12 months of the financial year, performed well and was offered a 10% increase to stay at the company. My performance was not in question and all my ex collegues who are still at the company received their bonuses. I do not consider this to be fair or reasonable.
My contract stated:
“The payment of any bonus is at the absolute discretion of the Company.”
My questions are:
Has this clause been tested in NZ, and if so what were the outcomes?
Should I contest this decision?
Ian Booth
Submitted: 2 years ago.
Category: New Zealand Law
Expert:  Chris The Lawyer replied 2 years ago.

If this is a term of the contract it should be enforceable, but the discretion clause may be the factor against this. No doubt this why they have included the clause, no use as an escape when they don't want to pay. I am not aware of any specific cases on this type of clause, but there is a balance between the duty to treat employees with good faith and the right to use the discretion. You have nothing to lose by claiming a personal grievance to at least the mediation stage, so I suggest you tell them you intend doing so, and does this change their position. You could then decide if you want to spend the time on a mediation, and at a mediation, get a sense of the strength of their case, at relatively low cost.

Customer: replied 2 years ago.
Thank you for your response. I would only go to mediation if I could show that a similar case has set a precedence. Such as in NZ or Australia or the UK. What is the definition of 'good faith'? Good faith could be argued (by the employer) as being solely in the interest (good) of the company, so would be irrelevant to the employee.
Expert:  Chris The Lawyer replied 2 years ago.

Good faith in this context means they must treat you fairly and evenly compared with other employees. If there wasnt the discretion clause you would have a strong case. Mediation is useful because if they refuse to settle, then you dont have to take this further and they cannot seek costs against you. But often they will make offers to make you go away.

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