Hanover, PA asked in Business Law, Employment Law and Contracts for Pennsylvania

Q: Can a company in PA change bonus payment structure after the close of the year, with no prior notice?

The company just released fiscal 2017 results, and we missed most targets. I then get an email saying they are changing our bonus payment for 2017, and the company as a whole will get a flat % due to poor overall company performance. I am part of a sales division that exceeded part of the bonus plan as published by our company, and now will not get paid for that portion. Is it legal for a company to change bonus payment structure after year end without prior notice? It seems to me they should have communicated this change before the end of the year, not after the fact.

2 Lawyer Answers
Carrie A. Ward
Carrie A. Ward
Answered
  • Marlton, NJ
  • Licensed in Pennsylvania

A: It will probably be an issue for your company if they clearly state the bonus structure in your contract. You should review your contract carefully. If you do not have a contract, your company has the flexibility to change its bonus structure as it sees fit. However, it is a major public relations dilemma for them.

1 user found this answer helpful

Andrew S. Abramson
Andrew S. Abramson
PREMIUM
Answered
  • Blue Bell, PA
  • Licensed in Pennsylvania

A: The issue is likely to be the terms of the written bonus plan. If the terms are clear and not discretionary, then under Pennsylvania law the plan could not be changed retroactively as to a complete yer. You should arrange for a consultation with an experienced employment law attorney to review the bonus plan document and the facts of your situation.

Karen Elizabeth Eichman agrees with this answer

1 user found this answer helpful

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