If you’re an employee who wants to change their job but has been holding on till you receive your bonus, we feel you!
After all, why leave money on the table after putting in so much hard work?
But it seems that you may not be able to quit immediately after receiving your bonus. Or at least watch the timing when you resign. If not, you risk being sued by the company to reclaim the bonus paid out to you.
Shocked? So is this ex-employee who was sued successfully by his former employer and now has to repay the bonus paid out to him.
Here’s what transpired between the pair.
Ex-employee Was Entitled to a Variable Bonus and Quit After It Was Processed
In a nutshell, the ex-employee was successfully sued by the ex-employer for the latter to claw back $7,200 paid in cash and $1,224 paid into the ex-employee’s Central Provident Fund account.
It seems like the entire Magistrates Court case turned on the tricky timing regarding the company processing the bonus payment, the ex-employee tendering his notice of resignation and when the bonus was actually credited into the ex-employee’s bank account.
In this instance, the company processed the ex-employee’s bonus payment on 23 March 2022. The ex-employee tendered his resignation a mere two days later, but before the bonus was credited into his bank account the next day.
As the ex-employee was already serving his two-month notice period when the money reached him, the ex-company wanted to revoke the bonus payment made to him. One of its main arguments made before the judge was that therefore the company was entitled to claw back the bonus paid out to the ex-employee as he had tendered his resignation before the bonus was paid out.
The company relied on its employee handbook to assert this argument. In its employee handbook, there was a clause that stated that the employees’ benefits could be changed as the “exclusive right and sole discretion” of the company.
The employee, on the other hand, argued that he was not aware of this employee handbook and the clause relied upon by the company and hence should not have to return the bonus received.
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The Court Decided That the Ex-company Should Prevail
Eventually, the court found that the “justice of the case” lay with the company being able to claw back the bonus payment since the company, per the wording of the employee handbook, had the sole discretion to change the terms within the handbook at any point in time.
This was despite there being a change in the employee handbook after the ex-employee had joined the company, a change to which the ex-employee did not give any express consent. However, there was a company-wide notification email from the human resources department about the change in the policy.
Another factor which swayed the judge to rule in favour of the company was that the bonus was discretionary in nature. It was for the company to decide the terms on which it would be paying out such additional money, and therefore, the company could choose not to pay any bonus to an employee who was already on notice.
What a shame for the ex-employee. A mere one day caused him to lose out more than $8,000 in bonus payout. And that’s not taking into account the additional costs and legal fees he has to fork out due to fighting this case in court.
We’ll definitely be reading our employment contracts and employee handbooks in detail from now on. Time really is money.
Here’s a simplified summary of the South Korea martial law that even a 5-year-old would understand:
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