A departing law firm employee had no contractual right to be paid his bonus despite it being previously offered, an employment tribunal has ruled.

Employment Judge Evans concluded that Imran Butt, a former finance business partner with national firm Simpson Millar, was not owed around £3,666 in two bonus payments offered to staff last year.

Butt had been informed last March that he had achieved a bonus of £5,500, split over three payments, and he received the first instalment within weeks.

But the firm deferred the July and October 2021 payments to October 2021 and March 2022 respectively because of cashflow issues arising from the Covid-19 pandemic. In the meantime, Butt left his employment in September 2021 after rejecting an offer by the firm to reduce his working week to four days. This left him without the second two instalments of his bonus in his final pay packet.

Judge Evans said the case hinged on whether Butt had a contractual right to receive his full bonus and if so whether Simpson Millar acted in breach of contract by varying the dates payments had initially been due to be made.

The judge said the wording of the firm’s bonus scheme general criteria made clear that the claimant did not in principle have any right to be paid a bonus. As such, Simpson Millar was entitled to make no payments because of the impact of the pandemic, and entitled to vary or withdraw the bonus scheme.

It was accepted by the judge that the bonus confirmation letter, which talked of Butt having ‘achieved’ a bonus and promising he ‘will’ be paid in three equal amounts, ‘to some extent adopts the language of entitlement not discretion’.

But the judge added that this letter ‘was insufficient to convert what had previously quite clearly been participation in a discretionary bonus scheme into a contractual right to specific amounts on specific dates’.

He stated that the firm had reason to exercise its discretion not to pay the whole bonus once the claimant had resigned in September 2021, adding that this decision ‘did not even approach being an irrational or perverse’ one.

The tribunal ruled that the claim for unauthorised deductions failed and should be dismissed. A further claim for breach of contract was also dismissed.