The Employment Relations Authority has ordered an employer to pay an employee for unjustified disadvantage after failing to set out clear expectations.

An employee resigned from their job but was not paid their bonus. Bonuses were to be paid when targets set by the employee’s management team were reached. This was stated in the employment agreement, however, the agreement did not explain what the targets were or how they were calculated.

Since no targets were set by the employer, the ERA decided that the employee could not be considered as having reached them, so he was not entitled to the bonus payment.

However, the ERA held that the employee was unjustifiably disadvantaged due to the employer’s failure to clearly identify how the bonus would be calculated in the employment agreement.

Additionally, the ERA explained that the employer also failed to act in good faith by unclearly setting out and recording the employee’s achievement targets and not advising him of any shortfalls in his performance.

The Authority ordered the employer to pay to the employee $15,000 in compensation and $2,000 for failing to act in good faith.

It is important that employers clearly record their expectations in their employment agreements and workplace policies. Failure to do so may result in expensive personal grievances.

If there are concerns that your employment agreements or workplace policies are unclear, it pays to speak with a professional experienced in the area.


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