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Verbal Agreements / Employee Bonuses
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Verbal Agreements / Employee Bonuses
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A verbal offer of a special bonus was extended to employees by a VP of the corporation. The terms of the employee's performance were specific (work xx# hours within this period of time and receive xx)
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Verbal Agreements / Employee Bonuses
posted at 6/28/1999 6:30 AM EDT
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Posts: 5
First: 6/28/1999 Last: 6/26/2001 |
A verbal offer of a special bonus was extended to employees by a VP of the corporation. The terms of the employee's performance were specific (work xx# hours within this period of time and receive xx). This performance was above and beyond the employees' normal duties. The reason for construction of this bonus was to make a delivery date to a customer thereby avoiding a substantial monetary penalty. The employees verbally accepted the offer, and performed the duties specified in the offer. The delivery date was met and the monetary penalty to the customer was avoided. Upon calculation of the bonus dollars associated with this agreement, which was after the employees performed their part of the agreement, it was found that the cost was much more substantial than originally estimated. The VP now wants to modify the terms of the bonus payout to reduce the cost to the company.
Question: Is this an enforceable contract with the employer? |
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Verbal Agreements / Employee Bonuses
posted at 6/28/1999 5:37 PM EDT
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Posts: 833
First: 6/11/1999 Last: 8/23/2001 |
Enforceable or not, the company didn't do it's job and not only didn't compute the costs correctly before making an offer but now wants to renege. That's terrible! What happens the next time the company's in trouble?
Not being any kind of expert in contracts, common sense tells me that waiting until after the effort was successfully expended, and then changing the rules, isn't fair, and fairness is the stuff that juries look for - since, they're employees themselves! I'm guessing you don't have a CBA - I'd be greatly concerned. |
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Verbal Agreements / Employee Bonuses
posted at 6/28/1999 6:09 PM EDT
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Posts: 58
First: 6/14/1999 Last: 2/20/2006 |
I worked for a company that made verbal monetary committments to employees and then never followed through. They always stated the company could not afford it. Lets just say it ruined morale and caused many employees (including myself) to look for other jobs. |
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Verbal Agreements / Employee Bonuses
posted at 6/30/1999 9:48 PM EDT
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Posts: 2217
First: 6/16/1999 Last: 12/13/2001 |
There is a legal doctrine called the Statute of Frauds which essentially provides that some agreements must be in writing to be enforced. Among these agreements are promises that by their terms cannot be performed within one year. Here, it's not clear whether the work could not have been performed within a year (regardless of whether it was), whether there was a "writing" (a formal contract is not necessary; indeed, the writing need not be contained in only one document), etc. Even if no "contract" existed, employees who worked in reliance on a promise by the VP could bring a claim under a legal theory called promissory estoppel. The requirements of contract formation and promissory estoppel vary by jurisdiction. You will need an attorney to review the facts of your situation and applicable law in greater detail to give a definitive opinion on your legal liability.
The points Jim made about "common sense" and "fairness is the stuff that juries look for" are well-taken, from a legal perspective as well as workplace morale. Unless there are some "fairness" issues the company could point to (e.g., if the bonus turned out to be outrageously high in the context of the work performed, etc.), this one might not play well to a jury! |
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