The issue in the appeal was whether a profitability bonus, which was paid to the claimants monthly in arrears, should be included in the calculation of a week’s pay pursuant to section 221 (2) Employment Right Act 1996.
Held: the employment tribunal erred in law in holding that the profitability bonus should be included. Section 221 (2) requires the inclusion of sums which are ‘payable by the employer under the contract of employment . . .. if the employee works throughout his normal working hours in a week.’ Completion of the normal working hours must be both a necessary and a sufficient condition for the entitlement to the relevant payment. Whether the profitability bonus was payable depended on a monthly calculation of the respondents profit rather than on whether the employee had worked their normal working hours. Indeed, if the business was insufficiently profitable no profitability bonus would be payable notwithstanding that the employee had done so. Completion of a given hour of work was therefore necessary but not sufficient, of itself, to give rise to an entitlement to the bonus payment.
[2020] UKEAT 0285 – 19 – 1003
Bailii
England and Wales
Employment
Updated: 12 November 2021; Ref: scu.653268