A bonus is extra money paid if you (or your team/company) hit certain targets. Unlike salary, it's not guaranteed—you only receive it if conditions are met. For example: "You'll receive a bonus equal to 10% of salary if the company hits profit targets." This matters legally because UK courts have ruled that bonuses can be contractual promises (you can sue if unfairly withheld) or discretionary gifts (employer can refuse). The difference is huge. A vague bonus clause ("we may pay a bonus") is weaker than a specific one ("you will receive 10% if sales exceed £2m").
Insist the contract states exactly what targets trigger the bonus, how it's calculated, and when you're paid. Avoid phrases like "at the company's discretion" or "subject to performance"—these let employers cancel bonuses arbitrarily. Ask: what happens if targets change mid-year? What if you leave before bonus day? Get these answers in writing in the contract itself. ---
Frequently Asked Questions
What does this clause mean in simple terms?
A bonus is extra money paid if you (or your team/company) hit certain targets.
Why should I care about this clause?
Unlike salary, it's not guaranteed—you only receive it if conditions are met.
What are my options?
For example: "You'll receive a bonus equal to 10% of salary if the company hits profit targets." This matters legally because UK courts have ruled that bonuses can be contractual promises (you can sue if unfairly withheld) or discretionary gifts (employer can refuse).
How does this affect small businesses?
The difference is huge.