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LELR Issue 112 (June 2006)

Contents

In the News
Minimum Rates
I don't like Mondays
The Libel Bible
Bonus Points
Transfer Time
Much Obliged
All Wired Up

Bonus Points

Hoyland -v- Asda Stores

The law says that during paid maternity leave, a woman is entitled to all the same terms and conditions had she not been away from work, with the exception of pay (defined as "wages or salary").

But do bonuses fall under this heading? The Court of Session has now said – in Hoyland -v- Asda Stores – that they do. As a result, employers are entitled to reduce them during the period that the woman is on paid leave.

What were the facts in this case?

Ms Hoyland had been working part time for Asda as a customer services assistant when she went on six months maternity leave in June 2002, returning on 3 December 2002.

On her return, she expected to receive her normal bonus for the year to 21 February 2003. The rules state that bonuses will be paid to any employee who:

• had been working for Asda for 12 months by 31 December 2002; and
• was still working for them on 21 February 2003

However, the scheme also set out a number of rules for pro rating bonuses, including an absence from the business of eight consecutive weeks or more.

Ms Hoyland had been on maternity leave for 183 days during the 2002 bonus year, so her bonus was pro rated accordingly, giving her about half the amount she had expected.

She claimed that this was unlawful under the Sex Discrimination Act as it took her maternity absence into account.

What did the tribunals decide?

The tribunal said that the store had not discriminated against Ms Hoyland when it paid her a pro rata amount of bonus. It said that, although the bonus was described as discretionary in the scheme, it was part of her "wages or salary" and was therefore a contractual payment.

That meant it was outside the scope of the Sex Discrimination Act 1975 which relates to non-contractual payments only. If a worker is discriminated against in relation to a contractual term, then the Equal Pay Act applies.

And the employment appeal tribunal agreed that the scheme was a contractual entitlement (see LELR 101 for details). It had not been withheld from anyone who satisfied the qualifying requirements. Her claim for sex discrimination could not, therefore, succeed.

What did the parties argue on appeal?

Ms Hoyland argued that the bonus was completely separate from any term in her contract and as such did not therefore fall within the exclusion created by section 6(6) of the Act.

The company pointed out, however, that section 6(6) did not require entitlement to a bonus to be a term of the contract. It just had to be “regulated” by it.

What did the Court of Session decide?

The Court of Session emphasised the importance of the word “regulated” in section 6(6). It pointed to the fact that, although the employer used the word "discretionary" in relation to the scheme, in reality every employee received a bonus.

It had no doubt therefore her entitlement “arose out of the contract of employment and is regulated by it in the sense that but for the existence of the contract of employment the bonus would not be paid and it is therefore being paid as a consequence of its very existence.”

The bonus payment therefore fell within the terms of section 6(6) and excluded her claim for sex discrimination under the Act.