Salary Bonuses: Are Former Employees Entitled to Them as Well?

Must an employer pay a bonus to a former employee? When the answer is yes—and when it is no.

In this short article, we explain when a former employee may still be entitled to a bonus and when they may not.

A bonus for a dismissed employee?

A practical example

A former employee sued her former employer, seeking payment of an extraordinary bonus that had been awarded to other employees but not to her.

The claimant had been employed by the defendant from 2020 until 31 December 2021.

In March 2022, the employer decided to pay its employees an extraordinary bonus in recognition of the company's strong financial performance in 2021 (a "2021 profit contribution bonus"). The bonus was also intended to motivate current employees for the future.

One of the conditions for entitlement to the bonus was that the employee's employment relationship had to continue until 31 May 2022.

The former employee argued that even an extraordinary bonus forms part of an employee's remuneration for work performed. According to her, remuneration for work already completed cannot be made conditional upon the employee remaining employed until a future date.

She therefore claimed that by denying her the bonus, the employer had breached its obligation to ensure equal treatment of employees in matters of remuneration. She sought damages equal to the amount of the bonus together with statutory default interest.

The Czech Supreme Court, however, ruled in favour of the employer.

The Court accepted that the former employee was not in the same position as the employees who received the bonus.

At the time the decision to grant the bonus was made, she was no longer employed by the company.

The bonus was awarded to existing employees not only as recognition of their past contribution but also as an incentive for future performance.

Although wages are indeed compensation for work already performed, a bonus paid in addition to guaranteed remuneration may also serve a motivational purpose going forward—and that purpose may legitimately be directed only at current employees.

The Court noted, however, that the outcome might have been different had the employer granted the bonus to another former employee while excluding the claimant. In such circumstances, the employer could have been engaging in unequal remuneration.

The requirement of equal treatment

Situations frequently arise where an employer decides to pay an extraordinary bonus and an employee's employment ends shortly before the payment is made.

The key questions are:

whether the employer established objective and equal conditions for payment of the bonus;
whether the employer applied those conditions consistently; and
what purpose the bonus was intended to serve (rewarding past performance, motivating future performance, or both).

Employers are required to ensure equal treatment when remunerating employees for their work. This reflects the principle of equal pay and equal remuneration.

However, equal treatment must be provided to employees who are in the same or a comparable position.

Conclusion

This case highlights the importance for employers of clearly defining the conditions governing extraordinary bonuses and incentive payments.

For employees, it demonstrates the value of carefully reviewing bonus conditions and taking them into account when considering a change of employment.