Let op met het afspreken van targets!

Friday, 14 March 2008 09:48

Nowadays it is very common that an employee will receive a bonus in addition to his fixed salary. In such cases, the bonus will often be calculated on the basis of the turnover (targets) generated by the employee. It is always advisable to set down in writing the targets being agreed with an employee. In a recent decree by the Court of Den Bosch, however, it does turn out very unpleasant for the employer when he forgets to agree new targets with the employee. Indeed, the Court of Den Bosch ruled that the employee must be paid a bonus, to which he actually had no right. What on earth were the circumstances? In the employee's employment agreement it is stipulated that he has the right to a bonus (in this case 20% of his annual salary) if he meets certain targets. In this regard, the parties agree that these targets will be reset annually. In 2002 and 2003 the employee achieves his bonus almost entirely, primarily because the targets are based on the overall company returns. The department where the employee himself works, however, makes a loss. For this reason, the employer wishes to make alternative agreements in 2004 such that the bonus will be linked to his own department. The employer does not agree to this, resulting in the parties agreeing nothing. When the employment agreement is subsequently terminated, the employee demands payment of the bonus. Both the magistrate's court and the court of appeal grant the employee's claim. In this regard, the court of appeal considers that, if employer and employee are unable to reach an agreement on the content of the bonus entitlement, a basic principle of being a good employer entails the employer setting these targets unequivocally after discussing them with the employee. In view of the fact that employer and employee did not make any new agreements with regard to targets, the court of appeal concludes that reasonability and fairness entail the same arrangements that applied to 2003 holding for 2004. The employer's argument that the claim be reduced because the department in which the employee was working made a loss and has since been dissolved was not accepted. In previous years this was not a requirement for payment of the bonus. Questions? Please feel free to get in touch with Frank Vergeer T +31 (0)172 - 419 844 or Roos Koster-Mulder from the Employment Law division T +31 (0)71 - 535 80 00.