Many units will set performance indicators for employees, which is often referred to as KPIs, and employees can often get performance bonuses after completion.
Lin worked as a regional sales manager in an elevator sales company in Nanjing, and soon after completing the annual KPI, Lin resigned for personal reasons, and the company did not pay him a performance bonus on the grounds of the change of the unit system, and the two parties went to court for this.
A few days ago, the Yuhuatai District People's Court of Nanjing City, Jiangsu Province, announced the verdict of this case.
(Source: Surging News)
Employee sues
On December 13, 2017, Lin joined an elevator sales company as a regional sales manager, and the labor contract was signed until December 12, 2024.
The two parties agreed that the labor remuneration consists of basic salary, sales staff commission salary and annual target bonus, commission salary and target bonus are generally issued before the Lunar New Year each year, and the financial year of the elevator sales company is from October 1 to September 30 of the following year.
On October 25, 2021, Lin officially resigned from the elevator sales company for personal reasons, and his working hours have been completed for the previous full financial year (October 1, 2020 to September 30, 2021). According to the company's sales bonus policy, Lin can receive commission wages and annual target bonuses, but the elevator sales company refuses to pay the above money to Lin in accordance with the relevant provisions added in the "Employee Handbook" issued on September 18, 2021.
Lin then filed a lawsuit with the Yuhuatai District Court, demanding that the elevator sales company pay commission wages and annual target bonuses.
The company argued
The elevator sales company argued that according to the "Employee Handbook" issued by the company on September 18, 2021, only employees who are registered on the payment date of bonuses (including annual target bonuses, commission wages, etc.) can receive bonuses; The company has the right not to pay the bonus to employees who leave the company before the bonus payment date. The employee handbook was deliberated and voted on by the employee congress and publicized to all employees, and Lin himself knew its contents. The company pays the bonus of the previous fiscal year to the employees after the assessment in January of each year, and Lin resigned on October 25, 2021, and according to the provisions of the "Employee Handbook", the company has the right not to pay his bonus to Lin.
Previously, the old version of the Employee Handbook, which came into effect on July 10, 2018, did not clearly stipulate whether employees who had worked for one year in the current year but left before the bonus was paid were entitled to receive the bonus.
However, the "Sales Bonus Policy" of the elevator sales company, which came into effect on October 1, 2019, stipulates the scope and payment standards of the personnel who receive sales bonuses: "Employees must comply with the Group Compliance Manual and the Employee Handbook during their employment, and no sales awards or target management awards will be issued to employees who are dismissed for violating the company's compliance regulations or employee handbooks." "When a salesperson leaves, the bonus will be converted and paid according to the progress of contract collection during his or her employment."
On January 13, 2021, Lin signed the "2020/2021 Fiscal Year Annual Target Bonus Agreement" with the elevator sales company, combined with the evidence materials and calculated in accordance with the "Sales Bonus Policy" and the "2020/2021 Annual Target Bonus Agreement", Lin should receive a total of 115,520 yuan in commission wages and an annual target bonus of 51,280 yuan.
Heard by the courts
Should the elevator sales company pay Lin a commission salary and an annual target bonus?
According to the relevant rules and regulations of the elevator sales company, the commission salary and annual target bonus involved in the case are collectively referred to as sales bonuses. The current laws and regulations do not mandate how sales bonuses should be paid, and employers have the right to independently determine whether bonuses should be paid, the conditions and standards for payment based on the operating conditions of the unit and the performance of employees, etc., but the rules for the payment of bonuses by the employer should still follow the principle of fairness and reasonableness, and should be comprehensively considered in combination with various factors such as the employee's time of resignation, work performance and contribution to the unit.
In this case, Lin's right to receive commission wages and annual target bonuses comes from the Sales Bonus Policy of the elevator sales company that came into effect on October 1, 2019, and the 2020/2021 Fiscal Year Annual Target Bonus Agreement signed by the two parties, which does not stipulate whether the departing employee who has worked for the entire fiscal year and has no negative work or punishment is entitled to receive the amount bonus and annual target bonus, and the old version of the Employee Handbook does not make relevant provisions.
Although the amendment and publicity procedures of the new version of the "Employee Handbook" of the elevator sales company on September 18, 2021 on the conditions for bonus payment are in line with the relevant provisions of the "Labor Contract Law of the People's Republic of China", the content of this clause came into effect on 12 days before the end of the 2020/2021 fiscal year, so as to deny the right to receive the commission salary and annual target bonus corresponding to the work performance completed by Lin in accordance with the "Sales Bonus Policy" and the "2020/2021 Fiscal Year Annual Target Bonus Agreement", which violates the principle of fairness and reasonableness. It is clearly the legal right to exclude Lin.
To sum up, the court held that the provisions on the conditions for the payment of bonuses in the new version of the Employee Handbook had no legal effect on Lin, and the elevator sales company should pay Lin the commission salary and annual target bonus involved in the case in accordance with the rules and regulations and the agreement before the amendment.
Verdict
The court ruled that the elevator sales company paid Lin a commission salary of 115,520 yuan and an annual target bonus of 51,280 yuan.
What the judge said
The non-retroactivity of the law is a common principle in a modern country governed by the rule of law, which embodies the intrinsic morality of the law and is the cornerstone of preventing the abuse of power and protecting the legitimate trust interests of citizens.
In the field of labor law, the rules and regulations of an employer that fulfills legal procedures and does not violate national laws, administrative regulations and policies can be used as the basis for determining the rights and obligations of both parties, and have the nature of norms.
Although the employer's amendment and publicity procedures for the rules and regulations are formally in line with the provisions of the Labor Contract Law, they essentially violate the basic principles of non-retroactivity and good faith, which is an abuse of power and infringes on the reasonable trust and interests of employees, and the relevant content cannot produce legal effect.
Further Reading –
Those things about performance bonuses
The performance appraisal bonus system is a way for employers to realize their operational autonomy through income distribution. However, in practice, disputes between employers and employees are not uncommon due to the performance distribution system in the clouds, the "overlord clause" in which no commission is paid after resignation, and the various bonus calculation methods.
Can the company still recover the bonus that has already been paid? Should post-employment business commissions be paid? Is it illegal for a company to unilaterally reduce bonuses? In response to the concerns of these migrant workers, the Fangshan District People's Court of Beijing Municipality has explained the law through several typical cases of labor disputes involving commissions and bonuses, guiding both employers and employees to correctly perform their obligations, protect their rights, reasonably regulate their own behavior, and effectively prevent disputes from occurring.
No commission bonus will be paid when you leave the job,
Is the Overlord clause valid?
During his tenure as a project manager in a company, Mr. Zhang was successively responsible for the investment promotion business of two projects, A and B. When he was responsible for the investment promotion of Project B, due to Zhang's work mistakes, the labor relationship with the company was terminated. Later, Zhang sued the court and demanded that the company pay 5,000 yuan for the risk warranty of Project A.
During the trial, the company clearly stated that it did not agree to pay, arguing that the risk warranty metal should be issued in strict accordance with the company's rules and regulations and assessment standards for an appraisal reward given to Zhang by the company in accordance with the company's system, and the company's system clearly stipulates that no rewards will be issued to the departing personnel.
After the trial, the court found that the company's "Business Commission and Performance Management Plan" stipulated: "Reward distribution ratio: The risk guarantee fund is the business risk margin reserved for each business, which is declared and cashed at the end of the year. In addition, the details of the distribution of business commissions for investment promotion personnel show that Zhang's project A risk warranty is 5,000 yuan.
The court held that the risk warranty metal was paid in the business commission, and the company claimed that it would not be paid according to the provisions of the resignation, which restricted the employee's right to receive labor remuneration and could not be directly used as a basis for non-payment of the risk warranty money.
In addition, the risk warranty money was for Project A, and Zhang had a dispute with the company over the work of Project B, which led to the termination of the employment relationship between the two parties, so the company's reason for not resigning Zhang as no longer issuing the risk warranty fund for Project A was not sufficient. In the end, the court supported Zhang's claim that the company should pay a risk warranty of 5,000 yuan.
The judge reminded that according to Article 26 of the Labor Contract Law of the People's Republic of China, the agreement of the employer to exempt itself from statutory liability and exclude the rights of employees is invalid. However, the agreement in the rules and regulations of the employer that the employee shall not be paid commission wages after resignation is invalid, and the employer shall not refuse to pay commission wages to the employee on the grounds that the employee has left the company.
Unilateral reduction of performance bonuses,
Is the employer breaking the law?
Mr. Zhao held the position of deputy general manager of the logistics department in a company in Beijing, and his monthly salary included a performance bonus of 3,000 yuan in addition to the basic salary. Later, the company issued the "Decision on Personnel Appointment and Removal", dismissed Zhao from the position of deputy general manager of the logistics department, and hired him as the deputy general manager of the department of the subordinate enterprise company, and the performance bonus was adjusted from 3,000 yuan to 1,000 yuan. Mr. Zhao sued the court and demanded that the company pay back the performance bonus.
During the trial, the company claimed that according to the resolution of the board of directors, Zhao was transferred to a subordinate enterprise company on January 4, 2022, Zhao's job position changed, and the salary standard was adjusted accordingly, and Zhao never raised any objection to the actual performance of the new position for more than 30 days, so it denied that there was an underpayment of performance bonuses.
After trial, the court found that the two parties signed an indefinite labor contract in 2016, stipulating that Zhao's monthly salary included a basic salary of 5,500 yuan, a performance bonus of 3,000 yuan, and a comprehensive subsidy of 1,500 yuan, totaling 10,000 yuan. Before the transfer, the company actually paid Zhao a salary according to the salary composition and total salary agreed in the labor contract.
The court held that after Zhao was transferred to a position at the same level in a subordinate company, the company adjusted the performance bonus standard to 1,000 yuan and the total salary to 8,000 yuan, but the company did not provide evidence to prove that the company and Zhao reached an agreement on the adjustment of the salary standard, and according to the salary table submitted by the company, Zhao's salary composition was inconsistent with the salary composition agreed by the two parties in the labor contract. Therefore, the company's unilateral reduction of Zhao's salary standard was inconsistent with the agreement between the two parties on the wage standard in the labor contract, and lacked basis.
In the end, the court ruled that the company should pay back Zhao's performance bonus.
The judge said that the performance bonus is a part of the labor remuneration, and the employer needs to reach an agreement with the employee before changing the performance bonus ratio. If the employer unilaterally increases the performance bonus, and the employee does not raise any objection, it may be deemed that the employee has accepted it; If the employer unilaterally reduces the performance bonus and the employee does not expressly accept it, the court will review the reasonableness of the employer's actions. If the reasonableness cannot be proved, the employee has the right to claim payment of the performance difference, or to terminate the labor contract on the grounds of "failure to pay labor remuneration in time and in full", and the employer shall bear the corresponding legal liability.
If the employee does not object, is it considered to be agreed?
Li works as a driver in a logistics company in Beijing, and the salary standard is 3,000 yuan plus commission. Later, Li terminated the labor relationship with the company on the grounds that the company was in arrears of piece-rate commission wages, and sued the court, claiming that the company's commission calculation method was wrong.
The company did not recognize the deduction of commissions, and submitted evidence such as the labor contract signed by both parties and the "Regulations on the Administration of Performance Award Accounting" to the court. After investigation, the labor contract stipulates that the piecework commission shall be implemented according to Party A's performance appraisal system, and if the employee has any objection to the company's salary payment, he shall submit it to the company within 1 month after the dispute occurs, otherwise it shall be deemed that the employee has no objection to the payment. The company's rules and regulations will be publicized, and employees will arrange their own time to read them. At the same time, the company's "Performance Award Accounting Management Regulations" stipulates that the driver's piecework salary = MAX (monthly signing commission - minimum standard × actual attendance days / number of days should be attended), and the minimum guarantee standard is 1,500 yuan / month.
The company said that employees can check the monthly salary details by themselves, and the company reminds employees to check their wages through WeCom every month, and if there is any objection, they can raise it online and offline; The screenshot of the salary submitted by Li also shows the specific composition of the salary details, the accountant, the contact number, etc.
The court held that the company's setting of an efficiency base value of RMB 1,500 as part of the commission calculation formula in the performance plan did not violate the mandatory provisions of the law and fell within the scope of the employer's exercise of distribution autonomy in accordance with the law. The company calculates the amount of Li's commission salary in accordance with the corresponding rules and regulations, and since Li's entry, the salary calculation method has not changed, and Li can check the amount of commission and the composition of the salary details every month, if there is any objection, it can be raised through online and offline methods, and there is no evidence that Li has raised an objection, which can confirm that the two parties have reached an agreement on the calculation method of commission wages. In the end, the court rejected Li's claim.
The judge reminded that the employer's performance system and plan have been formulated and revised through democratic procedures and have been publicized to all employees, and do not violate the mandatory provisions of the law, and are legal and valid. Employers enjoy the right to operate independently in accordance with the law, and the relevant calculation bases for determining commission wages shall fall within the scope of the right to operate independently. If the employee has any objection to the calculation of the commission, he or she shall raise it with the employer in a timely manner.
Performance-based bonus calculation error,
Can the company request a return?
Mr. Wang held a sales position in a company in Beijing. During the working period, Wang's performance bonus was issued in accordance with the company's "Performance Appraisal Bonus Management Measures". In August 2021, the person in charge of the company said that due to the insufficient understanding of the bonus calculation clauses in the "Performance Appraisal Bonus Management Measures" by the financial personnel, Wang's business commission calculation in the past three years was wrong, and Wang was required to return 180,000 yuan of performance bonus. Wang did not agree to return it, and the company filed a labor dispute lawsuit with the court.
After review, the company's assessment of employee performance is based on the business income completed by the employee in the current month, and the file is determined according to the proportion of business income divided by business indicators, and the higher the ratio, the higher the commission, with a maximum of 120%. The disagreement between the two sides is that the proportion calculation base should be the actual business volume or business indicators of the employee, if according to the calculation method advocated by the company, then Wang's performance bonus will be reduced by nearly half.
The court held that the rules and regulations on performance appraisal and salary distribution formulated by the employer through democratic procedures should not only be legal and reasonable, but also need to be clear and operable. In this case, the company's management system was more complex in terms of employees' performance provisions, and it was not obvious from the clause itself that Wang's original performance bonus accounting method was wrong. Although the Company asserted that the calculation of the base number should be determined in accordance with the accounting method understood by the Company, it did not submit evidence to prove that the Company had clearly interpreted the meaning of the above calculation concepts to the Employees and that the Employees were aware of them.
In addition, the rules and regulations of the employer on the distribution of employees' remuneration are essentially the agreement on remuneration between the two parties when establishing the employment relationship, which is one of the contents that should be agreed in the employment contract, and the system has the nature of standard clauses. Therefore, if there is ambiguity in the meaning of the terms and conditions such as performance appraisal, the employer, as the formulator of the performance appraisal and other rules and regulations, should interpret it in favor of the employee. The company has calculated and actually paid Wang's performance bonus for many years according to the original accounting method, and now claims a new accounting method and this method is obviously unfavorable to the employee, which is unreasonable. In the end, the court rejected the company's claim.
The judge said that the employer should ensure that the concept and method of calculating the performance bonus are clear and operable. When the employer and the employee have different understandings of the specific terms of the rules and regulations and it is difficult to clarify them, the employer will bear the adverse consequences if the provider of the standard clauses.
(Comprehensive sources: The Paper, Lizhi.com, Democracy and Legal Times, Jiupai News, etc.)
Source: Workers' Daily