Will there be a bonus this year?

Will there be a bonus this year?

The end of the year is approaching, and many people are already waiting for their bonuses, but there will be a number of employees who will be disappointed (again) this year. It matters what the basis for the bonus is, as the employer may legally decide to withhold this year's bonus. So when is a bonus due and when is it not? Can the employer be sued if they do not pay? Are we talking about salary, bonus, or premium?

What is definitely due?
If the bonus is part of the employee's remuneration specified in the employment contract and the conditions for payment specified in the employment contract have been met, then the employee is definitely entitled to the bonus. The conditions specified in the employment contract are typically linked to the individual, such as the existence of an employment relationship at the time of payment of the bonus, or to a company result, such as the employer's profitability.
If the conditions are met, the employer cannot refuse payment, as this would result in a unilateral amendment to the agreement between the parties, which is not possible. The Labor Code stipulates that the parties may only amend the employment contract by mutual agreement.
From this point of view, it does not matter whether we call the amount to be paid a bonus, Christmas money, or a 13th month's salary, if it is specified in the employment contract as remuneration or allowance in addition to the basic salary, it is definitely due to the employee (who meets the conditions), emphasized Dr. Péter Weidinger, LL.M., an expert at act legal Hungary.

What is not certain to be due?
Many employers only provide for the possibility of paying a year-end bonus in the employment contract, but leave the detailed rules to a separate document (typically a bonus or premium policy). This solution is good from the employer's point of view because it allows the detailed rules (e.g., individual or company goals) to be determined separately by the employer each year, and changes to the bonus rules for a given year do not require a bilateral amendment to the employment contract each year. From the employee's point of view, this is a more uncertain situation, as it may happen that the bonus policy is never finalized or is modified ad hoc by the employer to avoid the current payment.
If bonus rules have been drawn up and both the employee and the employer have fulfilled the applicable conditions, the employee is entitled to the bonus and may claim it from the employer if it is not paid. However, it is important to note that in order to win a lawsuit, it will be necessary to prove that the conditions (or any amendments thereto) were communicated to the employees, as well as to prove that the conditions were met.
It is also worth examining whether the employer's bonus policy was amended in a timely and appropriate manner, as it is quite possible that last-minute changes to the conditions could significantly alter the group of colleagues eligible for the bonus.
If the amendment to the policy is abusive and is solely aimed at avoiding the payment of bonuses, it is unlawful and violates the prohibition of abuse of rights and may be challenged by employees.
However, it is important to note that if, after the rules have been communicated, there is a significant change in the employer's circumstances that would make it impossible to fulfill the obligation or would cause disproportionate harm, then the rules may be legally amended even at the last minute and the bonus payment may be withheld. This could be, for example, a financial situation in which the payment of bonuses would result in insolvency of the employer. In such cases, despite the existing regulations, the employer cannot be expected to jeopardize its viability in order to pay the year-end bonus, emphasizes Dr. Péter Weidinger, LL.M., partner at act legal Hungary.

What is uncertain?
There are employers who have no written basis in labor law for the payment of year-end bonuses, meaning that the conditions are not specified in the employment contract, employer’s policy, or any other document. From the employee's point of view, this is of course the least reassuring situation, as payment in one year does not guarantee a bonus in the following year (even if the company is successful).
In such cases, it is largely up to the owner to decide when and how much their colleagues can expect to be paid, so employees have the least chance of claiming the outstanding bonus in a possible lawsuit.
However, the situation of employees is not hopeless in such cases, as the law states that the requirement of good faith and fairness is also violated by anyone whose exercise of their rights is contrary to their previous conduct, in which the other party had reason to trust. Therefore, if all colleagues receive a bonus every year regardless of their own and the company's performance, it will certainly be unlawful and discriminatory if a certain group of employees (e.g., blue-collar workers, female employees, or employees raising children) is excluded from the bonus payment in a given year. This is because the uniform bonus payment every year is considered a unilateral practice under labor law, to which employees can already lay claim.
Overall, it can be said that not everyone is entitled to a year-end bonus, premium, Christmas bonus, or other similar payment in all cases, even if they have done everything in their power to ensure the successful operation of the employer, and even if such payments have been made by the employer in previous years. However, if employees are entitled to the payment on the basis of their employment contract, employer's regulations, or even the employer's unilateral practice, they may claim the amount due to them from the employer in court if the payment is not made, concluded Dr. Péter Weidinger, LL.M., lawyer at act legal Hungary.