In Mr Andrew Blyth v Clockwork Group Holdings Limited, a finance director was awarded £118,223 after an Employment Tribunal found that he had been unfairly dismissed following a dispute concerning his annual bonus.

Mr Andrew Blyth (the “Claimant”) worked as Group Finance Director for Clockwork Group Holdings Limited (the “Respondent”). He earned £120,000 annually and had received a director’s bonus of around £30,000 gross per year in recent years. In November 2025, the Claimant emailed the company’s owner to argue that his bonus calculation was unfair and should be revised upwards. Less than two weeks later, he was dismissed with immediate effect and told his position was redundant.

However, the Employment Tribunal rejected the Respondent’s explanation. It found that redundancy was a “sham” and concluded that the real reason for the dismissal concerned the Claimant’s conduct in trying to renegotiate his bonus.

The case highlights the potential legal issues surrounding bonuses, particularly where disputes over bonus pay influence subsequent employment decisions.

What Happened?

On 27 November 2025, the Claimant emailed company owner Courtenay Morison with his views about the bonus calculation for the financial year ending 30 November. He believed the proposed calculation was unfair and should be increased.

Mr Morison disagreed. During an email exchange, he told the Claimant that he was becoming “disgruntled/upset” with his attitude towards what was right and fair. He also told the Claimant that he needed to “seriously look at” his position.

There was then no further direct contact between them until 10 December 2025. On that date, the Claimant attended a meeting lasting around five minutes and was informed that his Group Finance Director position was redundant. He had received no previous warning or consultation about a possible redundancy.

Read More: NHS Exec Accused of Bullying Staff Wins £118K in Dismissal Case

Evidence obtained following a data subject access request proved particularly important. A few hours before the dismissal, Mr Morison had conducted an online search for “Legitimate Reasons for Director Redundancy” and sent the results to the Respondent’s HR manager.

The tribunal found there was no documentary evidence showing that Mr Morison had been considering making the Claimant redundant for months, as had been alleged. Instead, it concluded that he was attempting to find a pretext for dismissing the Claimant following the disagreement over his annual bonus.

What Did the Employment Tribunal Decide?

The Employment Tribunal found that the Respondent had failed to establish redundancy as the real reason for dismissal. Instead, the principal reason was Mr Morison’s dissatisfaction with the Claimant’s attitude towards his bonus and his attempt to have it revised upwards.

The tribunal therefore concluded that the redundancy was a sham and that the Claimant had been unfairly dismissed. It also found that the Respondent had acted in bad faith by attempting to present the dismissal as redundancy.

There had been no warning, consultation or attempt to follow the Acas Code of Practice on disciplinary and grievance procedures. The tribunal considered this an “egregious breach” of the Code and applied the maximum 25% uplift to the compensatory award.

Before adjustments, the tribunal calculated the Claimant’s past and future losses at £94,632.86. Adding the 25% Acas uplift produced £118,291.08, but his compensation was limited to the applicable statutory cap of £118,223.

Importantly, this was an award for unfair dismissal, rather than compensation for challenging the amount of his bonus. However, the tribunal did include estimated lost bonus payments when calculating the financial losses resulting from his dismissal.

Can an Annual Bonus Decision Be Challenged?

An employee may be able to challenge an annual bonus decision, but their legal position will depend significantly on the terms governing the bonus scheme and the employer’s reasons for its decision.

Acas explains that bonuses can generally be either contractual or discretionary. A contractual bonus is guaranteed when specified conditions are satisfied, whereas an employer has greater flexibility over whether to award a discretionary bonus.

However, describing a bonus as “discretionary” does not necessarily give an employer unlimited freedom. Acas states that employers must still act fairly and reasonably when deciding whether to pay a discretionary bonus.

Employees considering challenging bonus pay should therefore begin by checking their employment contract, bonus scheme and any relevant workplace policies. These documents can help establish whether the bonus is contractual, discretionary and subject to particular eligibility or performance requirements.

What if Your Bonus Is Contractual?

A contractual bonus generally becomes payable when the employee satisfies the conditions agreed with their employer. Those conditions might relate to individual performance, company performance or another clearly defined target.

For example, a performance bonus might provide that an employee receives a particular amount after achieving specified targets. Where those targets have been satisfied, an employer may be contractually required to make the payment.

Read More: Flawed Employee Dismissal Process Leads to £40K Award

Acas advises that an employee’s entitlement should be recorded in their written statement or employment contract. The documentation should also explain the criteria that must be satisfied before the employee receives their bonus.

If an employer fails to pay a contractual bonus that is properly due, the employee may potentially have a claim for breach of contract. Depending on the circumstances, an unpaid contractual bonus could also form the basis of an unlawful deduction from wages claim.

Employees should therefore examine the exact wording of their contract before concluding that a bonus has been wrongly withheld.

Can You Challenge a Discretionary Bonus?

A discretionary bonus gives an employer more flexibility, but this does not necessarily mean its decisions are beyond challenge.

As per Acas, even where a contract describes a bonus as discretionary, an employer must act fairly when deciding whether to pay it. An employee might potentially pursue a breach of contract claim where an employer has failed to exercise that discretion fairly and reasonably.

The wording of the bonus scheme can be particularly important. Employers should make it clear where bonuses are non-contractual, because unclear wording could potentially result in a scheme being interpreted differently.

Previous practice can also become relevant. For example, an employer might have regularly paid a particular bonus despite there being no express written entitlement. Depending on the circumstances, questions may arise over whether the payment has become contractual through “custom and practice”.

However, this is highly fact-specific. An employee’s prior receipt of an annual bonus does not automatically create a contractual right to receive the same payment every year.

Interestingly, the Claimant’s contract in Blyth expressly stated that his bonus was non-contractual. Nevertheless, when calculating losses from his unfair dismissal, the tribunal accepted his evidence that he had received bonuses during most years and that they accrued monthly. It consequently accepted reasonable estimates of the bonus income he would likely have received had he remained employed.

Can a Performance Bonus Be Challenged?

Disputes may also arise where an employer refuses or reduces a performance bonus because it believes an employee has failed to meet the relevant targets.

Where a bonus is contractual, the starting point will usually be the wording of the scheme. Employees should consider what targets applied, whether they achieved them and whether the employer followed the agreed method when calculating the payment.

Problems can arise where performance criteria are unclear, changed unexpectedly or applied inconsistently between employees. Evidence such as previous performance reviews, written targets, emails and earlier bonus calculations may help establish how the scheme operated.

Employers should also be careful about changing contractual bonus arrangements. Acas advises that where a bonus scheme is contractual, changing it will generally involve changing employees’ contractual terms.

Where the scheme is discretionary, an employer may have more flexibility to make changes. However, Acas advises that employers should act reasonably, communicate changes clearly and provide reasonable notice before changing or removing a discretionary scheme.

Can Bonus Decisions Amount to Discrimination?

An employee may also have grounds to challenge a bonus decision where they believe it involves unlawful discrimination.

The Equality Act 2010 protects workers against discrimination because of protected characteristics, including age, disability, race, religion or belief, sex and sexual orientation. Pregnancy and maternity are also specifically protected.

An employer should therefore avoid making bonus pay decisions based on discriminatory considerations. For example, awarding employees performing comparable work different bonuses because of sex or race could potentially raise discrimination issues.

Read More:Unlawful Deduction – Employee Wins Bonus Claim 

The Equality and Human Rights Commission specifically advises employers to ensure equality in bonus payments. It recommends establishing clear criteria, ensuring employees understand what they must achieve and checking that employees are not excluded from bonuses for discriminatory reasons.

Special considerations can also arise during maternity leave. Acas explains that entitlement may depend upon whether a bonus relates to organisational or individual performance. In some circumstances, withholding or reducing a bonus because an employee is on maternity leave could amount to maternity discrimination.

The correct legal position will depend on the nature of the bonus, the employee’s circumstances and the employer’s reason for its decision.

What if You Are Dismissed After Challenging Your Bonus?

Simply questioning an annual bonus does not give an employee immunity from dismissal. Employers can still take legitimate action where there is a fair reason and an appropriate process is followed.

However, the Blyth judgment demonstrates the problems that can arise where a bonus disagreement becomes connected with a subsequent dismissal.

The tribunal found that the Respondent had attempted to present the Claimant’s dismissal as redundancy when that was not the real reason. It concluded that the operative reason was Mr Morison’s dissatisfaction with the Claimant’s attitude towards his bonus.

If an employer believes an employee’s conduct when raising a bonus complaint warrants disciplinary action, it should normally address that issue openly and follow a fair procedure. Attempting to use another reason to disguise the real basis for dismissal can create significant legal risks.

Employees concerned about a connection between a bonus pay dispute and subsequent disciplinary action, redundancy or dismissal should keep relevant documentation. Emails, bonus calculations, meeting notes and correspondence concerning the later employment decision may become important evidence.

What Should You Do if You Disagree With Your Bonus?

If you believe your bonus has been calculated incorrectly or unfairly withheld, begin by checking your employment contract and the rules governing the relevant bonus scheme.

Consider whether the annual bonus is contractual or discretionary, what eligibility requirements apply and whether any individual or company performance targets have been satisfied. Comparing the decision with previous bonus payments may also help identify inconsistencies.

Acas recommends initially raising an unpaid bonus informally with the employer. Confirming any discussions in writing can help create a clear record of what was discussed and how the employer responded.

If the matter cannot be resolved informally, an employee may consider raising a formal grievance. Depending on the circumstances, potential legal claims could include breach of contract, unlawful deduction from wages or discrimination.

Different claims are subject to different procedures and limitation periods. Employees considering legal action over bonuses should therefore obtain advice promptly rather than waiting for an internal dispute to conclude.

Concerned About Your Bonus Pay? Get Help with Redmans

If you believe you have been unfairly denied an annual bonus, or have faced negative treatment after challenging bonus pay, contact us for advice. Redmans Solicitors are employment law specialists, and following a brief chat, we can provide expert advice.

We will discuss your circumstances, consider the terms of your bonus scheme and explain your possible next steps. Where appropriate, we can also advise you about potential claims involving unpaid bonuses, breach of contract, discrimination or unfair dismissal.

To learn more about how we could help you:

• Phone 020 3397 3603
• Complete our online form to request a consultation