Mr N Iles v Unilever UK Central Resources Limited — 2020

Mr Iles was employed by Unilever from 1999 and signed a 2010 contract as a User Experience Director. The tribunal held that his contract made him eligible to participate in Unilever's variable pay or bonus scheme, but the wording in the contract itself was not sufficient to operate as a complete stand-alone entitlement. The contract had to be read with the relevant HR Standard on Annual Bonus, and the tribunal found there had always been one scheme, later renamed from Variable Pay Scheme to Annual Bonus Scheme.

The tribunal found that the 2010 HR Standard was incorporated into the contract. It treated the bonus as an important part of the remuneration package, but also held that the individual performance provision preserved a qualified discretion and that the resignation provisions were part of the contractual scheme. On that basis, employees who left before the end of the calendar year were not entitled to an annual bonus, while those who left after year end could still be paid, subject to the Respondent considering contribution and behaviour. The tribunal also held that clause 24 of the contract and the later 2017 bonus changes did not give Unilever an effective unilateral right to vary the scheme terms in the way it sought.

Mr Iles resigned on 20 October 2017. He had received communications in June 2017 explaining that, for 2017, employees had to remain employed on the bonus payment date, expected to be 21 March 2018, and that anyone who resigned and left before then would not be eligible. The tribunal found he did not agree to the variation by conduct. It accepted, however, that had the Respondent paid him a bonus, a PR3 rating would have been the correct rating to apply, and it rejected his case that a PR4 rating was guaranteed.

The tribunal therefore concluded that there was a breach of contract because the Respondent did not at the relevant time exercise the discretion in the 2010 resignation clause, but it also held that the Respondent would rationally have exercised that discretion consistently with the 2017 rules it sought to introduce. As a result, no remedy arose for breach of contract, and no sum was properly payable for the purposes of the unlawful deduction from wages claim.