When can a bonus be demanded?
Can a bonus be demanded as a matter of right? For context, I recently resigned from work. Prior to such resignation, my employment contract dictates that part of my regular salary is the quarterly bonus. I resigned last November 2022. When I asked for my final pay/receivables, my previous employer argued that they recently applied a new rule on the entitlement for bonus, i.e., the same will only be given to active employees. As such, they are denying my claim for the bonus. My position is that I already earned such bonus since it forms part of my salary. Be that as it may, I would appreciate if my position can be confirmed by your legal expertise.
To begin with, we shall jointly discuss your questions for being interrelated and for brevity. Succinctly, in the case of Mega Magazine Publications, Inc. v. Defensor (GR 162021, June 16, 2014), penned by the retired chief justice and current executive secretary Lucas Bersamin, the Supreme Court reiterated the following:
“The grant of a bonus or special incentive, being a management prerogative, is not a demandable and enforceable obligation, except when the bonus or special incentive is made part of the wage, salary or compensation of the employee, or is promised by the employer and expressly agreed upon by the parties.” (Emphasis and underscoring supplied)
The foregoing dictates that an employee may demand for a company bonus when the same is promised by the employer, and expressly agreed upon by the parties. In this connection, a company bonus veers away from its discretionary nature, and becomes a demandable right of an employee. Consequently, if it can be really shown that your employment contract says that the company bonus forms part of your salary, then, it can be demanded as a matter of right.
Anent the denial of your previous employer of such bonus due to an alleged subsequent company policy requiring actual employment as a condition precedent for bonus entitlement, we find that you are still entitled to the earned, and prorated amount of your demandable bonus. This is pursuant to the words of the Supreme Court in the fairly recent case of Manila Electric Company v. Argentera (GR 224729, Feb. 8, 2021), penned by Associate Justice Marvic Leonen, where the Supreme Court said that:
“An employer cannot unilaterally declare the forfeiture of wages, benefits, and privileges that have accrued in favor of a dismissed employee. The employer must prove the basis for the forfeiture through its policies, employee contracts, or its collective bargaining agreement. Without such proof, there is no basis to forfeit accrued monetary benefits as of the date of termination. To do so would violate Article 100 of the Labor Code, since the benefits have already accrued to the employee. x x x
“Without an express provision on the forfeiture of benefits in a company policy or contractual stipulation under an individual or collective contract, the employee’s rights, benefits, and privileges are not automatically forfeited upon dismissal. The employee’s termination from employment is without prejudice to the ‘rights, benefits, and privileges [they] may have under the applicable individual or collective agreement with the employer or voluntary employer policy or practice.” (Emphasis and underscoring supplied).
Applying the above-mentioned jurisprudence to your query, it would be erroneous and downright discriminatory for your previous employer to unilaterally impose a policy prejudicial to the previously agreed, performed, and earned company bonus or salary. If a dismissed employee is entitled to such bonus, then with more reason should an employee who voluntarily resigned be entitled thereto. After all, Article 100 of the Labor Code prohibits diminution of benefits due as a matter of right in favor of employees.
As you have mentioned, the grant of bonus in your employment contract forms part of your salary; hence, it is not discretionary and cannot be subjected to new conditions without your consent. Consequently, as long as it can be proven that the amount of bonus being claimed pertains to the period of your actual employment, then you have an unequivocal vested right to it, i.e., your property right to an earned salary bonus.
We hope that we were able to answer your queries. This advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]