Worker successfully claims quarterly bonuses after employer couldn't prove KPI requirements existed
The Western Australian Industrial Relations Commission recently dealt with an employment dispute involving contractual benefits and performance-based remuneration.
The case centred on whether additional quarterly payments were contingent upon meeting specific key performance indicators or represented unconditional salary increases for a promoted worker.
A worker who had been promoted to director of business development argued that his employer had agreed to pay him additional quarterly amounts of $10,000 as part of his increased remuneration package.
He maintained these payments were unconditional entitlements under his employment contract, not tied to any performance requirements or achievement of specific targets.
The employer acknowledged the agreement for additional quarterly payments but argued they were conditional upon the worker achieving performance benchmarks through measurable key performance indicators (KPIs), which he had failed to meet.
The worker, a French national employed under a Temporary Skill Shortage 482 Visa, started as advertising manager in August 2019 with the employer, which operated an online meal supply business.
His base salary was $70,000 per annum exclusive of superannuation. In April 2021, his salary increased to $100,000 per annum, and he received a promotion to director of business development in October 2021.
The worker maintained there was an agreement for his salary to increase to $140,000 per annum, with additional remuneration payable in increments of $10,000 every three months. He argued these amounts were not linked to performance-based KPI targets. The company's chief executive officer had allegedly agreed to this arrangement according to the worker's evidence.
The first quarterly payment of $10,000 for the March 2022 quarter was paid in May 2022. This payment was documented in a letter from the chief executive officer dated 31 May 2022, which mistakenly referred to the worker's former position rather than his new role.
The letter stated: "While the role remains probationary you are entitled to a payment equivalent of AUD $10,000 every three months served as discussed with [the chief executive officer] and [her husband]."
In August 2022, the worker obtained permanent residency in Australia and went on annual leave. Upon returning in September 2022, the chief executive officer informed him that his duties had changed, with several responsibilities, including his managerial duties, being transferred to another employee. The worker maintained that no explanation was provided for this change.
When he returned from annual leave on 12 September 2022, he told the chief executive officer during a telephone call that he had been granted permanent residency.
During this same phone call, the chief executive officer said that a number of his duties including his management responsibilities had been passed on to another colleague. The timing of these changes, occurring while he was on leave, became significant in the dispute.
The worker resigned in November 2022, giving eight weeks' notice. His employment ended on 30 December 2022. He then claimed denied contractual benefits, alleging the employer had failed to pay his quarterly payments of $10,000 for the second quarter of 2022 and a pro rata amount for the third quarter of 2022. The worker's total claim was $17,692.30.
The employer acknowledged there had been an agreement to remunerate the worker by way of additional payments of $10,000 per quarter.
However, they argued those payments were conditional upon the worker achieving performance benchmarks through measurable KPIs, which he failed to do. The employer maintained it had not denied the worker any entitlements because conditions for payment had not been met.
The employer's case relied on the assertion that the worker's new position was inherently performance-based, particularly given his probationary status. They argued the worker was the senior management member responsible for reporting KPIs to the senior management meeting each week. The employer maintained that probation is "a period under which you are being monitored closely to ensure you are adequate to the role."
During proceedings, the employer provided 25 documents related to KPIs during the document discovery process.
However, these documents primarily related to overall business performance measures rather than specific contractual obligations tied to the worker's individual remuneration.
The employer also referenced a 'KPI Dashboard' document used for monitoring overall business performance, discussed at weekly senior management meetings.
The Commission heard evidence from both the worker and the chief executive officer, finding that the overall truth of the witnesses' accounts "fell somewhere in the middle."
A significant issue arose regarding the employer's failure to call the chief executive officer's husband as a witness to support their case, even though he was mentioned in the May 2022 letter. This created a negative impression for the employer's case.
The Commission noted the worker's initial contract as advertising manager did not contain any express term for performance based on KPIs.
Around October 2021, there was an agreement to change the worker's duties and give him the new title of director of business development. To reflect increased responsibilities, the worker would be paid an additional $40,000 per annum, payable at $10,000 per quarter.
The Commission concluded: "There was no evidence before the Commission, whether documentary or otherwise that supported the [employer's] claim the payment of the quarterly amounts would be conditional upon the [worker] meeting KPIs or other performance targets." The May 2022 letter became central to the analysis, as it made no reference to performance conditions despite being prepared for auditing purposes.
The Commission declared that the worker had been denied a benefit under his contract of employment in the amount of $10,000 for the April to June quarter 2022.
However, it dismissed his claim for the July to September quarter 2022, finding that changes to his position while on annual leave effectively returned him to his previous role before the quarter's completion.
The employer appealed, alleging unfair treatment and arguing the Commission overlooked important evidence. The appeal tribunal systematically addressed each complaint, finding no merit in the allegations.
During the appeal, the employer's representative made a crucial admission when asked about direct evidence of discussions regarding performance-based payments, stating:
"But is there any other direct evidence? No, I can't think we can point to anything that's been put forward."
The appeal tribunal noted the significance of the May 2022 letter's omission: "If the [employer] had intended the quarterly amounts would be conditional upon the [worker] meeting KPIs, [the chief executive officer] would have told [the person who prepared the letter] to include this information in the May 2022 letter which she signed."
The decision emphasised that "generalised statements by the [employer] that the [worker's] new job was 'performance based', were insufficient to establish the [employer's] claims." The appeal was dismissed.
