3 February 2025

Rik writes in FD on discretionary bonuses

In an article published in Het Financieele Dagblad, Rik van Haeringen examines the legal challenges employers face when it comes to the issue of discretionary bonuses. In practice, employees frequently take legal action – often successfully – when they believe they were unfairly denied a discretionary bonus or received a lower amount than expected. Employers attempt to mitigate this risk by explicitly stating in contracts that bonus awards are at the employer's sole discretion. But case law shows that judges are often inclined to intervene by fully assessing whether the employer’s decision about the bonus was reasonable and fair.

Rik argues that judges tend to overlook the contractually agreed freedom of employers to determine bonuses. In his view, case law is too strict on employers, curbing their freedom to set their own policies. This limitation may discourage companies from offering discretionary bonuses at all. Rik advocates for a more restrained judicial approach, where judicial intervention occurs only in situations of clear unfairness. This would improve the balance between entrepreneurial freedom and employee interests.

The full article (in Dutch) is available here: Bij gesteggel over bonussen kiest rechter te vaak voor werknemer.