Employers cannot “move the goalposts” on bonus schemes
Monday 22nd June 2026
A recent Employment Appeal Tribunal (EAT) decision reminds employers that once bonus terms are set and the relevant criteria have been met, they are likely to be binding.
In Chandrashekarappa v Wipro Ltd [2026], the EAT held that an employer could not retrospectively impose a cap or introduce further approval requirements after the employee had already satisfied the conditions that had been communicated.
Background
Mr Chandrashekarappa (the Claimant) worked in a sales role at Wipro. As part of a pay plan, employees were told that they could receive a “kitty bonus” of up to 1% of revenue from new business deals.
The scheme was communicated to staff as part of a bonus structure linked to new customer revenue.
Following a successful deal with John Lewis, the relevant manager approved the payment of the Claimant’s full 1% bonus. Wipro then sought to impose a cap on the bonus and require further higher‑level approval. As a result, the Claimant brought a claim for unlawful deduction from wages before the Employment Tribunal (ET).
ET Decision
The ET rejected the Claimant’s claim for unlawful deduction from wages, finding that no entitlement had crystallised until a final, capped amount was declared.
The Claimant appealed to the EAT.
EAT Decision
The EAT allowed the appeal and overturned the ET’s decision. It held that the employer had set out clear terms of the bonus scheme, the claimant had fulfilled those conditions and therefore entitlement to the bonus had arisen at that point.
The EAT also found it was not open to the employer to “move the goalposts” and impose a cap after the event or introduce further approval requirements not originally communicated to the employees.
The ET had erred in law by still treating the bonus as discretionary after the conditions were met.
Comment
Although each case will turn on its own facts, this decision highlights a number of points employers should consider to reduce the risk of unlawful deduction from wages claims relating to bonuses.
Firstly, a “discretionary” bonus does not give an employer unfettered discretion. Where clear criteria have been communicated and those criteria are met, the employee is likely to have become entitled to the bonus.
Secondly, employers should not seek to retrospectively move the goalposts once bonus criteria has been met. All eligibility criteria, approval requirements, payment caps and timings should be clearly communicated from the outset.
Finally, employers should also ensure that any bonus scheme is commercially viable before it is announced to employees.
For advice and support on how to draft, update and/or communicate bonus schemes in your organisation contact one of our Employment Team.
