“How does a court figure out a fair bonus?”

Question: Dear Mr. Alan:

I am from Ethiopia, and established an employer-employee relationship as a Commercial Representative with a company headquartered in Israel. While I was following medical treatment to be relieved of a sickness, and not on my duty for this reason, the company terminated my employment contract starting from October 31, 2010, even if I presented a full medical certificate which shows I am fit to be back on my duty. 

The Company was not willing to return me back to my duty, and also didn’t pay me any compensation, severance, Bonus, payment for medical treatment that I underwent, and termination payments as per the law. My question is not regarding the severance pay; I could sue the Company and get it.

But regarding the Bonus it is stated in my Contract that I get a monthly payment of wage, but also a Bonus by the end of the year or when deal is closed with third party. But not stated is how much my Bonus is on the contract. I have been working for 8 years and made deals for US $100 Million during these years.

Can the Court order the Company to open up profit/loss documents of the Company and to sit to negotiate my Bonus? If yes, how should I calculate my Bonus if it is not defined how much in my contract? Thank you.

Teddy G. 
Addis Adaba, Ethiopia

Question:  Dear Mr. Teddy:

Thank you for your questions, and for writing in about your experience. I do not know the law in Ethiopia, or in Israel, but I can tell you how the law in most countries decide these things, that is, how much a bonus should be when a Contract does not say.    

a. First, a Court will look “inside” a Contract for the answer it seeks. It is almost a universal rule of law that, when two parties have a Contract, such as an employer and an employee, the Court first looks at what, if anything, the Contract says that might give an answer to the question. Does your Contract give any clues, indications or suggestions regarding how much bonus you should receive? If the answer is “yes,” the Court will first consider that information before it goes “outside” the Contract to steps “b” and “c,” below.  
 
b. Second, if a Contract is “silent” on a question, a Court will look “outside” the Contract for what the parties (here, employer and employee) intended. So, is it possible you and your former employer sent any emails or letters to each other, or filed any documents with other persons, that might give the Court help in finding an answer? I have many times seen emails between employers and employees help the Court figure out what the parties, themselves, intended. I have also seen Courts look at Immigration Work Visa applications – sent to Immigration Officials – that say how much an employee is “expected” to get paid.

As you suggested, a Court can also require that both the employer and employee hand over any relevant documents that might help it find the right answer to how much bonus you should get paid. In all Courts where I have done trials, Courts have required the employer and employee to turn over documents that might shed some light on a question such as yours.

Were there any witnesses to conversations who might come forward with what they heard you and your former employer agree to? This information, too, can be helpful to a Court in deciding what you and your former employer intended.

c. Third, a Court needs to go past “a” and “b,” above, it will also look to “the custom of the trade” to answer its questions. So, if a contract gives no clues, and there are no documents or witnesses to help figure out what you and your former company intended, a Court may also look to see how much other people get paid as bonus who (i) do your kind of work, (ii) in your area of the world, (iii) on deals the size of the deals you worked on.

I recommend to you that this may be the best place for you to look when you are trying to decide how much your own bonus should be: what is the “fair range” paid to other people who do your work in Ethiopia? 

d. Most, but not all, Courts will try to help the parties find a negotiated settlement. More and more Courts are working with people – and especially employers and employees – to try to find a negotiated settlement of their disputes. This is because it takes up so much less time than a trial, and even an appeal of verdicts in a trial. Settlements are quicker, less expensive, and more “final” in resolving problems. Even when a Court does not step in to help parties settle their disputes, the parties can ask the Court for help, or even hire a retired Judge to do so.

Teddy, if you feel that you were treated badly – which it sounds like you were – I support your efforts to get justice from your former employer. It is sad that they did not treat you honorably when you were ill. I hope this helps you get what you deserve.

I hope you will tell others in Ethiopia that our blog is here – on the internet – to help them, too. Good luck to you!! 

Best to you,
Al Sklover

© 2011 Alan L. Sklover, All Rights Reserved.