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Taking the discretion out of discretionary bonuses

A recent decision in the New South Wales Court of Appeal has emphasised the importance of ensuring that bonus provisions in contracts of employment properly reflect the intent of the parties.  This issue would be worth considering in the context of your own employment contracts, before the end of the financial year.

Employers should be vigilant in setting objectives for employees and examining performance against those objectives.  The recent outcome in Silverbrook Research Pty Ltd v Lindley highlights a few key issues surrounding bonuses: