Shanghai court allows employer to cancel deferred bonus

The Shanghai First Intermediate People’s Court ruled that an employer could cancel an announced but unpaid deferred bonus of RMB1.2 million to a senior fund manager because the bonus was not fixed compensation and was subject to conditions in the company’s bonus policy and a special agreement with the employee.

The employee joined the company in 2007 and became the company’s general manager in 2011. Later, the employee also became the company’s legal representative and head of the compensation committee.

In 2015, after approval by the employee, the company issued its compensation plan for 2015 to 2017. According to the plan, for mid-level managers and above, 70% of their performance bonus would be paid in the year of performance, and the remaining 30% would be paid in the next year as a deferred bonus. If the employee were to leave the company during the performance period, the employee would voluntarily relinquish the bonus for the current performance period and would be ineligible for the deferred bonus for the previous performance period.