Many employment contracts include bonuses, but what happens if your employer tries to delay payment or says you forfeit it if you leave? A recent Federal Court decision, Wollermann v Fortrend Securities Pty Ltd [2025] FCA 103, provides important clarity and strengthens employee bonus rights in Australia. This ruling is crucial news for employees and unions navigating bonus entitlements.
The Wollerman Case: Deferred and Forfeited Bonuses
In this case, two employees were entitled to monthly bonuses once they hit specific commission targets. Their contracts stated:
- 50% of the bonus would be paid the following month.
- The remaining 50% was deferred for seven months.
- Crucially, if their employment ended before the seven-month mark, they would forfeit the deferred amount.
When the employees resigned, the employer (Fortrend) refused to pay the deferred bonus portions, relying on these contract terms.
Federal Court Finds Deferral & Forfeiture Unlawful
The employees successfully argued that withholding the deferred bonus breached section 323 of the Fair Work Act 2009 (Cth).1 This section requires employers to pay employees amounts payable for work performed “in full” and “at least monthly”.
The Court found that the full bonus entitlement was earned as soon as the employees met their monthly commission targets. The contractual clauses attempting to delay payment for seven months (a deferred bonus) and forfeit it upon resignation (a bonus forfeiture clause) were deemed invalid because they contradicted the Fair Work Act’s requirement for timely payment of earned wages. Simply put, the employer could not use the contract to unlawfully withhold money already earned by the employees. The employees recovered over $38,000 in unpaid bonuses.
What the Wollerman Ruling Means for Employees
This Federal Court employment decision has significant implications:
- Earned is Earned: Your entitlement to a bonus (if based on achieving set performance conditions) likely arises when you meet those conditions.
- Unlawful Deferrals: Contract clauses significantly delaying payment (beyond one month) of already-earned bonuses may be unlawful under Fair Work Act section 323.
- Forfeiture Clauses Questioned: Clauses requiring you to forfeit an earned bonus if you leave before a deferred payment date are likely unenforceable.
- Director Liability: The company’s Managing Director was also found personally liable for the breaches, highlighting that individuals involved in implementing unlawful pay arrangements can be held accountable.
Check Your Contract and Seek Advice
If your employment contract contains deferred bonus clauses, or if you’ve left a job and had an earned bonus withheld or forfeited, review your situation carefully. Understand when your bonus entitlement is actually earned according to your contract.
The Wollerman decision provides strong support for employees seeking payment of earned bonuses. If you believe you have an unpaid bonus claim or need your contract reviewed, expert legal advice is crucial.