Entitlement to Bonus during Illness

An employee who had been ill during part of a calendar year was entitled to a bonus for the full calendar year, in accordance with the bonus scheme agreed with the employer. In order to determine the amount of the bonus, the Sub-district Court assumed the average of the bonused over the previous three calendar years.

For 17 years, an account manager had been employed at a wholesale of cleaning products. On January 1, 2022, the employment contract had been terminated by the Sub-district Court. The Sub-district Court had not just granted the employee the transitional allowance, but also a fair compensation, because the employer had demonstrated seriously culpable behaviour.
As of August 9, 2021, the employee had been ill due to a labour dispute with the employer. In turn, this sick leave had been the result of the employee's suspension by the employer, which, as the Sub-district Court had ruled, had been unjustified.
The employer had made a bonus arrangement with the employee, entitling the employee to share in the gross margin of the employer’s turnover in the part of the company where the employee used to work. At the time when the Sub-district Court had decided to terminate the employment contract, the bonus for 2021 had not yet been due, so that the Sub-district Court was still unable to decide on the entitlement to the 2021 bonus during the dissolution proceedings. When, subsequently, the parties also entered into a dispute about the amount of the bonus, a separate proceeding before the Sub-district Court was necessary to determine the amount of the 2021 bonus the employee was entitled to.
One of the points of contention about the amount of the bonus was about the question of whether the employee was also entitled to the bonus during the period in which he had been ill. According to the employer, a reasonable explanation of the bonus scheme implied that the employee's active performance had to be taken into account. Since the employee had been ill from August 9, 2021 to December 31, 2021 and had not made any contribution to the results of the part of the company in which the employee used to work, he would be entitled to only 60% of the bonus. On the other hand, the employee pointed out that the bonus scheme was based on the total gross margin only and that, for that reason, there was no link between this bonus and his personal contribution to it.

During the hearing, the Sub-district Court explained the legal provision to the parties regarding an employee's right to sick pay, also for variable wages. This lead to a discussion between the parties about the question under whose control the employee’s failure to perform work fell. The Sub-district Court held the opinion that illness is a cause that should be borne by the employer, even if the illness was related to a labour dispute. The Sub-district Court did not consider the bonus scheme as a pure profit-sharing mechanism. The bonus was determined by gross margins, influenced by employee efforts over a number of years. The employee could influence the amount of the bonus by attracting and retaining clients for the employer.
Within the meaning of the law, the bonus is “a wage that is not determined on the basis of the number of hours worked”, and where the law stipulates that an employee is entitled to as much salary as he/she could have earned if he/she had not been ill. The employee believed that this meant that he was entitled to the total amount of the 2021 bonus. The employer however, believed that a usual and reasonable average period over the previous seven years should be assumed.
The Sub-district Court assumed a usual and reasonable reference period of three years. Thus, the Sub-district Court based the entitlement to continued payment of the bonus on the average amount of the 2018, 2019 and 2020 bonuses.

Regarding variable wages, above described as “wages that are not determined on the basis of the number of hours worked”, in practice, little is known about the legislation on the continuation of wage payment during illness. Initially, the representatives of both parties in the above case had actually paid no attention to it, although this may have been a conscious choice from both sides.
There are two legal provisions regarding the right to wages for inactive employees.
The first one provides a risk distribution, under which the inactive employee is still entitled to wages, unless the reason for the inactivity falls under the employee's control.
The second one explicitly stipulates that an employee who is ill shall be entitled to continued payment of 70% of the salary.
As for the amount of the continued payment of the variable wages, the second provision (the one about the salary during illness) refers to the first provision (the one that provides the risk distribution). It follows that an employee who is ill is entitled to continued payment of wages up to the amount that the employee would have received if he/she had not been ill.
Based on the above, the fact that a sick employee is entitled to that wage is established.
The question under whose control the employee's illness should fall is thus no longer an issue.
The only remaining question is how much variable salary the employee would have received if he/she had not been ill. It is obvious they this is a difficult question since it is, almost by definition, an unknown factor. That is the reason why it is not uncommon to -if possible- assume the average of the three previous years. The law also uses it for calculating the amount for the transitional allowance.
In the above case, however, also the question may be raised whether the employee, had he not been ill during part of 2021, would not at least have been entitled to the entire 2021 bonus. If it is really so that the employee contributes to the gross margin -which determines the amount of the bonus- by attracting and retaining clients for several years, the employee's efforts in the 40% of the year in which he had been inactive have only had limited impact on the amount of the bonus.
Remarkable in the Sub-district Court's judgment is that the employee was awarded 100% of the bonus, whereas the entitlement to the sick pay only entitled him to 70% of the salary and amounts to not more than the maximum daily wage. The reason may be that contractually the employee was entitled to continued payment of 100% of the salary, but the Sub-district Court judgment did not mention this.