contract-law
merit pay accounts
<p>If Brand X creates a merit pay pool to give out merit bonuses or bumps in salary related to merit, can it be decided to use that pool of money for other purposes? For example, if a market study determines that they have to bring a segment of the workforce in line with market pay -- can they use the merit pool to do that?</p>

<blockquote>
  <p>can it be decided to use that pool of money for other purposes?</p>
</blockquote>

<p>Changes to a contract need to be agreed upon by all the individuals who insofar as parties to that contract have grounds for objecting to that change.</p>

<p>A promised stimulus or bonus on the basis of merit is a form of delayed compensation contingent on outperforming others and/or reaching a specified benchmark. Note that by "<em>promised</em>" I mean that the condition for higher pay is conveyed to the employees so as to encourage them to work harder.</p>

<p>Once an employee (provided that he is a party to that contract) has worked hard enough or achieve certain results, he becomes entitled to the additional compensation that was proposed to him. At that point, depriving him of that compensation constitutes breach of contract. The outstanding employee may argue that the base salary is too low for his skills set (regardless of market pay) and that therefore he would not have retained employment were it not for the stimulus plan.</p>
