By Joanne Bell & Hilary Larter
|Published 13 July 2026
In this case, the Employment Appeal Tribunal (EAT) held that where an employer announced the terms of a discretionary bonus and then approved payment under those terms, it could not later impose further approval requirements or a cap that had not previously been communicated.
Mr Chandrashekarappa worked for Wipro Ltd in a sales role. He participated in an incentive arrangement known as a "kitty bonus", which was introduced in March 2020. At the time of introduction, employees were informed that they could receive up to 1% of invoiced revenue generated from new business, subject to approval by the relevant sector lead.
Mr Chandrashekarappa later secured a deal with the John Lewis Partnership. On 1 July 2020, his manager wrote to the sector lead proposing that Mr Chandrashekarappa receive the full 1% commission on that deal. The sector lead approved the proposal. The employment tribunal also found that this approval was communicated to Mr Chandrashekarappa by telephone.
After this had been done, the sector lead then indicated that he needed approval from higher up the management chain. In addition, Wipro Ltd sought to apply a cap of US $150,000 on Mr Chandrashekarappa’s entitlement.
In December 2020, Mr Chandrashekarappa was told that management had approved a 1% commission but that it was capped at $150,000. He was paid the capped sum, although the tribunal recorded that 1% of first-year revenues from the John Lewis contract would have been £516,082. Mr Chandrashekarappa brought a claim for unlawful deductions from wages, arguing that he was entitled to the full amount. The tribunal dismissed the claim and Mr Chandrashekarappa appealed to the EAT.
The central question was whether Mr Chandrashekarappa's entitlement crystallised on 1 July 2020 when the sector lead approved the 1% payment, subject only to later calculation once the first-year revenues were known. The EAT held that this was the correct focus. As such, any later attempt to add conditions was ineffective. The later introduction of a $150,000 cap could not lawfully reduce Mr Chandrashekarappa's entitlement.
The EAT found that the tribunal had erred in thinking there was a need for further approval to achieve entitlement to the kitty bonus and also by concluding that the cap could be introduced after the event. Wipro Ltd had put forward terms under which the discretionary bonus would be awarded and Mr Chandrashekarappa had satisfied those terms. It was not open to Wipro Ltd to then ‘move the goalposts’ by attaching further conditions to the entitlement after the original terms had been outlined and after those terms had been satisfied. Once the manager had approved the 1% bonus in accordance with the March 2020 parameters, Mr Chandrashekarappa's entitlement crystallised.
The EAT allowed the appeal and substituted a finding that Mr Chandrashekarappa was entitled to the full amount, less the sterling equivalent of the $150,000 already paid.
For employers, the key point is that a bonus described as discretionary does not remain wholly flexible forever: once the employer has set the terms on which the discretion will be exercised, and then approved the bonus in accordance with those terms, it cannot later “move the goalposts” by adding fresh conditions or tighter limits.
Practically, the case highlights that all key features of a bonus arrangement - including any cap, formula, timing and approval level - should be communicated clearly and at the outset before employees begin working towards the relevant incentive. In this case, the EAT placed weight on the fact that the cap and extra approval requirement were not part of what had originally been conveyed to the employee.
