we signed an employment contract for an executive that reads.
The company shall, on the fifteens (15th) day of each month, pay employee a performance bonus equal to seven percent (7%) of the company's Earning before Interest, Taxes, Depreciation, and Amortization. ("EBITA") for the previous calendar month.
This from an accountant perspective turn out to be impossible as invoices and other payments for services and goods maybe exceed that period. I should say that we are operating a restaurant.
This has now gone to court because we paid the calculated monthly profit but only after we closed the books for the particular year.
I'm looking for some advise and views of the community. Ultimately a reference to an authority that can evaluate and confirm that it is impossible to process such a clause.
I've found companies that pay performance bonuses on an annual basis based on EBITA but I have not found any example where the bonus is calculated on a monthly profit basis.
There are reasons why we signed such an agreement that goes beyond the technical question.
HJ
The company shall, on the fifteens (15th) day of each month, pay employee a performance bonus equal to seven percent (7%) of the company's Earning before Interest, Taxes, Depreciation, and Amortization. ("EBITA") for the previous calendar month.
This from an accountant perspective turn out to be impossible as invoices and other payments for services and goods maybe exceed that period. I should say that we are operating a restaurant.
This has now gone to court because we paid the calculated monthly profit but only after we closed the books for the particular year.
I'm looking for some advise and views of the community. Ultimately a reference to an authority that can evaluate and confirm that it is impossible to process such a clause.
I've found companies that pay performance bonuses on an annual basis based on EBITA but I have not found any example where the bonus is calculated on a monthly profit basis.
There are reasons why we signed such an agreement that goes beyond the technical question.
HJ