Cash Incentive Plan Prepared in Error

pinto4you

Last year, our HR department prepared and delivered a Cash Incentive Plan to an eligible employee in which the terms of the Plan were in error.  The employee signed the document, which described the Plan, and it went into their file.  Now, a year later, it turns out that the terms of the Plan were wrong to the extent that the employee will now receive double the payment of what was originally intended.

Can we rescind the document and just have her sign a new one with the correct terms or are we held to honoring the terms of the Plan even though they were wrong to begin with?     

TXHRGuy

You can certainly negotiate with this person but if you unilaterally make a change, they can make a wage claim against the company and you will likely lose.  If the amount of money is really really big and they are unhappy in their job or with the Company, this could be exactly the sort of thing they would look for to get the money and get out and get out by riding on a tall white horse.  I would carefully consider the person's attitude in determining how I would approach the negotiation.

If the person is willing to sign a letter of understanding modifying the original agreement, that wouldn't hurt.  Something like "I understand that the incentive plan I signed on <date> contained an error.  Where it says 'x', it should have said 'y'.  That was my understanding at the time, and this letter clarifies my understanding.  The Company is only obligated to honor the intended agreement as given by 'y'."

You could have a "do over" but I think that always looks worse if things go bad.  It looks like you had a cover up rather than a misunderstanding.  In either case they can say they were coerced, anyway.