Bankers’ bonuses are in the news at the moment. There seems to be an assumption that all those who work in banks are of the same kind, are all equally targets for blame, and that their contracts can be ignored because a lynch-mob, with the Prime Minister at its head, is out to get them. It might pay to consider the contractual position – and to bear in mind that there will be many variants between the hopeful recipients.
Usually most bonuses are discretionary. There have been some cases in the past where employees have successfully sued for failure to pay a discretionary bonus guaranteed on the individual’s performance. In many cases the discretion depends on the whole company’s performance rather than the individual’s.
The Contracts need to be looked at very carefully. Public pressure is on at the moment to curb bonuses, but a blanket attack on everyone, from the ordinary investment worker to the captains of industry is inappropriate.
Some Contracts include bonus structures geared both for good and bad performance and are gauged over several years, being reduced if necessary if performance dips. It is possible that a nil bonus might give rise to a claim for breach of Contract.
These are difficult times and each case and employment contract has to be looked at very carefully.
Be proactive, consult early.
