Bonuses: bang goes the safety net

Been paid a dire bonus? Don't expect the courts to help you out.

After options trader Daniel Ridgway lost his case against JPMorgan last week, lawyers are warning of a deep-freeze when it comes to courts' willingness to dabble in bonus disputes.

"The Ridgway case means you're going to need to jump much higher hurdles in order to win a bonus case in court," says Darren Isaacs of Linklaters, which represented JPMorgan in the affair. "The High Court just doesn't want to get involved in second guessing banks' decisions on bonuses year in and year out," he adds.

If you've got a measly bonus, how can you tell if the courts are likely to take your side? Isaacs says it's very simple: "Would the average person on the street look at your bonus and say it's outrageous, given the circumstances?"

In the case of Ridgway, the answer would seem to be a resounding "no". Having gone on sabbatical for nine months during 2003 and made a loss for the three months that he was actually around, Ridgway had sought to argue he'd been wrongfully denied his bonus. Ahem, we don't think so.

Ridgway's failure to win his case follows last November's case involving James Keen, a senior prop trader at Commerzbank. Keen argued that he'd been underpaid to the tune of more than 7m, but the judge ruled in favour of Commerz and said Keen's payout would need to have been "irrational or perverse" for the court to rule he'd been treated unfairly.