GUEST COMMENT: Good news for anyone summarily dismissed before bonus day
If you were expecting a bonus, but were unexpectedly dismissed before it was paid out, a recent court case could act strongly in your favour.
Last week, the High Court ordered Seymour Pierce to pay a bonus of 70k to former head of institutional sales, Malcolm Rutherford.
Rutherford was dismissed in November 2007, allegedly for poor performance, despite being promoted in the five months preceding his dismissal.
The High Court not only rejected Seymour Pierce's allegations of poor performance, but determined that Rutherford should be paid a 70k for the final quarter -even though he was no longer working for the company when bonuses were paid at Christmas.
This could be a groundbreaking judgement.
Banks have traditionally been free to add a clause to their contracts stating that individuals must be in full time employment and not under notice on the day that bonuses are paid in order to be eligible for a bonus. As a result, it has been possible to oust employees before bonus day, and to withhold bonuses solely on the grounds that they're no longer employed.
Following the case of Commerzbank -v- Keene in 2006, employees gained the right to challenge an employer's discretion to withhold a bonus if it could be shown that the employer had acted perversely or irrationally in failing to pay a higher bonus. However, to make this challenge they had to be employed at the bonus payment date.
The Rutherford case means that it may now be possible to challenge an employer's decision to pay a low bonus (or withhold a bonus entirely) if you weren't employed on the date the bonus was supposed to have been paid. It may also make it easier to challenge bogus redundancy situations (of which there are undoubtedly many), where banks have ousted employees as a means of avoiding bonus payments.
The banks have had their way for far too long in this area and so the Rutherford case is good news indeed.
Feel free to contact Philip on pl@lzwlaw.co.uk or 020 7357 9494 for a free consultation on this or any other employment law issue.
