There is still a case for claiming deferred 2008 bonuses

Here's a can of worms, allow us to open it for you: there may be a case for pursuing deferred bonuses from 2008 that the government has forbidden banks to pay.

We're sure most bankers in Ireland don't need a reminder of the AIB bonus debacle that occurred in December last year, but here it is. When we revealed that AIB had earmarked €40m to pay its capital markets staff bonuses promised in 2008 but deferred for over two years, it caused a bit of a stink.

Eventually, then finance minister Brian Lenihan wrote a letter to AIB, vetoing them from paying these bonuses and thus giving the bank a legitimate get-out of its contractual obligation to shell out for this variable pay.

In theory, this should have been the end to matters, but we understand from employment lawyers representing AIB capital markets staff (and disgruntled employees from other institutions that have retracted deferred bonuses) that, actually, people are still contesting the government's decision.

After providing financial support for Ireland's domestic banks, the government produced in December the Credit Institutions (Stabilisation) Act 2010, which - among other things - gives the state power to determine remuneration within the institutions it has bailed out. It's this act that the government is using as justification for retracting bonuses.

Many of the cases currently being pursued by bankers trying to claim 2008 bonuses hinge on whether the act should allow the government to retrospectively deny bonuses.

"The government can determine the future remuneration policies of the banks it has provided financial support to, as well as for the period it has provided funds. The question, however, is whether it can interfere with banks' contractual obligations to pay bonuses for as far back as 2008," says one employment lawyer who declined to be named because the cases are ongoing.

The key question, says the employment lawyer, is whether retrospectively cancelling contractually promised bonuses is a violation of these employees' constitutional rights.

This is still open to debate, with lawyers poring over the act to look for indications that this is indeed the case. If so, banks could be forced to pay these bonuses...eventually.