Non-Payment of Discretionary Bonuses Upheld
Keen v Commerzbank AG: [2006] EWCA Civ 1536
CA
17 November 2006, reported 6 February 2007
Daily Law Notes Summary
The claimant was made redundant at a time when he thought he was
due an enormous €3m bonus. He sued for breach of contract by
his employers for the bank's breach of an implied term not to
exercise its discretion about the bonus irrationally or
perversely. The Court of Appeal held: (1) The burden of
establishing that the level of a discretionary bonus payment by
the employer was irrational or perverse, where much depended on
the employer's discretionary judgment having regard to
fluctuating markets and labour conditions, was very high and here
the bank could not be said to be irrational. (2) As a matter of
construction of his contract, the claimant was not entitled to a
bonus for 2005.