The bank appealed against judgment against it on claims by former senior employees for contractual discretionary bonuses.
Held: The appeal failed. The bank’s unilateral promise made within the context of an existing employment relationship to pay discretionary bonuses, became part of the contract. ‘in accordance with well established principles the clause should, in the case of ambiguity, be construed in favour of a construction which limits the scope of the clause since it confers a right on the employer unilaterally to make detrimental changes to the terms and conditions of employment. Usually this means that it will be construed against the employer because he will be seeking to rely on it. The unusual feature of this case is that it is the employees who are seeking to rely on the clause and are therefore urging a broader construction, but of course the meaning of the clause cannot vary depending upon who is praying it in aid. The significance of the principle is, however, limited: it is relevant only where there is genuine ambiguity . . The fundamental principle is that the clause should be interpreted objectively so as to give it a sensible and workmanlike construction.’
This was a promise made in the context of a pre-existing legal relationship, and viewed objectively, the natural inference was that any promises made to staff relating to the terms of their employment would take effect in the same way as other contractual terms.
Maurice Kay VP, Elias, Beatson LJJ
[2013] EWCA Civ 394, [2013] WLR (D) 156
Bailii, WLRD
England and Wales
Citing:
Appeal from – Attrill and Others v Dresdner Kleinwort Ltd and Another QBD 30-May-2012
Several former employees of the defendant claimed for payment of discretionary bonues. The bank replied that the bonuses were at their absolute discretion.
Held: They had indeed been wrongfully denied their contractual entitlement to certain . .
Cited – Clark v Nomura International plc 2000
clark_nomura2000
Mr Clark was dismissed on three months’ notice and, although he was paid his basic salary for that period and was still in employment at the date for payment of the annual bonus, he was not paid a bonus. He had earned substantial profits for the . .
Cited – Cantor Fitzgerald International v Horkulak CA 14-Oct-2004
The employee claimed under a bonus clause which ‘contained in a contract of employment in a high earning and competitive activity in which the payment of discretionary bonuses is part of the remuneration structure of employers.’
Held: The . .
Cited – RTS Flexible Systems Ltd v Molkerei Alois Muller Gmbh and Company Kg (UK Production) SC 10-Mar-2010
The parties had reached agreement in outline and sought to have the contract formalised, but went ahead anyway. They now disputed whether an agreement had been created and as to its terms if so.
Held: It was unrealistic to suggest that no . .
Cited – Edmonds v Lawson, Pardoe, and Del Fabbro CA 10-Mar-2000
A contract of apprenticeship is synallagmatic. The master undertakes to educate and train the apprentice (or pupil) in the practical and other skills needed to practise a skilled trade (or learned profession) and the apprentice (or pupil) binds . .
Cited – Carlill v Carbolic Smoke Ball Co CA 7-Dec-1892
Unilateral Contract Liability
The defendants advertised ‘The Carbolic Smoke Ball,’ in the Pall Mall Gazette, saying ‘pounds 100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza, colds, or any disease caused by . .
Cited – Edwards v Skyways Ltd QBD 1964
There had been a negotiation between representatives of the British Airline Pilots Association and the airline company regarding pension rights of pilots who were made redundant. The company contended that the representation made by it in the course . .
Cited – Bowerman and Another v Association of British Travel Agents Ltd CA 21-Nov-1995
The claimant was to take part in a school skiing trip. The first operator was a member of the defendant association, and ceased trading through insolvency.
Held: The ABTA notice displayed in the travel agent’s offices created a contract . .
Cited – Okta Crude Oil Refinery A D v Mamidoil-Jetoil Greek Petroleum Company S A and Another CA 17-Jul-2003
The parties had contracted to allow an exclusive right to deliver oil by tanker and to sell into Macedonia. The defendants claimed they were overborn, and claimed exemption under a force majeure clause.
Held: The acts which had made the . .
Cited – Judge v Crown Leisure Ltd CA 21-Apr-2005
The claimant appealed against dismissal at the ET and EAT of his claim for constructive dismissal. The court considered whether the employer had made a promise to the employee.
Held: Smith LJ said: ‘In my view, with respect, [the claimant’s . .
Cited – Hartog v Colin and Shields 1939
The defendants had contracted to sell to the plaintiff 30,000 Argentine hairskins but by an alleged mistake the defendants offered the goods at a price per pound weight instead of a price per piece. The value of a piece was approximately one third . .
Cited – Pateman v Pay 1974
A party who in fact knows that the other party does not intend to create legal relations cannot seek to contend otherwise by asserting that the evidence, objectively analysed, supports his case. He knows the truth and should not be allowed to deny . .
Cited – Lark v Outhwaite 1991
The plaintiff asserted an intention to create legal relations but there was evidence from his agent which unambiguously showed that subjectively he did not have any such intention.
Held: The claim failed. Though the test for whether a promise . .
Cited – Carmichael and Another v National Power Plc HL 24-Jun-1999
Tour guides were engaged to act ‘on a casual as required basis’. The guides later claimed to be employees and therefore entitled by statute to a written statement of their terms of employment. Their case was that an exchange of correspondence . .
Cited – Assicurazioni Generali Spa v Arab Insurance Group (BSC) CA 13-Nov-2002
Rehearing/Review – Little Difference on Appeal
The appellant asked the Court to reverse a decision on the facts reached in the lower court.
Held: The appeal failed (Majority decision). The court’s approach should be the same whether the case was dealt with as a rehearing or as a review. . .
Cited – Commerzbank Ag v Keen CA 17-Nov-2006
The bank had sought summary dismissal of a claim for non-payment of bonuses to the claimant a former employee, and now appealed refusal of its request for summary dismissal, saying that the claim had no prospect of success. The claimant said that . .
Cited – Malik v Bank of Credit and Commerce International (BCCI); Mahmud v Bank of Credit and Commerce International HL 12-Jun-1997
Allowance of Stigma Damages
The employees claimed damages, saying that the way in which their employer had behaved during their employment had led to continuing losses, ‘stigma damages’ after the termination.
Held: It is an implied term of any contract of employment that . .
Lists of cited by and citing cases may be incomplete.
Employment
Updated: 10 November 2021; Ref: scu.472993