A recent case ruling puts discretionary bonus schemes under doubt.
Mr Horkulak worked for Cantor Fitzgerald in a senior management position working on interest rate swaps in the money markets.
Horkulak successfully claimed that he had been both constructively and wrongfully dismissed following claims of continued bullying and abusive behaviour from the President of the business.
Seeking compensation for lost earnings, Horkulak won his argument that had he remained at the firm he would have received bonuses amounting to £630,000 under a discretionary bonus clause contained within his contract.
Russell Brown, Employment Solicitor at Manchester law firm, Glaisyers comments: “Many employers operate discretionary bonus schemes and use them as a deliberate attempt to avoid being placed under specific contractual obligations.
“Following this case however it is essential employers are extremely careful when both establishing whether a bonus payment is payable and if so, how the bonus payment is calculated. If they are not, then the law is now very clear on how the employee in question should be compensated.”
The Court ruling sends a warning to bosses that even where a discretionary clause is in place regarding bonus payments there are restrictions placed upon employers to exercise this discretion rationally and in good faith.
Brown adds: “Employers should think carefully about recording reasons in order to demonstrate that they have exercised their discretion in a rational and
non-capricious manner.”
