Lager yana cobsbsbbdhdbdbdnwdbbbwbwEmployment documentation often gives an employer a discretion to make certain decisions. The classic example is the employer’s right to determine the size of an employee’s bonus. But contracts also give employers a discretion in a broad range of other situations. Depending on the terms of the contract examples might include the right to:determine that an employee is a “good leaver” under share plan; claw back or reduce a bonus; determine if an employee is unfit for work;exercise a mobility clause; orrelax a contractual restriction (such as a restriction on outside interests).When drafting these provisions and exercising a contractual discretion that they give the key question for an employer is the extent to which the courts will police the exercise of that discretion.This question has received significant judicial attention over the years. But since the decision of Keen v Commerzbank AG [2007] (in which GQ’s Paul Quain and Jon Gilligan acted) the position has been clear. Traditionally, the courts will only intervene if the employer’s discretion was not exercised in good faith or was arbitrary, capricious or irrational. As the court said, “it would require an overwhelming case to persuade the court to find that the level of a discretionary bonus payment was irrational or perverse in an area where so much must depend on the discretionary judgment of the Bank in fluctuating market and labour conditions".The decision in Keen and the economic conditions prevailing in 2007/8 effectively put an end to most City bonus litigation.
Lager yana cobsbsbbdhdbdbdnwdbbbwbwEmployment documentation often gives an employer a discretion to make certain decisions. The classic example is the employer’s right to determine the size of an employee’s bonus. But contracts also give employers a discretion in a broad range of other situations. Depending on the terms of the contract examples might include the right to:determine that an employee is a “good leaver” under share plan; claw back or reduce a bonus; determine if an employee is unfit for work;exercise a mobility clause; orrelax a contractual restriction (such as a restriction on outside interests).When drafting these provisions and exercising a contractual discretion that they give the key question for an employer is the extent to which the courts will police the exercise of that discretion.This question has received significant judicial attention over the years. But since the decision of Keen v Commerzbank AG [2007] (in which GQ’s Paul Quain and Jon Gilligan acted) the position has been clear. Traditionally, the courts will only intervene if the employer’s discretion was not exercised in good faith or was arbitrary, capricious or irrational. As the court said, “it would require an overwhelming case to persuade the court to find that the level of a discretionary bonus payment was irrational or perverse in an area where so much must depend on the discretionary judgment of the Bank in fluctuating market and labour conditions".The decision in Keen and the economic conditions prevailing in 2007/8 effectively put an end to most City bonus litigation.
Lager yana cobsbsbbdhdbdbdnwdbbbwbwEmployment documentation often gives an employer a discretion to make certain decisions. The classic example is the employer’s right to determine the size of an employee’s bonus. But contracts also give employers a discretion in a broad range of other situations. Depending on the terms of the contract examples might include the right to:determine that an employee is a “good leaver” under share plan; claw back or reduce a bonus; determine if an employee is unfit for work;exercise a mobility clause; orrelax a contractual restriction (such as a restriction on outside interests).When drafting these provisions and exercising a contractual discretion that they give the key question for an employer is the extent to which the courts will police the exercise of that discretion.This question has received significant judicial attention over the years. But since the decision of Keen v Commerzbank AG [2007] (in which GQ’s Paul Quain and Jon Gilligan acted) the position has been clear. Traditionally, the courts will only intervene if the employer’s discretion was not exercised in good faith or was arbitrary, capricious or irrational. As the court said, “it would require an overwhelming case to persuade the court to find that the level of a discretionary bonus payment was irrational or perverse in an area where so much must depend on the discretionary judgment of the Bank in fluctuating market and labour conditions".The decision in Keen and the economic conditions prevailing in 2007/8 effectively put an end to most City bonus litigation.