Philip Landau, partner at London law firm Landau Zeffertt Weir, on why banks may soon be penalised if they don't help you earn your payout.
Did your bank do everything in its power to help you earn the biggest bonus possible last year? No? That could all change in 2007.
Following a recent High Court decision (Takacs v Barclays Services Jersey Limited) there may in future be far-reaching implications for employers who don't assist employees to earn hefty end-of-year payouts.
Oliver Takacs was employed as a trader and was entitled to a minimum bonus award in the first two years, as well as an additional award for each of the two years if he achieved certain sales targets. He was dismissed, having not achieved the sales targets in either year. Takacs brought a High Court action, claiming the following implied terms should be incorporated into his contract:
· Employers should co-operate in the achievement of sales targets - Takacs claims Barclays failed to do so, in that he was prevented from achieving his targets by the carrying out of a restructure that involved the recruitment of a large team of specialists who took over the deal he was involved in. Takacs says he was therefore obstructed from achieving his targets.
· Where a bonus payment is reliant upon continuing employment, there should be an 'anti-avoidance' term. This would place the employer under a duty not to terminate the contract simply to avoid their bonus obligation. (This will be looked at in further detail in a later article.)
As far as an employers duty to 'co-operate' is concerned, this could be anything from a general restructure (with the aim of improving margins and efficiency as in Takacs's case) to a lack of support or training to enable you to fulfil your role. You may also have a claim if you are moved into a less profitable role mid-year, thereby depriving you of the opportunity of meeting your targets.
When did your employer last sit down with you to provide clear guidance and support on how to reach your targets? When did they address the difficulties you faced through external factors in cracking a market? Never? You may well have a case against your employer.
How close is this to becoming a reality? Following an application by the employer to strike out Takacs's claims, the High Court, at a preliminary hearing, has now decided that Takacs has a real prospect of showing that this implied term existed in his contract (and therefore in other similar contracts used across the financial services industry). The full case is due to be heard later this year. If it goes ahead, banks that have clearly not co-operated with their employees in helping them meet their targets could have a case to answer to in next year's bonus round.
Feel free to contact Philip Landau on firstname.lastname@example.org or 020 7357 9494 for a free consultation on this or any other employment law issue.