9 May 2012
The long awaited High Court ruling on a dispute between 104 London-based bankers and Dresdner Kleinwort (now part of Commerzbank) over a guaranteed minimum bonus pool of €400m has been handed down, says GQ Employment Law, the specialist employment law firm. (Details of ruling below)
Paul Quain, Partner at GQ Employment Law who worked on the dispute, comments:
"This ruling will force banks to be extremely cautious when communicating with staff about their pay and bonuses, even in an informal manner. If they are not careful they run the risk of being held to any promises they make, even if that was not their intent."
"We could now see a wave of copycat lawsuits. Disgruntled bankers could bring claims against their employer that a casual promise by their manager about a bonus amounted to a binding contractual agreement."
"Banks will be discouraged from using group methods for communicating with staff, such as ‘Town Hall meetings’ which have become increasingly popular. They won’t want to risk inadvertently making expensive binding promises to large numbers of staff."
"This litigation has been running for over three years and it’s very likely that Commerzbank will appeal the ruling."
Explanation of the ruling
In August 2008 the then Dresdner Kleinwort Chief Executive, Stefan Jentzsch, announced in a meeting with staff they would receive a guaranteed minimum bonus pool of EUR 400 million.
This was not paid to the bankers, after Dresdner Kleinwort suffered huge financial losses as a result of the credit crunch.
104 London-based bankers launched the claim, arguing that they were entitled to the rest of their provisional bonus awards (of which they had only received 10%).
The Court has ruled that:
The claimant bankers are therefore entitled to the rest of their provisional bonus awards.
GQ Employment Law
Tel: +44 (0) 20 3375 0334
Nick Mattison or Louis Auty
Mattison Public Relations
Tel: +44 (0) 20 7645 3636