BRITISH BANKS have been advised to prepare for legal action if they try to cut the bonuses of some bankers – who could sue for the loss of earnings.
The Daily Telegraph reports that legal experts in the City of London have told banks how some of their “disgruntled” employees have begun preparing a legal campaign if banks follow through with plans to take major chunks out of their bonuses.
It adds that one banker is already thought to have initiated a suit for £1.5m (€1.8m) in damages after claiming that their bonus paid for 2011 was too low.
While judges are not likely to be sympathetic towards the claims, a growing number of employees were nonetheless preparing to go to court to secure the money that they rightfully believed to be their own.
One legal partner told the paper that bankers “could argue that when banks have exercised discretion [in paying their bonuses], they have exercised that discretion in breach of contract.”
The Telegraph’s report seems to echo fears raised in a report in the Guardian before Christmas, where an employment lawyer warned that bankers stripped of their bonuses would have no qualms pursuing legal action.
Although all banking bonuses remain discretionary in theory, bankers could argue that the right to receive the bonuses has become so strongly embedded in their corporate culture that they may still have a legitimate expectation of receiving one.
The workers would follow the lead of a case taken in Germany in 2009, where employees of a bank which had accepted a state bailout sued their bank for £30m in unpaid bonuses – six of whom claimed over £1m each.
If any bankers were to win any such claims, they would have to successfully argue that the bonus paid to them was “irrational or perverse” – a claim which may be difficult in the current circumstances.
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