Commerzbank AG v Keen

implied term | discretionary bonus | unfair contract term

The House of Lords has refused an application for leave to appeal the Court of Appeal's decision that, in order to show that an employer has breached a discretionary bonus term, the employee must demonstrate that the employer exercised its discretion irrationally or perversely.

The Court of Appeal held that Mr Keen had failed to show that Commerzbank had acted irrationally or perversely when determining the amount of a bonus payable to him in 2003 and 2004 and that the bank had been entitled to rely on a contractual term requiring an employee to be in employment at the date of payment when it refused to pay a bonus for 2005.