Clark v Nomura International Plc

Clark v Nomura International Plc (2000) IRLR 766

Facts

Mr Clark was a senior equities trader for Nomura. His contract provided for a basic annual salary supplemented by a bonus awarded under a discretionary scheme which was stated to be “not guaranteed in any way”. He was dismissed and paid his basic salary in respect of his three-month notice period. However, although he was still in employment at the date for payment of the annual bonus and had earned substantial profits for the company during the relevant period, he received no bonus. The High Court held that an employer will breach the contract of employment if it exercises its discretion (which on the face of the contract is unfettered or absolute) in a way that no reasonable employer would have exercised its discretion.

Held

On the facts of the case, the High Court concluded that the employer’s decision to award a nil bonus to an employee who had earned substantial profits for the company was irrational and did not comply with the terms of the employer’s discretion. Having considered the bonus payments made to Mr Clark in the years prior to his dismissal, and the payments made to his colleagues both before and after his dismissal, the High Court concluded that had his employer complied with its contractual obligations, it would have paid Mr Clark £1.35 million.