Recent case law demonstrates that Westminster, not the courts, will be wielding the axe on pay-offs & bonuses, says Ian Smith
As part of the much discussed economic retrenchment, there has been talk of measures to curb excessive pay-outs in the public sector and bonuses in the private sector. One question for employment lawyers has been whether the courts might make any contribution here by taking a less generous view of individual rights under such schemes.
However, the two cases considered this month strongly suggest that this is not going to be the case, thus putting the ball firmly back into the government’s court if moves are to be made in such a direction. The first shows a much more restrictive approach by the Court of Appeal to the application of public law concepts such as ultra vires to agreements to pay off staff, and the second shows a continuation of the courts’ existing powers to ensure that employees receive the bonuses to which they are contractually entitled, strongly suggesting that any fundamental changes to bonus cultures may have to start with the contracts themselves,
