UK court rules in favour of 104 bankers in bonus dispute
A High Court judge has ruled that over 100 ex-London employees of Dresdner Kleinwort, now owned by Germany's second largest bank Commerzbank, were entitled to claim unpaid bonuses totaling 42 million pounds even though the bank had made huge losses.
In his ruling Wednesday, High Court judge Robert Owen said that the 104 former employees of Dresdner Kleinwort should be paid the bonus promised to them four years ago.
The judge said the bank had breached its legal duties by failing to honour the payouts, which came from a guaranteed annual bonus pool in 2008, calling them "binding and enforceable contractual promises".
Commerzbank, which has twice been bailed out by German taxpayers, had argued that it is now integrated into the Dresdner Kleinwort investment banking subsidiary and as such was obliged to slash 2008 bonuses because of its huge losses.
Lawyers for the bankers said the case hinged simply on a brazen attempt by an employer to break promises made to staff, who had been persuaded to remain loyal to the bank in uncertain times with the promise of financial reward.
They said the pool was created in August 2008 in order to retain staff and was formally communicated to them by Dr Stefan Jentzsch, then chief executive of Dresdner Kleinwort Investment Bank.
In January, Andrew Hochhauser QC told Justice Owen the bonuses should have been paid for 2008 from a guaranteed minimum bonus pool because of "binding and enforceable contractual promises" made between August and December 2008.
Speaking on Jeff Randall Live show, Clive Zietman of Stewarts LLP, which is representing 83 of the bankers, said: "The promise was made not just to the employees, but also to the Financial Services Authority, which was a critical part of the case."
At the end of a two-and a half year legal battle, Commerzbank called the decision "disappointing" and said it would appeal against it.
"The bank believes that the decision to reduce discretionary bonuses in light of 6.5billion euros (5.2m billion pounds) of losses at Dresdner Kleinwort for 2008 was responsible and justified. The main argument revolves around whether the announcement on August 18 amounted to a legally binding agreement."
The ruling comes at a time when investor and public anger is being witnessed over the size of bonuses been paid to executives despite disappointing returns and billions spent by taxpayers in bailing out banks after the 2008 credit crisis.
Mark Levine, employment partner at Mishcon de Reya, who represented the bankers, said: "This case is likely to have significance whenever employment contracts are varied, particularly on the basis of verbal commitment or actions."
Source: Europe News.Net
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