Daniel Johnston v Veritas Technologies (UK) Limited
[2023] EAT 15
G Thom v Hobart Real Estate Partners Limited
24 March 2023
[2023] EAT 37
Employment Appeal Tribunal
Imagine you have a bonus that's only maybe 10% of something, and you never agree on exactly what that 'something' is. You can't sue for not getting that bonus because it was never clearly defined how much it should be.
Key Facts
- •Ms Thom (Claimant) worked for Hobart Real Estate Partners Limited (Respondent) under a consultancy agreement and later a contract of employment.
- •The contract included a discretionary performance fee clause (clause 6.2) stipulating a minimum 10% of the company's performance fee from future investments where she was the designated Asset Manager, with terms and exact percentage to be negotiated.
- •Following an investment in Worship Square, the Claimant sought a 25% profit share; the Respondent offered 10%, but no agreement on the calculation method was reached.
- •The Respondent received payments related to Worship Square's sale, but the Claimant received no performance fee.
- •The Claimant claimed this omission as an unlawful deduction from wages under section 13 of the Employment Rights Act 1996 (ERA).
Legal Principles
An employer shall not make a deduction from wages unless required/authorised by statute or contract, or the worker consented in writing.
Employment Rights Act 1996 (ERA), section 13
'Wages' includes any sums payable to the worker in connection with employment, including fees, bonuses, commissions, etc., whether under contract or otherwise.
ERA, section 27(1)(a)
For a sum to be 'properly payable' (and thus claimable as an unlawful deduction), there must be a legal entitlement to payment, typically arising from contract or other legal obligation.
New Century Cleaning Co Ltd v Church [2000] IRLR 27
Contractual interpretation involves determining the meaning a reasonable person would convey, considering the background knowledge available to the parties, excluding prior negotiations and subjective intent.
Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896
In discretionary bonus cases, the discretion must not be exercised capriciously; once a bonus is declared, it generally cannot be withdrawn.
Farrell Matthews & Weir v Hansen [2005] ICR 509
A claim for unauthorised deduction from wages requires a quantifiable sum; difficulty in calculation does not automatically negate jurisdiction, but an unliquidated or unidentifiable sum falls outside jurisdiction.
Coors Brewers Ltd v Adcock [2007] EWCA Civ 19; Lucy v British Airways plc UKEAT/0033/08/LA
Outcomes
The Employment Tribunal lacked jurisdiction to hear the claim.
The Claimant failed to establish a quantifiable sum properly payable. The email exchanges did not create a binding agreement on the performance fee's calculation, leaving the sum unliquidated. While the Respondent's offer of 10% could be viewed as a declared bonus, the absence of agreement on the calculation basis (the multiplicand) meant no identifiable sum was due.
Appeal dismissed.
The EAT upheld the Employment Judge's decision, finding the claim fundamentally altered on appeal and that no identifiable sum was properly payable to the claimant under the contract.