Tradition Securities and Futures SA v Mouradian

The Court of Appeal dismissed the employer's appeal, holding that the Employment Tribunal had jurisdiction to determine a claim under the Employment Rights Act 1996 for an unlawful deduction of wages. The tribunal had found as a factual matter that the respondent had exercised the contractual discretion to apportion the bonus and that a definite sum was therefore due to him. The presence of a contractual discretion as to the form of payment (including an EBT contribution) did not prevent the bonus, once declared in cash terms, from being a quantifiable element of wages within sections 13 and 27 of the Employment Rights Act 1996.

The court accepted that the Act provides a summary remedy for unlawful deductions and that where a quantified sum by way of wages is owed, the tribunal may order payment. The employer's alternative contention that the claim amounted to an unquantified loss of chance was rejected because of the factual findings that the respondent had already determined to take the balance of the pool for himself.

Background and parties: The appellant is a global broker; the respondent is head of a London options desk employed since 1997 and, in September 2005, entered a four year fixed-term contract. Clause 5.2 of the contract entitled the respondent to a bonus from a pool calculated as 60% of net billed Company Income after specified deductions.

Nature of the claim: The respondent claimed an unlawful deduction from wages under the Employment Rights Act 1996 in the sum of 92,571.60, being the difference caused by the employer deducting costs which the respondent said were not permitted by the contract when declaring the bonus pool for July ecember 2006.

Procedural history: The Employment Tribunal (Ms Leslie) held it had jurisdiction and found the respondent had exercised the apportionment discretion and determined the amounts payable to team members and the balance for himself; it concluded a quantifiable sum was due. The Employment Appeal Tribunal (HHJ Peter Clark) dismissed the employer's appeal (UKEAT/0570/07/RN). The employer appealed again to the Court of Appeal.

Issues framed:

• Whether the Employment Tribunal had jurisdiction under the Employment Rights Act 1996 to hear a claim for an alleged unlawful deduction where the bonus scheme involved contractual discretions as to apportionment and form of payment.
• Whether the existence of a contractual discretion (both as to apportionment and as to form of payment) rendered any claimed sum unquantifiable and therefore beyond tribunal jurisdiction.

Court's reasoning and decision: The Court of Appeal upheld the factual findings of the Employment Tribunal that the respondent had, in practice and factually, apportioned fixed sums to his team and retained the balance for himself prior to the employer's declaration of the pool. Those findings meant that a definite, calculable sum was due to the respondent and the tribunal therefore had jurisdiction under section 13 of the Employment Rights Act 1996 to adjudicate the claim. The court also accepted that a discretion as to the form of payment did not alter the quantum of the declared bonus where it had been stated in cash terms; payment into an employee benefit trust or pension did not prevent the declared cash sum being wages for the purposes of the Act. The appeal was dismissed for these reasons.

Wider context: The court noted the summary nature of the statutory remedy but emphasised that where a quantifiable entitlement exists, the tribunal may enforce it; findings of fact relevant to jurisdiction are proper for the tribunal to make.

Appeal dismissed. The court held that the Employment Tribunal had jurisdiction because the respondent had a quantifiable entitlement to a bonus despite contractual discretions: the tribunal's factual findings established that the respondent had exercised the apportionment discretion and thus a definite sum of wages was due; moreover a contractual discretion as to the form of payment did not alter the quantum once the bonus had been declared in cash terms.

Employment Tribunal: Claim for unlawful deduction of wages upheld (Ms Leslie) — Employment Appeal Tribunal: appeal dismissed (HHJ Peter Clark) UKEAT/0570/07/RN — Court of Appeal: appeal dismissed [2009] EWCA Civ 60.