Gutermann Messtechnik Gutermann UK Ltd v Hartley & Anor

Where an employment contract provides for remuneration by bonus but leaves the amount or method of calculation unresolved, the employee is not thereby deprived of remuneration. A reasonable bonus or commission may be assessed by the court according to all the circumstances. The entitlement arises in contract where payment was agreed, rather than necessarily in quasi-contract or unjust enrichment. The court may permit such a case to be advanced despite the absence of a formal pleading amendment where the facts were fully investigated, no adjournment or material prejudice would result, and refusing the claim would conflict with the overriding objective.

The judgment concerned the reserved issue of Mr Hartley’s entitlement to bonus during the period from 10 November 2009, when the parties agreed that he would continue working in a new role, until his resignation on 3 October 2010. The earlier judgment had rejected his claim to a bonus based on the profits of the whole Gutermann group.

The remaining issues were whether a new employment contract had been formed, whether its provision for bonus was enforceable although the detailed terms were never agreed, and whether Mr Hartley could advance a reasonable-remuneration or quantum meruit case notwithstanding that it had not been pleaded.

1. New contract. A new employment contract was formed at the 10 November 2009 meeting. It provided for a different role, a later increased salary, and remuneration by a bonus relating to defined types of business at a percentage still to be defined. The absence of a later written contract did not prevent contractual formation because the parties worked on the agreed basis.
2. Bonus entitlement. The agreement that Mr Hartley was to receive a bonus was enforceable even though the detailed basis of calculation remained unsettled. Where services are provided on the understanding that they will be paid for, but no amount or mechanism for fixing the amount has been agreed, the law requires payment of a reasonable amount. In employment, that principle may produce a salary or bonus appropriate to the employment. The court referred to section 8(2) of the Sale of Goods Act 1979 and section 15(1) of the Supply of Goods and Services Act 1982 as statutory recognition of the principle.
3. Mr Hartley had agreed that any bonus should be set off against sums he had misappropriated, but had not agreed to defer the existence of his bonus entitlement until the extent of those sums was established. His misconduct did not deprive him of the contractual right.
4. Unpleaded case. Applying the overriding objective in CPR 1.1, the court permitted Mr Hartley to advance the reasonable-remuneration case. The relevant facts had been fully investigated, no adjournment was needed, no substantial costs consequence arose, and refusing the claim would cause real unfairness without practical benefit from a formal amendment. The amount due would be assessed in Phase 2, with further directions to be agreed.

The judgment followed the court’s earlier decision in [2012] EWHC 1013 (QB), which had determined most issues and reserved the question of bonus entitlement for the period after 10 November 2009.