Bonuses: Withholding payment

 In Humphreys v Norilsk Nickel International (UK) Ltd, the High Court looked at the circumstances in which an employer can withhold a discretionary performance-related bonus payment.  It concluded that the correct test was whether the employer's decision not to pay was rational or not, rather than the individual’s performance.

Dr Humphreys was employed as the chief economist for the company, but his forecasts were often 50% out (which he blamed on the world economic crisis).  His poor performance had contributed to the company sustaining significant losses and on this basis he was not awarded a bonus payment for 2008. Dr Humphreys argued that he had performed relatively well and that any poor performance could be attributed to the economic climate.  However, it was concluded that it was not for the Court to determine whether or not this was the case and that the employer had acted rationally.