Contracts - Employee Entitled to Summary Judgment for Bonus Payment

Originally published May 2010

In the recent case of Khatri v Cooperatieve Centrale etc. an individual was employed under a written contract which included provision for a performance-related bonus to be paid each year-end calculated on the basis of a formula. The claimant employee was sent a letter containing new contract terms including a provision that bonuses would now be payable entirely at the employer's discretion rather than on a performance basis. He did not sign the letter, nor was he pressed to do so and his duties did not change. At the year-end he was made redundant and he sought a swift "summary judgment" in court on the basis of relevant documents for payment of the (substantial) performance-related bonus. The employer argued that the claimant could not be entitled to judgment for this sum without the court hearing all relevant circumstantial evidence. Further, it was suggested that the employee had, by his conduct, accepted a variation of his contract and that his only entitlement, therefore, was to a discretionary bonus, which the employer was entitled not to pay. The Court of Appeal rejected both of these arguments and granted the employee summary judgment for the full amount of the performance–related bonus. Points to Note –

Where a fuller investigation of the facts would not alter the evidence available and would not therefore affect the outcome of the case, a court may decide a case on documents alone. This case is a reminder that this procedure may be used to enforce rights under an...