Humphreys v Norilsk Nickel International (UK) Ltd

The High Court has held that in determining whether an employer was entitled to withhold a discretionary bonus, the correct test is whether the decision not to pay was rational. Mr Humphreys was employed as the chief economist by Norilsk. His contract entitled him to an annual bonus calculated by an assessment of his performance on a sliding scale.

In 2008 his contract came to an end and the company failed to pay him a bonus. Norilsk explained that this was because his performance was assessed at the lowest grade on the scale. Dr Humphreys argued that his performance had been satisfactory in the circumstances and that it was not his fault that the global economic crisis had led to his price forecasts becoming inaccurate. He pointed out that the forecasts of other leading economics in the same industry had also proved inaccurate.

The High Court found that the company’s decision to not pay a bonus was rational. The court was keen to point out that the key issue was whether Norilsk’s decision was irrational or perverse, not whether Dr Humphreys’ performance had been suffi cient to justify payment of a bonus.