Contracts cases - no clause and wrong party

Cases

Contracts cases - no clause and wrong party

A foreign exchange trader has failed to win a case seeking over $500,000 in deferred bonuses from the Commonwealth Bank.

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A foreign exchange trader has failed to win a case seeking over $500,000 in deferred bonuses from the Commonwealth Bank. The NSW Industrial Court found that the contract in issue did not impliedly contain a clause to this effect. In another case, a poorly drafted restraint clause that focused on protecting a party that was not involved in the relevant employment relationship was not upheld by the Federal Court.

Deferred bonuses not payable

A foreign exchange trader has failed to win a case seeking over $500,000 in deferred bonuses from the Commonwealth Bank. The NSW Industrial Court found that the contract in issue did not impliedly contain a clause to this effect.

The trader argued that he was a victim of an unfair contract. He argued that a bonus scheme was an integral part of the contract of employment.

Justice Backman found that the entitlement to bonuses was not a contractual term. Rather the bank has a discretion to pay or not pay based on the continued good performance of the employee. When the applicant left the bank there was no longer an incentive in issue.

Rick Lloyd v Commonwealth Bank of Australia Limited [2006] NSWIRComm 129

Restraint clause fails to stand

A poorly drafted restraint clause that focused on protecting a party that was not involved in the relevant employment relationship was not upheld by the Federal Court.

Justice Finkelstein in the Federal Court also noted that a sensible notice period was an important part of a valid restraint clause and this was questionable in this case.

Background

The two employees involved were both employed by a business that was part of AMP Services Ltd (AMP) as financial advisors. They actually worked in the business of Arrive Wealth Management Ltd. The two employees went to work for a competitor business in 2004.

Conclusion

The Court found that the post-employment restraint clause was ineffective in that it was expressed to protect ‘a competitor of AMP’ and not of Arrive.

The Court found that any loss recoverable would be limited to the short period of time between when one of the employees resigned on 20 January 2004 and her employment coming to an end on 16 February 2004.

AMP Services Ltd v Manning [2006] FCA 256 (24 March 2006)
 
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