A former equity dealer with Davy Stockbrokers who sued the firm over its failure to pay him some €260,000 in unpaid bonuses due to him has won his High Court action.
Now the stockbroking firm will have to enter talks with Eamon Finnegan to decide the total figure due to him in deferred bonus payments plus interest. It is believed that similar cases may be brought after the judge's decision.
Mr Justice Thomas Smyth in the High Court found as a fact that the real purpose of the deferred bonus payments was to create a financial restraint on an employee going to another stockbroking firm. The judge said he did not accept the deferred bonus payment scheme was to protect some proprietary interest.
The deferred bonus payment condition, the judge said, was onerous and the clause operated as a form of forfeit if an employee went to work for a competitor.
In the action, Davy Stockbrokers disputed that the money was due to Mr Finnegan. The company also pleaded that the payment of bonuses was entirely discretionary and that it was entitled to alter any terms and conditions relating to the payment of bonuses.
Mr Finnegan, who worked with Davy for 10 years until 2000, had said he asked about bonuses in his job interview in 1990. He said he was told it depended in how he and the firm did and, if he was successful, it could be a material amount. He had secured a job as equity research analyst. He received a bonus of IR£3,000 in his first year. There was no bonus in 1992. the next year he got a bonus of £10,000 and a salary increase to about £24,000. His bonus rose to £30,000 in 1994 and his salary was increased to £40,000. He said bonuses would be typically paid in the month after they were agreed.
In 1995, he was promoted to the equity desk, and at the end of that year he got a £25,000 bonus and his salary was also increased. Mr Finnegan claims that, from 1995 until January 1998, his arrangement with Davy was that he would be informed at the end of the year what his bonus would be and that bonus would be paid the following month or at a time suitable to him.
However, he claims that situation was unilaterally changed by Davy from 1998 when he was told the bonus would be paid in instalments and was conditional on his remaining with Davy. He remained with Davy until September 2000 by which time, he claims, he was owed some €260,000 in unpaid bonuses, sums which had been agreed with the company. However, the company had refused to pay those sums.
In his reserved judgment, Mr Justice Thomas Smyth said Mr Finnegan did not have the use of his own money which he had earned whether he wanted to make purchases, investments or pay off debts. He had no control of the money he earned. Mr Finnegan, the judge said, felt he had to tolerate the situation but he did not accept it.
The judge said the purpose for the spreading of the bonus payments was given as to generate loyalty. Mr Justice Smyth said he understood the notion of incentives and a bonus paid in full would be an incentive to performance.
Mr Finnegan, he said, could have had a legitimate expectation a bonus could come to him . The judge said it was certainly discretionary as to the amount . As a matter of principle he could have expected payment of a bonus, the amount depended on the trading of the firm and his own performance.
The judge said he was satisfied that in 1997, 1998 and 1999, Mr Finnegan did not consent to terms of employment with a deferred bonus system. Mr Finengan he said had a 'Hobson's choice'.
The deferred payment mode without notice was a contract in restraint of trade, the judge said. Mr Justice Smyth said no genuine proprietary interest of Davy Stockbrokers required the condition. It was difficult, the judge said, to see how such a restraint would be protecting the proprietary interest of the stockbroking firm and the public. The global quantum value of the bonus payments had nothing to do with loyalty, the judge said.
