The Bates Blog 

Bankers’ bonuses continue to generate much comment in particular in certain parts of the press. The entitlement to a bonus is however a contractual issue and the parties to the contract are the employer and the employee.  The view of the public is irrelevant.  Although there is legislation to provide a national minimum wage, there is no legislation to cap a maximum wage.

It is however not only bankers who may be eligible to receive substantial bonuses and not all bonuses are payable. 

In the case of Locke v Candy & Candy Limited, the Court of Appeal considered a claim for an unpaid bonus following the termination of employment a few days before a guaranteed bonus would have become payable. 

On termination of employment, it is not unusual for an employer to opt to terminate the employment forthwith and to pay the employee in lieu of notice. Some contracts of employment contain what is known as a PILON clause which reserves to the employer the right to terminate the employment on making a payment in lieu of notice at the sole discretion of the employer. 

In the case of Locke v Candy & Candy Limited, there was such a contractual PILON clause which the employer invoked.  Mr Locke was paid his 6 months’ salary in lieu of notice but his employer refused to pay him his bonus of £160,000.  Mr Locke sued for the bonus.  The Court considered in detail the correlation between the PILON clause and the bonus clause which provided as follows:-

“You must be employed by the company in order to receive the bonus.” 

The employer argued that the employment had terminated a few days before the bonus would become payable and that in those circumstances, Mr Locke was not eligible.  The High Court concluded that he had no entitlement to a bonus as his employment had been terminated.  Mr Locke appealed to the Court of Appeal who decided by a majority of 2:1 that because the contract provided “You must be employed by the company in order to receive the bonus”, Mr Locke did not have a claim in respect of the bonus.  In consequence, Mr Locke was deprived of a bonus to which he would have been entitled had he completed one year’s service which he almost had.  That however was the consequence of what the parties had agreed.

Get in touch with Diana

Have you ever thought about what would happen if your Will were contested?

Many people think that Wills are watertight documents which will always be followed to the letter.  If only that were so, our job as lawyers would be much simpler.  Sadly, despite our best efforts, it doesn’t always work like that.

No solicitor can ever give a cast-iron guarantee that a will he or she has drafted will be upheld by the courts if it is challenged.  But there are things we can do to make a challenge less likely.

Challenges to wills often focus on the mental capacity of the person who made the Will at the time he or she signed it.  So we will sometimes recommend to clients that a Doctor should give a written report on their capacity before they sign their Wills.  It is much better to have this evidence ready, just in case it is ever needed, than to try and reconstruct it after the client is dead and gone!

More, please!

Another increasingly common problem is the beneficiary who gets less than he or she was expecting, or even nothing at all.  The law says that some types of people (including widows and widowers, but also grown-up children) can ask the court to consider making extra provision for them from an estate if they can show that they need it.  There is no sure-fire way to prevent such a claim being made, but again there are steps your lawyer can take which could make it easier to defend the claim.

Whose Will is it anyway?

Some people are shocked by the idea that the wishes they have put down in black and white might be disregarded after their death.  Some even ask what the point of making a Will is, if it can be overturned by a judge?  The thing to remember, though, is that challenges to Wills are very rare (and successful challenges even rarer).  And the one thing you can be sure of is that, if you don’t make a Will, your wishes will be ignored - because no-one will know what they were! 

Get in touch with Nick.

'There is no such thing as a Common Law Wife'- and more Matrimonial Myths.... 

Dinner parties have a lot to answer for.......Why? Because they can be the perfect forum for exaggerations, speculations and misconceptions, particularly when it comes to relationships.....marriage.....and divorce!

During the course of my practice, I have encountered many poor souls who, courtesy of a well meaning dinner companion, have heard with increasing anxiety of the horrors they face when embarking upon a divorce.  It’s no wonder that when they arrive at the office, they are more than a little apprehensive as to what is about to befall them!

Divorce is complex. There are no hard and fast rules to decide exactly who gets what and a client will often find themselves in a state of uncertainty and emotion.  Each case is different and so it serves a client well not to listen to the conjectures of their blurry eyed dinner companion and instead to consult a Solicitor at the first opportunity so that they are well versed in the facts.

Listed below are five things you may hear at a dinner party.....and then the truth!

1.  'If you live with her for two years, she becomes your common law Wife...'

There is no such thing as a common law wife.  You can either cohabit with your partner, or marry them.  If you marry them, they become your Wife (or Husband). At that stage, they obtain rights under the Matrimonial Causes Act 1973...it really is that simple!  It therefore follows that if you choose to cohabit, you will not have the same rights as a spouse upon Divorce.  

The misconception arises from the fact that a cohabite can, after you have lived together for two years, make a claim against your Estate under the Inheritance (Provision for Family and Dependents) Act 1973.

2. 'If you move out of the matrimonial home.......you relinquish all rights you have in it'

This is not correct.  Whilst you are married you are both entitled to live in the property.  If you choose to move out you do not relinquish any rights in the property which you may have under the Matrimonial Causes Act 1973, even if it is not held in your name.  You should be aware that if the property is not in your name, then a Notice should be registered against the property to protect your interest in it.

3. 'You should have had a Pre-Nuptial Agreement.....they are legally binding now'

Pre-Nuptial Agreements have certainly become more popular over the years, particularly with the well publicised case of Radmacher v Granatino.  It is also true to say that the Courts will now take them into account in some circumstances but they are not bound to do so.

Pre-Nuptials are effective where legal advice has been obtained by both parties and financial disclosure made. The agreement must also have been entered into at least a month before the marriage and most importantly, it must be a fair agreement.  If your circumstances have changed significantly since entering into the Agreement i.e. the birth of children, then the Agreement is less likely to be effective.

4.    'You can base your divorce Petition on irreconcilable differences'

Irreconcilable differences, is not in itself a ground for divorce. In order to obtain a divorce, you must be able to demonstrate to the Court that your marriage has irretrievably broken down, as evidenced by one of five grounds;-

i.   Adultery

ii.  Unreasonable Behaviour

iii. Desertion

iv. Two year separation

v.  Five year separation  

5.  'It’s not adultery if the relationship started after you separated'

Unfortunately not...adultery is adultery, whether you’re married or separated, right up until the point when your marriage is dissolved.

Get in touch with Rachel.