An attempt by 104 London investment bankers to get 50 million euro (£42 million) in unpaid bonuses has succeeded at the High Court.
The individual claims brought by former employees of Dresdner Kleinwort Limited (DKL) against the company and its new owner, Commerzbank AG, ranged from 15,000 euro to two million.
In January, Andrew Hochhauser QC told Mr Justice Owen the bonuses should have been paid for the year ending December 31 2008 from a guaranteed minimum bonus pool of 400 million euro because of "binding and enforceable contractual promises" made between August and December 2008.
They were to be allocated to front- and middle-office employees in the usual way, taking into account individual performance, and paid in full in cash in January 2009.
"Put briefly, those promises have not been honoured and that is why we are here today," he said. "Although the defendants accept that the statements which we rely upon were made, they deny that they amounted to contractual obligations."
Mr Hochhauser said the pool was created in August 2008 in order to retain staff in the face of a mass exodus, and was formally communicated to them by Dr Stefan Jentzsch, then chief executive of Dresdner Kleinwort Investment Bank, who said the pool would remain "no matter what", irrespective of financial performance.
The judge said: "I have come to the conclusion that the claimants are entitled to payment of bonuses provisionally awarded to them."
A Commerzbank spokesman said: "We are disappointed with the court's decision and will seek leave to appeal. The bank believes that the decision to reduce discretionary bonuses in light of 6.5 billion euros of losses at Dresdner Kleinwort for 2008 was responsible and justified. The main argument revolves around whether the announcement on August 18 amounted to a legally binding agreement. It is the Bank's submission that there is every prospect that the Court of Appeal would come to a different view on this matter."
The judge said: "I would simply add that, whilst these claims arose in 2008 against the background of the major crisis in the international banking industry and whilst the subject of bonuses paid to those employed in the banking sector remains a subject of intense public interest, the issues to which these claims gave rise arose within a narrow ambit and concern the nature and existence of contractual obligations owed to the claimants by their employer. They did not concern wider issues as to the structure of remuneration within the banking industry."
Mark Levine, a partner at law firm Mishcon de Reya, which represented 21 of the claimant bankers, said: "We welcome the High Court's decision today confirming the bank's contractual obligation to pay retention awards promised to our clients in exceptional circumstances in 2008. Dresdner made repeated promises to employees prior to its sale to Commerzbank in an attempt to avoid a mass exodus of staff - namely that they would be financially rewarded from a guaranteed retention pool for remaining at the bank and performing well. We welcome the High Court ruling that these promises constituted a binding contract and, with the staff having performed their side of the contract, that the bank breached it by refusing to honour the payments it had promised. This case is likely to have significance whenever employment contracts are varied, particularly on the basis of verbal commitments or actions."