Commentary

(7) The exercise of an employer's discretion

Division AII Contract of Employment
| Commentary

(7) The exercise of an employer's discretion

| Commentary

(7)     The exercise of an employer's discretion

The T&C term has surfaced in the context of the calculation of damages for breach of the employment contract, being a possible way of an employee challenging what he or she perceives to be an unfair exercise of an employer's discretion under the contract. This has arisen particularly in the area of discretionary bonuses—in strict contract law, the fact that the bonus is stated to be discretionary means that the employer could always decide to give nothing or very little (in spite of performance), but a capricious application of this power has been challenged on the basis of the T&C term (Clark v BET [1997] IRLR 348; Horkulak v Cantor Fitzgerald International [2004] IRLR 942, [2005] ICR 402, CA; see para [502] ff below). Perhaps significantly, other case law in that area has also prayed in aid concepts from administrative law such as perversity and irrationality in exercising a discretion (always known as 'Wednesbury unreasonableness' from the leading case of Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223, CA, see para

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