This case concerned unpaid bonuses for employees of Dresdner Bank from 2008, totalling 50 million Euros. Although the employment contract stated the bonus was discretionary, in August 2008 following rumours of a sale and possible closure, the Bank announced via a live broadcast that a minimum pool of 400 Euros would be set aside for bonuses for 2008, in order to prevent key staff leaving. This was confirmed again on the Company Intranet and further details were emailed by the Head of Human Resources.

The Bank decided in December to introduce a “material adverse change” (“MAC”) clause into bonus letters stating that the bonus award was subject to review if earning’s deteriorated. In February 2009 the Bank decided that discretionary bonuses would be reduced by 90%. The Court of Appeal had to decide if the employees had any enforceable contractual right to the bonuses, which depended on the interpretation of the employment contract. Interestingly it was the employees who argued that the Bank had a right to vary the terms of the contract. A clause allowed for changes of the terms and stated “[s]uch changes can only be made by a member of the Human Resource Department and must be communicated to you in writing. When the change affects a group of employees, notification may be by display on notice boards or Company Intranet." 60 The Court of Appeal had to determine if the Bank had altered the terms of the contract under this clause such that the employees had been given a contractual right to the bonus.

The Court of Appeal considered that the broadcast in August had been a variation pursuant to the clause and had created legal obligations. It rejected the Bank’s argument that there had been no intention to create legal obligations. The Bank also challenged the judge’s conclusion that the introduction of the MAC clause breached the implied duty of mutual trust and confidence. The Court of Appeal again rejected the Bank’s arguments finding that the judge had had ample evidence to come to the conclusions he did. Accordingly the appeal was dismissed. http://bit.ly/10rBGnc