1. Steel v Spencer Road LLP [2023] EWHC 2492 (LINK)
In this case, the High Court confirmed that the doctrine of restraint of trade did not apply to bonus clawback provisions and so they were not subject to the test for enforceability applied to contractual obligations in restraint of trade (the most common type being post-termination restrictive covenants).
The Appellant employee was employed by the Respondent company, a global executive search firm. Under his contract of employment, the Appellant received a basic annual salary and a discretionary bonus. The contract stated that the bonus was conditional on the Appellant remaining in employment for three months after the payment date and not giving or receiving notice of termination in that period. If the conditions were not met, the contract provided that the Respondent could recover the discretionary bonus payment and any costs, fees and charges incurred in enforcing such payment.
The Appellant was paid a bonus of 187,500 in January 2022. One month later, he gave notice of his resignation. The Respondent requested repayment of the bonus under the clawback provisions of the contract and the Appellant refused to pay. The Respondent therefore issued a statutory demand for the full amount of the bonus plus 12,623 in legal fees.
The Appellant applied to the Insolvency and Companies Court (“ICC”) to set aside the statutory demand on the basis that the bonus clawback provisions were:
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