U.K. High Court

The UK High Court recently confirmed that incentive pay may be conditioned upon good behavior.  In Imam-Sadeque v BlueBay Asset Management (Services) Ltd [2012] EWHC 3511 (QB), the court concluded that forfeiting incentive pay for bad behavior does not constitute an unlawful penalty.  In that case, an employee and employer had entered into a release agreement under which the employee was deemed a “good leaver,” provided he complied with the terms of his employment contract.  The employee later breached implied obligations of fidelity during his notice by providing confidential information to and otherwise assisting a potential competitor.  The employer refused to grant the employee any unvested awards and the employee sued, claiming among other things that forfeiting unvested incentive awards in such circumstances amounted to an unlawful penalty. 
Continue Reading Forfeiture of Incentive Pay for Violation of Employment Agreement Is Not an Unlawful Penalty, Says UK High Court