How Discretionary is a Contractual Discretionary Benefit – Expert Comments

Louise Walker
Louise Walker
Legal Director
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It has always been important to take care when drafting contractual terms. In light of the Supreme Court’s recent judgment, employers, when offering employment or updating any contractual benefit schemes, should think carefully as to how much discretion they need.

While it could be helpful to set out in the contract or contractual benefit scheme what the ‘right’ matters are (such as attendance record, disciplinary record, performance targets and so on), the scope of actual discretion is likely to be reduced by the judgment.

Care should be taken also when considering any discretionary element in existing contracts and benefits schemes. Where discretion is not exercised in favour of the employee, they may be more likely to challenge the decision. As a result of the new test, they may be more likely to succeed even where the employer has, on the face of it, retained absolute discretion.

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