As ever, it looks like banks have waited until Q4 before slashing headcount in a manner that in any way approximates to the fall in their revenues. So, if you’re one of the people let go in the months to come, will you have any right to a portion of this year’s bonus?
Sadly, the answer is probably no. Despite a promising article in this week’s Financial News, which seems to suggest that pro-rated bonuses are a definite possibility, employment lawyers say this is emphatically not the case.
“Legal entitlement to a pro-rated bonus following redundancy is news to me,” says Jane Mann, head of employment law at Fox Williams. “Most banks have so-called ‘killer clauses’ in their contracts which absolve them from the need to pay bonuses to redundant staff,” she adds.
Mann says these so-called killer clauses are typically worded along the lines of: “The employee will not be entitled to a bonus unless he or she is in employment on the bonus payment date, and not under notice either given or received.”
Although most banks include these clauses in their contracts, Mann says some big firms do voluntarily pay pro-rated bonuses to axed staff. She declines to say which ones, though.
James Davies, an employment partner at law firm Lewis Silkin, says the only way you could contest deprivation of a bonus following redundancy would be to prove you were only made redundant to avoid paying the bonus. “That’s not a very credible argument when banks are cutting so many people,” he muses.
The only course of action is for a senior banker with deep pockets to take a bank to the High Court and dispute the legality of the killer clause. This nearly happened in 2007, when Oliver Takacs, a trader at Barclays, tried to take his employer to court for failing to pay a bonus after dismissing him. The case was never heard because Barclays settled out of court.