According to employment lawyers representing people ejected by banks, Morgan Stanley is emerging as one the more generous houses when it comes to making redundancy payouts.
No one’s saying precisely how liberally Mack is buttering bankers’ exits, but two out of three of the lawyers we spoke to (and one headhunter) identified Morgan Stanley as a lucrative place to lose your job from. Bank of America and UBS are said to be relatively niggardly by comparison.
What amounts to a well-greased departure? “If you get six months’ base salary you should generally be happy,” says Philip Landau, partner at London law firm Landau Zeffertt Weir.
But what about bonuses? Unfortunately, following a ruling in 2006, banks are usually able to wriggle out of paying bonuses to dumped bankers.
All that’s required is a a clause in an employment contract specifying that a bonus will be payable only if employees aren’t under notice at the payment date – bankers put under notice the day before the money hits their account are legally entitled to zilch.
Nevertheless, nice banks (AKA Morgan Stanley) are understood to be offering a proportion of bonuses to those who are being let go. Anything from 30% to 70% is apparently possible.
There’s no guarantee that everyone at MS will have their exit greased with a pro-rated bonus, however. Elaine Aarons, a principal at law firm Withers LLP, says generalisations are impossible: “My experience is that some banks will pay pro-rated bonuses for some people and not for others. It will depend upon the circumstances.”
With the law behind them, Gareth Brahams, a partner at law firm Lewis Silkin, says banks are more likely to pay an element of base salary than any form of bonus to employees they let go: “Some banks pay according to a formula such as one month of base salary per year of service. Whether that’s a good deal depends upon how long you’ve worked there and how big your salary was as a proportion of your total compensation.”