I normally expect to get a lot of enquiries about low or non-payment of bonuses around this time of year. However, it is not normal for the subject of bankers’ bonuses to be front page news or for all three party leaders to jump on the bandwagon and criticise the level of bonus payments. Of course, we’re not living in normal times at the moment and bankers are going to be fair game for the media and politicians.
What is noticeable about the current debate is the lack of clarity. Are we talking about all bonuses (such as the fairly small sum that a cashier on a frontdesk in Barclays would expect to receive – cf: John Varley CEO of Barclays on BBC News last night) or the stonking seven or eight figure sums going to the Masters of the Universe? What about the high five or low six figure sums going to those in between? Also, are we talking about discretionary or guaranteed bonuses? Or commisssion payments? As usual the media seems to let us down.
Here is my take on the situation. If you’re working for an Investment Bank and sitting at your PC wondering if you’ll get a bonus (or smarting over having been told you won’t), these are the issues.
1. If the bonus you were expecting was wholly discretionary and you’ve got a low or nil bonus it is going to be difficult (but not necessarily impossible) to successfully challenge the award made to you. The precise terms of the bonus scheme will need to be looked at. Do you have to be in work at the date it is paid (have you been made redundant conveniently early so that you’re not around when the payment is made)? Is there a payment in lieu of notice clause in your contract?
2. Is it a commission payment? In other words, have you a contractual entitlement to be paid, say 10% of the value of the work you bill? If the employer doesn’t pay this they will need to have a pretty good reason because, provided you have met the conditions, you should be entitled. In reality this sort of scheme isn’t seen very often in the City and is not the target of the jibes made by all and sundry in the media.
3. Have you got a guaranteed bonus? These are seen most commonly when an employee joins a Bank, perhaps to compensate them for losing stock entitlements at their last job. Usually the schemes will require the employee to be in employment as at the payment date and not to be under notice or in the midst of disciplinary proceedings. The sums guaranteed can be substantial and it is these types of payment that will be giving the banks the biggest headaches. The employee will be entitled to receive the payment and I foresee much litigation occurring if payment isn’t made, especially if the employee has performed well. In cases where someone expecting a guaranteed bonus hasn’t performed well, or has lost their employer large sums of money, they may well find themselves facing a counter-claim for breach of contract for not performing.
My firm has a lot of experience in acting for banking executives in relation to all these issues. If you are in doubt about your situation do take legal advice quickly. You can reach me on 0207 464 8433 or at firstname.lastname@example.org