Christmas is over, but if you work in an investment bank you still have something to look forward to: bonuses. Most banks announce annual bonuses for the previous year in January or February and pay them shortly afterwards.
Unfortunately, however, the foibles of employment law mean that banks who face paying gigantic bonuses to particular individuals can have an incentive to dump those individuals and pay them nothing at all – UK employment law says that unless a bonus recipient is in employment on the day that a bonus is due to hit their bank account, they are not eligible for payment. It’s quite possible, therefore, to be told your bonus one week and made redundant before it’s paid so that you never see it.
Something similar seems to be in force in Hong Kong. Bloomberg reports that Sunny Tadjudin, a former distressed debt trader at Bank of America, has brought a case against the bank claiming that it fired her rather than paying the $3.7m bonus she was expecting. If Tadjudin is successful, it won’t be the first time that a bank has been found guilty of disposing of an employee to avoid paying a bonus. In December 2012 SocGen was made to pay €12.5m to Raphael Geys, its ex-head of fixed income sales, whom it had fired after realizing that he was contractually owed an €11m bonus.
Evidently, it doesn’t always make sense to dispense with a top performer – particularly when they’re likely to perform again or if there’s the option to pay them a zero bonus. However, if repeat performance is not assured and precedent means a bonus is near-mandatory, making someone redundant before bonuses are paid can make very good sense indeed.
Meanwhile:
Guy Hands doubled salaries to retain staff at Terra Firma. (Financial Times)
Deutsche Bank may yet fire Alan Cloete for his part in the LIBOR scandal. Cloete was once a candidate to succeed Anshu Jain. (Bloomberg)
ABN AMRO is on a hiring spree and seems to be recruiting investment bankers. (Financial News)
Carmignac Gestion, the French asset manager which has just opened in the City, has hired a 4 person team from SAC Capital. (Financial News)
JPMorgan hired Anoop Singh, the former director of the International Monetary Fund’s Asia-Pacific department, to be head of regulatory strategy in that region. (Financial Times)
Bank of America and JPMorgan were most of out of kilter with the coming EU bonus regulations last year. (Reuters)
Something bad has happened to Swiss banks’ share of IBD fees since 2000. (DealIntel)
There is a culture of unconditional love at Egon Zehnder. (Harvard Business Review)
Money is a sign of poverty. (Quinn-Norton)
Working long hours is the strongest predictor of compulsive internet use. (Telegraph)