When is a bonus not a bonus? This is a question that has vexed the media, as poor performances by British banks have failed to dim the earning expectations of the higher echelons of management. And it is one that could soon be troubling m'learned friends, as Personnel Today warns that "if investment banks sought to pay no bonuses, or to reduce them beyond the level justified by reduced financial performance, they would be subject to legal challenge".
I'd really be interested on what grounds such a challenge would be made. A bonus by definition is something given or paid over and above what is due. If it is something that is always paid regardless of the performance of the business, then surely it cannot, ipso facto, be considered a bonus, but becomes part of salary. This is regularly explained away in the press by the unchallenged fact that such largess is "in the contracts" of senior investment bankers - implying the unwitting banks are over a barrel.
To which I would reply: how many Lehman Brothers ex-employees are looking forward to receiving their bonuses? When the bank went belly up, did its senior staff shoot straight to the top of the list of creditors seeking bonus payouts from whatever assets remained after they'd filed for Chapter 11? I'd imagine they were pretty far down, somewhere between window cleaners and stationery suppliers. Every bank that was rescued by government cash is, in effect, a "virtual Lehmans". The slate is wiped clean. To pretend otherwise would be ludicrous - by the same logic, banks would not be able to make any staff redundant.
If senior investment bankers truly have contracts that guarantees income in the event of total global financial meltdown, effective bankruptcy and the largest crisis of capitalism in nearly a century, and that is defensible in law, then it's not the bankers we should be directing our ire at. Rather it is the HR departments and their legal advisers that could draw up such terms and conditions in the first place. Personnel Today has so far been silent on that subject.
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