Bankers have been told to expect doughnut bonuses this year.
No, we don’t mean that they will be paid in Krispy Kremes. A ‘doughnut’ is the term used for a bonus of zero.
Why Should Bankers Expect Doughnut Bonuses?
According to the predictions from salary benchmarking website Emolument, investment bankers can expect their bonuses to fall due to the sharp decrease in the number of IPOs (Initial Public Offerings). IPOs are the first sale of private company stock to the public.
FICC traders who deal with fixed income instruments, currencies and commodities, should expect their bonuses to drop by almost 10 per cent.
The dwindling bonus pool is not just due to a poor performance in the industry, there’s also pressure from the public and shareholders. It’s also true that some banks are struggling less than others, and different banks will pay out different bonuses. Deutsche Bank’s chief executive warned staff they would have to shoulder some of the burden of their recent struggles. Meanwhile, bonuses at Barclays are expected to not only be smaller but also delayed by at least a month.
Despite data suggesting there will be an overall smaller bonus pool, this doesn’t explain why bankers should prepare themselves for a zero-bonus. The reason is that bonuses are rarely spread evenly across staff in banks. The expectation is that the banks will do anything they can to keep their star performers happy in order to retain them. This could mean giving them large bonus awards out of the bonus pool meanwhile awarding others nothing.
Slater and Gordon senior employment lawyer, Harriet Bowtell, said: “If bonuses are meant to be based on performance, then the practice of banks giving ‘doughnuts’ out alongside large bonus awards that are purely based on retaining people is questionable. If an employee’s bonus is discretionary and they are awarded a nil bonus despite good performance then they may be able to challenge this if they can show that the decision to award them nothing was irrational or perverse. This is a high threshold though.
“If there is a shortfall or delay in your bonus payment I would recommend seeking the advice of an employment solicitor for work pay and bonus disputes.”
Slater and Gordon are experts in advising employees in high-value bonus disputes. If you are contemplating taking legal action over a bonus pay dispute or need assistance in your negotiations call our employment solicitors on 0800 916 9060 or contact us online.