Banks reneging on guarantees

Banks are wriggling out of paying cash bonuses to people who thought they'd get a hefty payout no matter what.

"We're getting quite a few calls from people who are finding their guaranteed bonuses for this year are being paid in shares," says Jane Mann, head of employment law at solicitors Fox Williams. "For people who were expecting their guarantee to be paid in cash, it comes as quite a shock."

The bad news is that banks are often perfectly within their rights.

Mann says clauses allowing guarantees to be paid in stock are usually concealed in the small print of employment contracts, and that naïve bankers fail to scrutinize them before signing: "On the face of it banks might say there's a guarantee of 250k, but when you look into it, the contract will often give the organization the discretion to decide how much of that to pay in cash and how much to pay in stock."

Equally unfortunately, Mann says the stock element of a guaranteed bonus is often subject to the recipient still being in employment at the time of the payout - unlike the cash part, which is paid regardless: "Everyone thinks that if they're made redundant before a guarantee is paid out they will still get their pay. That's not always the case if a proportion is paid in stock."

Charles Ferguson, managing director of Ferguson Solicitors, which specializes in traders' cases, says banks are also trying to evade paying guarantees by arguing that structured credit traders who lost money have been negligent: "There are all kinds of trumped-up charges going around."