Bigger redundancy payoffs at small houses

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Smaller firms may be more generous when it comes to paying off staff who've been unceremoniously dumped.

Philip Landau, partner at London law firm Landau Zeffertt Weir, says he's come across two banks in the past week which are letting go of staff before bonuses are paid, and compensating them with a bonus pro-rated for the first 10 months of the year.

Common practice in the banking industry is to pay a zero bonus if staff aren't in employment at the payout date.

Landau says the bonus benevolence appears to be confined to smaller banks that are making a few - rather than wholesale - redundancies: "This is certainly not the kind of thing you'll get at the US bulge-bracket houses."

Jane Mann, head of employment law at Fox Williams, says offering proportionate bonuses to people who are ejected before the payout date isn't unheard of: "Banks come up with all kinds of schemes - they might pro-rate a bonus based on the previous year's bonus, or give a third of bonus as redundancy severance."

However, Mann says banks are becoming less rather than more generous with time - which isn't great news if you've accrued 10 months' bonus and are about to be handed a P45.

Lower bonuses all round

On a separate note, the Centre for Economics and Business Research (which seems to be working overtime when it comes to issuing pessimistic prognostications) has clarified what it's reportedly been saying for several weeks now - namely that bonuses will be lower. By how much? Some 16%, at 7.4bn (in total, rather than for one lucky hedge fund manager).

The research consultancy foresees further pain to come in 2008: it suggests next year's bonuses will be shaved again to 6.2bn. Before wallowing too deeply in the gloom, it's worth bearing in mind that this is still 35% higher than in the dark days of 2002.

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