Sorry bro, here's the real story.

bourgeois

AIB's decision to honour 2008 bonus payments for 90 of its capital markets staff is likely to offer encouragement to other financial services professionals embroiled in legal disputes with their employers over pay issues.

After John Foy, a trader in AIB's capital markets division, successfully sued the bank for non-payment of his €161k 2008 bonus last week, the bank capitulated and agreed to pay around 90 other staff pursuing similar actions. Total payment will amount to €10m.

Such a high profile case is bound to attract headlines, as well as possibly reinforce the greedy banker stereotype, but a large number of financial services professionals are chasing their employers for decidedly less glamorous changes to their contracts.

These include pay freezes, salary reductions (often imposed as an alternative to job cuts), contesting the reasons for being chosen for redundancy and changes to their pension arrangement (probably no Anglo staff on the last one, though).

Peter McInnes, partner in the employment practice at McDowell Purcell Solicitors in Dublin, says: "We're not seeing any let up in these sorts of disputes, with more and more financial services professionals taking action against their employers. The AIB ruling doesn't set any legal precedent, as each case is assessed on merit, but it should offer encouragement to those in a similar position."

The greedy banker perception

Yes, €10m is a lot of money, but there a few things to consider. Firstly, the AIB employees were due to be paid the money in early 2009 and waited until mid-2010 to take legal action, despite being contractually entitled to the money.

This implies that a) the bank wasn't intending on shelling out any time soon and b) bonus payments for both 2009 and this year are either diminutive or totally non-existent.

Bank of Ireland has also confirmed that there are unlikely to be bonuses for those in its capital markets division again this year.

Rather than including annual bonus entitlement in employment contracts, increasingly Irish banks are awarding them on an entirely discretionary basis. Considering the ongoing lack of profitability at Ireland's banks, and focus on reducing operating expenses, this potentially means much smaller pay packets for those in these traditionally well-remunerated divisions.

Around 90 people is also a very small proportion of total headcount in AIB's capital markets division. What's more, the majority of them are still employed within the bank. In the current climate, taking legal action against your employer is a risky move.

"From a legal perspective, there is absolutely nothing to prevent an employee taking legal action against their employer," says McInnes. "But it's a natural concern, in a tight job market where redundancies are commonplace, that such action could become a black mark against your name which might come to light again somewhere down the line."

International allure

Those working in capital markets functions in Ireland have options, of course. There's the prospect of seeking work across the Irish Sea in the (comparatively) healthy City market.

Or, closer to home, they could towards an international organisation which are not hampered by self-imposed compensation restrictions.

"Half the pitch of working for an international organisation is that they've professed to be paying bonuses all the way through the crisis," says one financial services headhunter in Dublin. "Strictly speaking, though, these too have been much smaller than in previous years and sometimes subject to deferral."

More important than money, he claims, is the need for increased job security and a greater chance of career progression, and this is why international banks are attracting talent.

luketitz

bourgeois wrote: »

Bank of Ireland has also confirmed that there are unlikely to be bonuses for those in its capital markets division again this year.

Surely not performance-based bonuses?! What have they done to merit ANY kind of bonus? Should consider themselves lucky to still be in a job IMHO

bourgeois

John Foy must have a huge pair of kahunas!

But seriously-the people employed in this service that AIB is offering is taking a €40million bonus when the bank is only worth around €550million and has recieved roughly €3.5billion from every taxpaying Joe and Jane Soap on this island.

Toots

bourgeois, I suggest you actually read the charter of this (or any) forum before you post a thread. This forum is for the discussion of banking, insurance and pension products. It is not for discussing the renumeration packages of senior bank officials.

I would suggest that a forum such as After Hours would be more appropriate for your thread (although I'm not sure even that would be the best place for it, best PM the moderators before posting it).

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