How HSBC could cancel bonuses for everyone it fired, and the questions that remain

If you lost your job at HSBC last month, and you were waiting for your bonus, it will not have been forthcoming. The Financial Times says today that when many of HSBC's investment bankers sat down hoping to learn of their 2024 bonuses, they were instead told that they would receive nothing at all and were losing their jobs. This came as a shock. HSBC had “a reputation for looking after [its] people,” one reflected.

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Not any more, it seems. 

Unfortunately, HSBC was entirely within its rights. In the UK, at least, banks are able to withhold bonuses in their entirety for people who are no longer employed at the payment date. If they want, banks are even able to announce bonuses and yet not pay them if an employee is terminated after the announcement and before the payment. This applies even when someone has worked a full year, and even though the bonus is in large part a retrospective payment for work already done. 

Lawyers confirm this is so. "Typically contracts in financial services will contain clauses that say that if their employment is terminated before the date of payment they will not need to pay it," says Dan Begbie Clench, a partner at law firm Doyle Clayton. If you want to recover the money lost as a result, you will need to resort to other means. "It becomes a question of whether an employee has another claim involving the termination that may allow them to recover the bonus," says Begbie Clench. In the UK, this usually means a discrimination or whistleblowing claim, or both. 

It may not have been thus. Back in 2006, Oliver Takacs, a former Barclays debt capital markets banker, attempted to bring a case against the British bank arguing that he was owed a £2m bonus after he was dismissed before his bonus was paid. Takac's contract had the standard clause saying that he would be owed nothing if he received notice of his termination ahead of the payment date, but he argued that this wasn't fair. Takacs said Barclays had dismissed him deliberately to avoid paying his bonus, and the judge at a preliminary hearing agreed that he had an arguable claim. Unfortunately, though, Takacs settled out of court before the full trial, meaning that his claim was never tested. 

HSBC's zeroed bankers are therefore in no real position to demand compensation. They are, however, in a position to feel aggrieved. Much of their ire is directed towards Adam Bagshaw, the global head of investment banking who joined from Deutsche Bank four years ago. "Why wasn't Bagshaw able to defend us against this?" says one managing director (MD).

While the people let go in the first round are at least certain of their situation, sources at the bank say those due to be let go in rounds two and three have a lack of clarity. 

"Bonus day (days after full year results) was when most people learned their faith," says another HSBC MD. "We were split into three categories: a) Fired today (no bonus, here is your severance package); b; Short term retention (finish your project and then likely severance and small bonus); c). Long term retention." 

People in the long term retention group have received bonuses, but many would like to leave, says the MD. Their bonuses are small and there's not much incentive to work or stay. It's not clear how they will get paid by HSBC for the work they're doing now, says one MD. - Will they receive zero bonuses in 2026 (if they're still there then). "The lack of visibility is a worry," he says.

Photo by Noppon Meenuch on Unsplash

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