Weeks before the holiday season, Barclays laid off 15 New York-based bankers and traders and 35 other employees without annual bonuses. The measure has sparked a backlash and raised potential legal issues. The Times of India reports that the UK-based bank's job cuts have left affected professionals upset as they miss out on year-end bonuses, which often make up a significant portion of their total remuneration. It is said that there is.
For the 15 affected Wall Street professionals, bonuses that could normally reach up to $1 million were wiped out by the layoffs, industry sources said. Investment bankers' salaries often start at $200,000, and bonuses are a significant component of their earnings. Philippatos lawyer Tanvir Rahman characterized Barclays' decision as “callous” and explained that some employers offer at least a partial or pro-rata bonus to employees who are made redundant at the end of the year. Rivals such as Goldman Sachs and Bank of America follow similar practices, the report added.
Considering legal action
Some of the fired employees are considering legal action, and claims could exceed $10 million. They argue that bonuses earned in small increments throughout the year are not entirely discretionary and should still be paid. But Rahman warned that the chances of success were low, pointing out that employment contracts typically stipulate that only currently employed staff are eligible to receive bonuses, according to a TOI report. .
Some former employees are seeking arbitration through the Financial Industry Regulatory Authority (FINRA) to resolve disputes.
Livemint was unable to independently verify this news development.
In response to the criticism, a Barclays spokesperson said: 'We regularly review our talent pool to ensure we are best placed to invest in our people, serve our customers and achieve long-term success. “There is,” he said. The job cuts are part of the bank's three-year strategy to reduce its dependence on investment banking and streamline its operations, TOI cited.
The decision came despite reports that bonuses in some departments are expected to increase by 20% due to a pick-up in trading activity.
Barclays has been tightening its rules on bonus payments for some time. The bank cut overall bonuses by 43% in 2023 due to falling revenue. The previous year, many bankers reportedly received no bonuses at all.
The layoffs and bonus denials have stoked resentment among affected employees and broader circles on Wall Street, raising concerns about the balance between cost-cutting measures and maintaining morale. Amid potential legal battles, this episode serves as a stark example of the challenges financial institutions face in balancing economic efficiency with employee satisfaction.
Barclays' year-end job cuts may be remembered as a wake-up call for companies under pressure to cut costs while protecting employee trust.