I was discussing the topical issue of Bankers and their bonuses with a solicitor today who wanted to know my opinion based on my knowledge of contract law.
I caught most of the recent parliamentary committee meeting with the Bankers (the one where they all apologised) and I watched the Prime Minister before a different parliamentary committee this morning. I thought all of these hearings were pretty tedious and I can't see how much good could come out of it. I think the government could have done a better job of preparing for the current public disquiet over bonuses when it decided to bail them out.
One of the bankers before the committee informed the MPs that, having sought legal advice, they had been told that they were obliged to pay bonuses if they were stipulated in an employee's contract. With this in mind, I found one particular question by an MP quite surprising. This MP asked a banker whether he could appreciate the view of the wider public that these bankers should not be paid the bonuses they were promised in their employment contract and that surely they shouldn't be paying them out. I thought it was strange how this MP was being so callous in his analysis of an employee's right to be paid their due.
My conclusion is: the bankers aren't to be blamed in this respect. I think there is an inherent problem in the word 'Bonus'. By itself, it suggests that its something surplus to standard requirements; and, in a banking context, the wider public see it as something of an excessive windfall. Now, I acknowledge that, applied to certain bankers, this definition rings true. But it absolutely doesn't for certain bankers in the low-mid level of the profession.
If this issue was to be litigated before the courts, it seems to me that the word 'bonus' itself should be considered closely. For some employees, a bonus isn't a bonus in the real sense of the word but rather no more than their standard salary. The court's assessment should take into account the employee contract itself and what the employee has come to expect in practice in light of the work he does. If its clear that a windfall is being made where not a lot of work is being done, then they should not be rewarded.
Finally, the government is partially to blame for their failure to consider the Bonus issue at the time they bailed out the banks.
4 days ago