Just weeks before the holiday season, Barclays terminated 15 New York-based bankers and traders, along with 35 other employees, without issuing their annual bonuses—a move that has sparked backlash and potential legal challenges. The layoffs by the UK-based bank have left the affected professionals reeling as they missed out on year-end bonuses, often a significant part of their total compensation, as per Times of India report.
For the 15 Wall Street professionals affected, the termination erased potential bonuses that typically reach up to $1 million, according to industry sources. With investment bankers’ salaries often starting at $200,000, the bonuses are a vital component of their earnings. Attorney Tanvir Rahman of Filippatos characterized Barclays’ decision as “heartless,” explaining that some employers at least offer partial or pro-rata bonuses to employees dismissed late in the year. Rival firms such as Goldman Sachs and Bank of America reportedly follow such practices, the report added.
Legal Action on the Horizon
Several of the terminated employees are considering lawsuits, with claims potentially exceeding $10 million. They argue that bonuses, earned incrementally over the year, are not entirely discretionary and should still be paid. However, Rahman cautioned about the slim likelihood of success, noting that employment agreements typically stipulate that only currently employed staff are eligible for bonuses, as per TOI report.
Some ex-employees are also exploring arbitration through the Financial Industry Regulatory Authority (FINRA) to resolve disputes.
Livemint could not independently verify this news development.
In response to the criticism, a Barclays spokesperson stated, “We regularly review our talent pool to ensure that we are investing in talent, delivering for clients, and best positioned for long-term success.” The layoffs form part of a three-year strategy to reduce the bank’s dependence on investment banking and streamline its operations, as quoted by TOI.
This decision comes despite reports that bonuses in select departments were expected to increase by 20% due to a recovery in dealmaking activity.
Barclays has been tightening its bonus payouts for some time. In 2023, the bank slashed overall bonuses by 43% as revenue dropped. The previous year, numerous bankers reportedly went without bonuses altogether.
The layoffs and denied bonuses have fueled resentment among the affected employees and broader Wall Street circles, raising concerns about the balance between cost-cutting measures and maintaining morale. With legal battles potentially unfolding, this episode serves as a stark example of the challenges financial institutions face in navigating economic efficiency and workforce satisfaction.
Barclays’ end-of-year layoffs could be remembered as a cautionary tale for firms under pressure to save costs while managing employee goodwill.