Schroder Securities case sets off alarm for pay structures

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A spokesman for one bank said he feared employees might look at the size of the record tribunal payout and be tempted to launch similar claims themselves.

Mark Taylor, at the law firm Lovells, said: 'The process of educating management about transparency is still an issue.' US firms often had the most transparent pay schemes, he said, as tribunal awards for discrimination in the US can run into many millions of dollars.

But Fraser Younson, head of the employment practice at the law firm McDermott, Will & Emery, said many banks had improved the transparency of their bonus schemes over the last five years.

Criteria such as personal performance, bank performance and evaluation by colleagues are now often written into contracts to avoid accusations of arbitrary decision-making.

Younson said a change in UK law last October shifted the burden of proof on to the employer to show that it did not discriminate.

This might affect the outcome of only a few cases, Younson said. However, it is part of a climate in which the number of tribunal actions is rising and the size of sex discrimination settlements has increased.

One lawyer said he knew of a settlement of nearly 5m, dwarfing the tribunal award to Bower.

Taylor said: 'Banks are seen as soft targets with big pockets.'

The tribunal said that Bower, a drinks analyst who left Schroder Securities in 1999, was paid an 'insultingly' low bonus of 25,000 that had been 'picked from the air'. It said the procedures for deciding bonuses at the firm as a whole lacked transparency.

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