When you lose your job at an investment bank - or any other organisation in the UK - it's rarely a smooth process. Instead of simply being let go, employees in the UK are entitled to a consultation period. Depending upon the number of jobs being dispensed with, this must begin anything from 45 to 30 days before redundancies take effect.
Nomura is in the middle of just such a consultation period now. The Japanese bank is making around 50 people redundant in its London sales and trading unit. Individuals put at risk are understood to include emerging markets traders only hired last year and Omar Ghalloudi, the former head of investment grade credit at Citi, who only joined in November 2017.
During the 30-45 day consultation period, banks are obliged to offer employees at risk of redundancy the opportunity to move into any vacant roles they have which match their previous positions in terms of pay and seniority. For the individuals concerned, this can present a problem.
At Nomura, for example, we understand that senior salespeople who were previously structuring derivatives solutions for publicly traded clients are in the process of being offered alternative roles at the Japanese bank. Instead of working with publicly traded clients, they will be on the "private side", structuring solutions for privately traded companies and private equity funds. They can accept - or accept redundancy. Some appear to be choosing the latter.
Employment lawyers caution that refusing alternative roles in lieu of redundancy can be a risky strategy, however. "If you unreasonably turn down what is an obviously suitable alternative role, an employer can say you are not being made redundant but are resigning, and that you will therefore not receive a redundancy payment," says Philip Landau of Landau Law. While there is no indication that Nomura has been deploying this technique, Landau says he's seen it used in banking, with expensive consequences for the individuals concerned.
Severance packages in investment banks are typically one month's pay for every year worked, although Deutsche Bank offers much less than this. To count as a suitable alternative to the role being made redundant, Landau says other jobs offered must have comparable pay, responsibility and status. They must also be based in a similar location - unless your contract includes a relocation clause, which is often the case in banking.
This, then is the choice for around 50 employees at Nomura now: accept what's on offer, or look for alternatives elsewhere. Early indications are that many front office staff will look outside, with the Japanese bank at risk of losing talent across the sales and trading business as staff not put at risk also contemplate leaving.
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