The Financial Services Industry is in the middle of the annual round of deciding the size of the bonus pool for its employees as well as the distribution of the payments between the various departments and staff members. Recent Press comments let us send a word of caution to Senior Management and Human Resource Departments. We are very sympathetic to management's desire to reward those among their staff that they think offer the best potential to make good contributions in the future. So we are not surprised that employers may wish to award the bulk of their bonus pool to the most profitable employees or to younger staff that they wish to motivate.However, today's litigious workplace limits the amount of discretion employers have without running the risk of being dragged into damaging and costly legal disputes.Awarding bonuses on anything less than objective standards creates a legal minefield for the employer as those employees that have received a low bonus may be tempted to have their compensation reviewed by an employment tribunal or even in a court of law.Some firms still have no adequate internal system to allocate profits on an objective basis and they should now urgently review their management controls. They will need them so that they can make sure that bonus payments are backed up by hard numbers that can stand up to scrutiny in a court if staff members feel that their bonus was allocated in an arbitrary fashion.
