Banks 'to be hit for millions' as hotshots axed

Lawyers today said that firms in the Square Mile and Canary Wharf are getting rid of some of their hotshot bankers to cut bonus payments - with women particularly hard hit.

It comes as banks struggle through the credit crunch and economic downturn which has already cost them billions in writedowns on dodgy investments.

Elaine Aarons, employment partner at City law firm Withers, said some investment banks are culling their best staff rather than weaker performers. Important clients then get shared out among surviving, less well-paid bankers.

"This is leaving many City banks open to claims of unfair dismissal or discrimination," she said. "As the economic gloom deepens, numerous City workers are seeking legal advice after being made redundant despite having outperformed colleagues who have kept their jobs."

It is feared that as many as 20,000 jobs could go in the City over the next two years.

Aarons said: "Whilst at face value, culling the best performers in times of difficulty may look like employers shooting themselves in the foot, it actually affords a number of advantages. It means that City institutions stand to cut the bonus bill, given it is the stellar performers who cost millions, not the weaker players, whilst at the same time motivating the remaining high performers because they stand to win the clients of the departing banker.

"Some decisions may be made by the very people who stand to gain from the departure, or who are at least influenced by them. Conflicts of interest are at play and everyone will look to protect their own back when push comes to shove.

"It goes without saying that such a strategy is severly misguided and fundamentally amounts to unfair dismissal. Discrimination often appears to be at play as well - a disproportionate number of the high performers that we are seeing being made redundant are female."