The dark side of bonus season: navigating redundancy

• 6 February 2025
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Unfortunately, it is no coincidence that the impetus for organisations to reorganise and make cuts often happens just before bonus payments for the previous financial year are due to be paid. 

As a result, bonus season can be a particularly tumultuous and fraught period, with many employees finding themselves without a role or an anticipated bonus only weeks into 2025.

In a recent article for the FT Adviser, Jo Keddie and Daniel Parker shared their insights on bonus season in the financial services sector and the emerging pattern of reducing headcount in the run up. We have summarised the article by sharing eight steps that employees can take if faced with the possibility of redundancy before bonus payments are made. 

1. Review your employment contract: check for information about your financial entitlements related to your notice period, bonus award, and deferred incentives in case of termination.
2. Check award documents and policies: look at any freestanding award documents, bonus policies, or incentive plans for ‘good leaver’ terms that might offer more favourable treatment in redundancy situations.
3. Scrutinise the redundancy process: check that your employer is carrying out a fair process involving proper consultation, fair selection criteria, and taking reasonable steps to avoid redundancy-related dismissals.
4. Consider unfair dismissal claims: if your employer has not complied with the required procedures, you may have grounds to challenge the redundancy and claim unfair dismissal, provided you have sufficient length of service (around two years).
5. Understand the rationale: ask for the rationale behind the redundancy. If there is no genuine business need or if the explanation differs from reality, the dismissal may not be fair and lawful.
6. Check for unlawful factors: scrutinise whether the selection process is motivated by unlawful factors such as discrimination or whistleblowing. 
7. Engage in the process: engage in the redundancy process early. Understand if any enhanced redundancy terms are on offer and whether the employer is allowing volunteers for redundancy.
8. Document performance and contributions: ensure that your performance and contributions are fairly documented in your appraisals. Challenge any unjustified criticism or grading to avoid being unfairly selected for redundancy.

Taking these steps can help you navigate the redundancy process more effectively and protect your rights.

You can read the full article here.

We have seen a clear pattern emerging of reductions to workforces being made in the first quarter of each new year and 2025 is proving to be no different. Once again, we are finding that the timing of the reduction processes is often closely linked to rules around bonuses and other incentives.

https://www.ftadviser.com/advice-businesses/2025/2/4/bonus-season-can-come-at-a-cost-and-not-in-the-way-you-might-think/