In Europe, Banks Do More to Ease the Sting of Layoffs

By Evans, John | American Banker, September 5, 1991 | Go to article overview

In Europe, Banks Do More to Ease the Sting of Layoffs


Evans, John, American Banker


In Europe, Banks Do More to Ease the Sting of Layoffs

If you are going to be "pink-slipped" from your banking job, it's far better to be employed by a European than an American bank.

The foreign institution usually offers a richer severance package than its American counterpart, according to bankers on both sides of the Atlantic.

In fact, American managers might learn a lesson or two from the British.

Generous Tradition

Compared with U.S. banks, which have a reputation for hard-nosed "hire and fire" employment policies, European institutions have traditionally offered more generous terms to surplus staff, said the personnel director at one major U.S. bank in London.

This executive, speaking on the condition that he not be identified, said: "Like most other U.S. banks, our operations in Europe work within not only the local framework for statutory protection for workers, but also the social and financial-market practices that dictate layoff benefits."

In a typically English touch, "gardening leave" is the term used by British bankers who are now sending some staff home on full pay to, in effect, watch the grass grow. In the meantime, the employer takes responsibility for trying to find another position for the employee.

But critics complain that the gardening terminology makes light of a bad situation.

"The bank says it will pay you to stay at home for a few weeks or months while they try to find you another job," said Richard Lynch, head of the London division of the Banking and Insurance Finances Union.

Socialist-Designed Packages

"Then you are called back and in most cases told you are being made redundant" - in American words, laid off.

Yet even when layoffs are inevitable, Europeans make out better than U.S. bankers. In such countries as Britain and France, socialist governments established laws and regulations that force employers to set handsome settlements. The result is packages that U.S. bank employees might envy.

A managerial-level banker in Britain with about 10 years of service can expect a severance package equal to nine months' salary. …

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