Oh, well done!

It came as David Cameron said he would cap all 2008 bonuses at £2,000 for staff in banks owned or partly owned by the government. He also said the government should be willing to sue any bank executive who insisted their contract entitled them to a large bonus for the year.

Let\’s rip up contracts already signed for reasons of political expediency. Isn\’t it wonderful to abandon the rule of law for a soundbite opr two?

17 comments on “Oh, well done!

  1. Granted Mark. However, the government should have used this to its advantage when bailing out the banks. That they didn’t shows what idiots they are. But the point still stands, than having not done this when should have doesn’t mean that now, the concept of contracts should be trashed.

  2. There’s a more important contract.

    That between taxpayer and the recipients of taxpayer funding.

    Bankers, or anyone else in a ‘bail-out’, can go hang if they insist on a contract made prior to taxpayer rescue being honoured before their contract to the taxpayer.

  3. I’ve heard some talk of changing the Human Rights Act to permit retrospective criminal and civil law changes to allow bankers to be prosecuted and have bonuses confiscated.

    Lovely. Just lovely. If they do it to the bankers, they’ll do it to all of us when it suits.

  4. Surely the proper place for these issues to be discussed is the company boards that UK Plc now sits on?

    Either we are for contract law or we are not. Just as we are either for free speach or we are not.

    Politicians, as usual, want to be for contract law when it suits and be contract breakers when it doesn’t. They are simply trying to avoid the blame of not having insisted on such changes before promising bagfuls of taxpayer money.

  5. “There’s a more important contract.
    That between taxpayer and the recipients of taxpayer funding.”

    This even has a name, its called the Low Redefintion Fallacy. There is no such contract. Or at least not one that I have been issued or seen signed. Taxpayers do not get contracts, they get votes.

  6. Don’t blame the bankers it was our government that failed to regulate and then threw cash at the banks in desperation. It is the government that is robbing from this and future generations.

    It is the government that has breached its contract with the people.

  7. GeoffH, you’re wrong. It doesn’t matter how much you or I dislike these contracts, neither you nor the government has a right to rip them up. And that’s a good thing, because I really don’t want Labour’s socialists (or the Tories) to have that sort of power.

  8. This Governement has legislated at great length about what happens when a company changes ownership, its called TUPE. As far as I am aware they didn’t excuse themselves from the bit that says that the new owner cannot change employment contracts under any circumstances.

    http://www.out-law.com/page-448

    “As the new employer is required to take on the employees on their existing terms and conditions of employment, it is prohibited from making any changes to the terms and conditions of employment of the transferred employees if the sole or principal reason for the variation is connected to the transfer (unless there is an ETO reason for the change, usually requiring a change in number of the workforce). This often makes it difficult, if not impossible, for incoming employers to harmonise terms and conditions of employment of staff after a TUPE transfer.”

  9. Tank. Want to keep prior contracts intact?

    Fine. No taxpayer money then.

    You want the money? Then no prior contracts.

    Easy. And has nothing to do with excessive Labour or Tory power. Or fallacies.

  10. GeoffH, I think you are misunderstanding many people’s position. I for one agree that they government should have used their bargaining position at the outset to get the issue of bonuses sorted. But the fact is they didn’t. That being the case, to now not pay bonuses is breach of contract. I do not think it melodramatic to say that civilisation depends on contracts being honoured.

  11. “That being the case, to now not pay bonuses is breach of contract. ”

    Really? A contractual bonus? Neat……..but a nonsense.

    A bonus must depend on circumstances. Contracts have nothing to do with it.

    Even if personal performance justifies an individual bonus that bonus can only be paid if the employer is solvent and trading. What’s more trading on the same terms.

    With bail-out money the terms of trade changed. Agreed, the government need to have been sharper in dealing with the sharks (sorry bankers) but, when push comes to shove, the terms of trade trade are changed. RBS today is not the same as RBS prior to the bail out.

    Ergo, no need to pay the bonuses. Indeed, not only no need but to do so is a swindle perpetrated against all taxpayers.

  12. http://ftalphaville.ft.com/blog/2009/02/16/52500/lloyds-needs-to-raise-112bn/#comments

    Profit warning raises capital concerns — In previous research (Darkest Before the Dawn — 27 January 2009) we estimated that Lloyds Banking Group (LBG) could get through the economic downturn by raising as little as £3bn in equity at 60p per share. Post the trading statement (13 February 2009) we have revised this estimate to £11.2bn, which at 50p would dilute stressed tNAV per share to 67p and potentially increase government ownership to 76%”

    Oh yeah, contracts MUST be honoured and bonuses paid.

    Only in cloud cuckoo land.

  13. GeoffH: “A bonus must depend on circumstances. Contracts have nothing to do with it. ”

    No doubt you would accept that as a reason why your savings account provider no longer wants to pay you the interest it promised.

    (And I don’t mean when interest rates fall; what you’re proposing means they can turn round at any point and say “sorry, contracts depend on circumstances, no payout sonny, hard cheese”.)

    Or perhaps you mean contracts depend on circumstances when that works to your advantage? A sort of heads-I-win-Tails-you-lose setup?

    That is exactly what we are attacking here.

  14. Bonuses ARE contractual obligations. I know this because my bonuses (contingent on me achieving certain objectives) are in my contrct. Granted I work in IT not finance, but that doesn’t change the fact that bonuses are part of a remuneration package which forms part of the terms and conditions of employment.

    “Only in cloud cuckoo land.”
    As you clearly cannot tell the difference between a tip and a bonus, you should not try to be so patronising.

  15. >Tank. Want to keep prior contracts intact?
    >Fine. No taxpayer money then.

    Fine by me. I don’t want my money going to the banks. It’s money down the drain.

    But if you’re saying that because taxpayers’ money has gone to the banks, that the government is then entitled to dishonour contracts, no, that doesn’t follow.

    But you dodged that point, didn’t you, by trying to claim that it wasn’t a matter of contracts. Maybe it isn’t, but what if it is? Do you still say the government can do what it likes? Does that also apply to anyone who invests money into a business? That they can ignore contract law as they see fit, just because they’ve put money in?

  16. Sorry but if an American Bank sued for Chapter Eleven, wouldn’t all their contracts be null and void – and renegotiated? Isn’t that what GM wants to do to get out of paying benefits to their retired workers?

    This is a little more ad hoc and hence stupid, but isn’t it the same principle?

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