Mr. Shangkong | Is it really so bad to be laid off?
With all the entitlements of modern contracts, some in the financial industry look forward to getting their hands on severance packages
Getting laid off sounds tough, but for a highly paid banker it is not always such a bad fate.
In the latest round of financial industry lay-offs that began over summer, hundreds of Asian-based jobs have been lost. The toll has been heavier in the United States and Europe.
I remember an entrepreneur friend once told me: “If you sack an employee, to some extent, that means you sack his whole family.”
But I know some people in the financial industry who can’t wait to get the chop so they can collect big severance packages in cash and other benefits.
In Hong Kong, people who lose their jobs at major international banks usually get severance equivalent to at least three months’ pay. Typically, the more senior the position, the more severance the person gets, and the longer the employment, the bigger the package.
Currently, the base salary for a managing director at an international bank in Hong Kong is between US$400,000 and US$500,000 annually, or about US$30,000 to US$40,000 a month. Often the severance calculation is based on the number of years of employment plus one or two months’ pay extra. So, if a person is employed for 10 years, he or she would receive 10 months of salary plus one or two months more.
Besides cash, there are often non-cash benefits, too, depending on the terms of the job contract. That may call for the employer to, say, provide free medical coverage and tax consultancy services for a year, or sometimes longer.