There are always going to be winners and losers in the redundancy process. The biggest winners I’ve seen are the fortunate few who started work at a new bank about a year ago, and signed on with a guaranteed bonus for the first year – which the bank has had to honour in their redundancy payout. These bonuses are high, having been negotiated at a time when the credit crunch was a term known only to the cognoscenti, and so these few are being let go with packages far higher than their counterparts’.

For the rest, the news is mixed. As a general rule of thumb, the longer you have been employed, the more generous banks tend to be. As an average, larger banks are making a severance payment of about six months’ equivalent salary (to include payment in lieu of notice). Given the possibility of making the first £30k of any redundancy payment tax free, the net payment is more generous than the equivalent salary award.

Most people who are let go are more interested in bonus than salary, however. It’s unfortunate, therefore, that in most cases there will be no payment to take into consideration the previous year’s bonus – whether in full or in part. Most banks are able to avoid paying any form of bonus on the basis that employees have been let go before the contractual bonus date, and there is little that can be done to challenge this.

Traders in particular are often convinced that they will receive a large payout because of the money they made for the bank in the previous year (notwithstanding the difficult times). Banks are almost universally not taking this into account, and are treating everyone fairly in accordance with their set policy. There is no legal basis to challenge a redundancy payout on the basis of unfairness in these circumstances.

On the other hand, there are some banks who will factor a notional bonus into the redundancy package. They are often unwilling to admit this, though: bonuses are purely discretionary and contractually they have no obligation to pay them.

So, is it worth challenging the redundancy at all, and will it lead to a higher payout? Well, if you feel you have been unfairly selected, not properly consulted or not considered for a suitable alternative role, then it may well be worth challenging the redundancy, and this can occasionally lead to a higher payout.

Finally, you are likely to be asked to sign a compromise agreement with the bank on your exit, which has the effect of prohibiting any future claim against the bank. You will need a solicitor in any event to advise you on the agreement and therefore this is an ideal time to challenge the amount being received if there is reason to do so.

Philip Landau is a partner at London law firm Landau Zeffert Weir. He can be contacted at pl@lzwlaw.co.uk or 020 7357 9494.