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Merit driven pay – Slaughter and May introduces discretionary associate bonus

Building on its decision earlier this year to introduce an element of merit to its associate pay, Slaughter and May has overhauled its associate bonus, moving away from a ‘blunt instrument’ flat rate bonus of 5% to a performance and seniority related uplift.

The overhaul – which was unveiled by the Magic Circle firm today (2 December) and follows its decision in January to create ‘good’ and ‘exceptional’ salary bands for associates from 4.5 years post-qualification experience (PQE) and upwards – will see associates paid up to a 12% bonus based on both their PQE level and performance.

Associates of under six months PQE who are judged as ‘good or exceptional’ will receive a bonus of 6%, which for associates of 1-2 years PQE will increase to 8%, for those of 2.5 – 4 years PQE will rise to 10%, and for associates of 4.5 – 6.5 years PQE will increase to 12%.

Trainees and support staff will receive a bonus of 3%, compared with a 2.5% bonus in 2012.

While the 690-lawyer firm has been quick to point out that the new bonus structure is heavily PQE-related rather than being purely merit-driven, a statement from the firm today said: ‘Associates whose performance falls short of the level of achievement that we would expect will receive a lower bonus percentage.’

However, executive partner Richard Clarke told Legal Business: ‘The performance element is relatively modest when compared to the PQE element. It is primarily a lockstep philosophy with some performance element.’

He added in a statement: ‘Our philosophy as a firm is different to the extent that we do not impose billing or time recording targets on our associates and our approach to bonus differentiation is to recognise performance and career progression while ensuring that we reflect our team culture of valuing everyone’s contribution.’

This move comes as more large City firms move to a merit-based remuneration system, such as Norton Rose Freehills and Freshfields Bruckhaus Deringer. It also follows the recent decision by RPC to dispense with newly-qualified fixed salary bands in favour of pay that is linked to both merit and the value of the associate’s area of contribution to the firm and to the client.