HSBC to end fixed-pay allowances for staff from January 2028

what happened

HSBC will begin phasing out fixed-pay allowances for employees in January 2028. Reuters reported the change after reviewing an internal memo, which linked the decision to UK regulatory reforms that removed the 2:1 limit on variable pay relative to fixed pay.

These allowances are paid in addition to base salaries, typically to cover specified expenses such as commuting. HSBC said base salaries would not be cut and that its overall approach to total compensation would remain unchanged. However, affected employees could receive a larger share of their compensation through bonuses.

An HSBC spokesperson told Reuters that the revised approach would strengthen pay-for-performance, improve differentiation, help attract talent and recognise employees delivering the best outcomes for customers, clients and stakeholders. Under CEO Georges Elhedery, who took the role in September 2024, HSBC has also been combining some businesses and reorganising its structure into four main units.

why it matters

The policy will alter the mix between fixed and variable compensation at HSBC after the UK removed the 2:1 restriction. It may affect the bank’s personnel-cost structure and incentive system, while leaving base salaries unchanged.

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