Herbies u-turns on Australia pay freeze ahead of remenuration overhaul

Herbert Smith Freehills (HSF) is to lift its pay freezes in Australia after cancelling an annual salary review in 2013.

Permanent staff in Australia will be told about their salary increases in July, with employees expected to be reviewed based on performance. 

The initial pay freeze was isolated to staff in Australia, with the firm insisting at the time that it was related to market conditions and not Freehills’ merger with legacy Herbert Smith (28 June 2012).

The decision to thaw out the freeze comes months before a new global remenuration system kicks in for the firm. At the start of the 2015 financial year legacy Herbert Smith partners will abandon its rigid eight-year lockstep in favour of a merit-based pay system (9 December 2013).  

Partners’ performance will be assessed using a global balanced scorecard marked across 12 different areas, from new business to people management.  There will also be an annual bonus pool used to reward exceptional performance.

However Australia partners will have a specific performance related component above a certain point in the lockstep, one which is slightly lower down the lockstep to legacy Herbert Smith.

Top performing partners at legacy Freehills took home AUS$1.8m (£1.02m) in 2011/12 before bonuses. Before the new system was announced, sources said partners at legacy Freehills were reluctant to wed with legacy Herbert Smith’s more rigid eight-year lockstep, concerned that a compromise between the two systems would lead to pay cuts for its top performers.

Herbert Smith merged with Australia’s Freehills on 1 October 2012 (28 June 2012). HSF has since confirmed the appointment of global head of disputes Sonya Leydecker and former legacy Freehills managing partner Mark Rigotti as joint chief executive officers (19 December 2013).

The firm did not provide further comment.