Investment banks under pressure to shrink their workforces and rein in excessive pay are increasingly using a technique called performance improvement plans to ease people out of the door, according to employment lawyers.

Clive Howard, senior principal lawyer in the employment practice at Slater & Gordon Lawyers, said Pips were being used more than ever. He said: "I have seen a number of clients in the past six months who previously would have been offered a compromise agreement or redundancy."