Goldman Sachs' London-based staff will be forced to take a pay cut. The firm, whose first half profits fell 14% compared to 2010, will invoke a contract clause inserted into the European division's employment contracts in 2009.

The clause reserves the right to cut back base salaries of some of the London staff after two years. It was added after the bank increased the UK staff's base salary after the UK government announced a one-time tax on bonuses aimed at restraining bonus pay in the finance industry.

Staff at the managing director and partner level are reported to be affected by the cuts, but most will stay as they'd been previously warned that the cuts might occur. It is unclear whether lower-level staff will also feel the wrath of cuts, but it seems that the clause Goldman has triggered is mostly limited to higher-level staff that would expect to receive larger bonuses. [Financial News, 8/25/11]