Bonuses

jmartin · December 2001

In the last year we have had several employees resign within days of receiving a bonus. Can we implement a policy requiring employees to forfeit or repay their bonus if they resign within 30 or 60 days? If so, does anyone have a sample policy?

Down_the_Middle · December 2001

What's so important about retaining people 30-60 days longer? If it is essential, then change your payment date so there's a hand-cuff period in there. My guess is that something else is the problem and is causing people to hang on til bonuses are paid and then jump ship. Seems to me, that's where someone's attention s/b focused. The rubber band can only be stretched so far b/4 employees decide that it's not worth it to stay or the employer decides that this 30-60 day period is just not that important.

TheCol · December 2001

Bonuses in all ways are a form of salary or "remuneration". Are used in forward year overtime calculations and suchlike. As such, I don't see a way in the world to recoup that money, once paid, absence civil suit for breach of some contractual policy you can come up with. Change your bonus structure to "Managemant Discretionery" or "Merit" and see if you can reward your best (aka long term!) employees. My policy is written so that the bonuses I give at year-end are so "discretionery" that they don't count for overtime. Let me know if you want that language.

smarti · December 2001

Could you explain this "bonus" in more detail? You give a bonus after 30-60 day what event? And what is the purpose of your bonus. And, without knowing exactly what the circumstances, be careful, discretionary can always be tested, especially when it means performance. Definitions can be very technical when it comes to labor law. Please explain a little further. Thanks

Theresa Gegen TX · December 2001

If the bonus is based on past performance, the company will have a real risk that a court or gov't agency will say that it is earned and cannot be forfeited.

That being said, it seems that your bonus is keeping the employees around longer (they wait until its' paid). If you want to keep them even longer, you could strech out payment (1/2 now and 1/2 in 60 days), but that still will not stop them from quitting after the first 1/2 is paid or after the 2nd 1/2 is paid.

Good Luck!

jmartin · December 2001

Our bonuses are completely discretionary in terms of timing, amount and existence. Our policy is written so that we are very clear that bonuses are at the discretion of management. There is no guarantee that an employee will receive a bonus, no guarantee that bonuses will come at a particular time and no guarantee as to the amount. Having said that, typically most supervisors participate when bonuses are given and typically there has always been a December (or year end) bonus. We have also often given a bonus in the 2nd or 3rd quarter. Bonuses are based upon company profit, department success and individual performance. Bonuses are often used as an incentive to stay with the firm and to help our employees remain loyal.
It is a natural course that we will have turnover. It just seems that we have had some supervisory level employees time their departure to coincide with the bonuses. Example is that we just had an employee wait until the receipt of the year end bonus to turn in her resignation. I have no doubt that she was postponing the resignation anticipating the arrival of the bonus.
We are curious about the 30/60 day forfeiture, not to encourage those employees to stay, but to lessen the sting of paying out a nice bonus and having the employee immediately return a resignation. We have heard that some of the larger banks have a forfeiture policy.

Bonuses

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