Bonus Archives

Voluntary – Key Words & Phrases

Published on February 19th, 2019 by Alan L. Sklover

Sklover Working Wisdom keywords and phrases

Be on the lookout for . . .

“Voluntary,” as in “Voluntary Departure,” “Voluntary Resignation”
or “Voluntary Waiver”

You’re quite likely to find the word “voluntary” in several work-related legal documents. If you do notice it, that word may be very advantageous to you.

Generally speaking, “voluntary” means “done on one’s own free will.” It is synonymous with discretionary, unforced and optional. In legal documents, it often suggests that the act described was not required, not coerced, and not demanded.

Let’s say that, according to your employer’s Annual Bonus Plan, you are not entitled to your annual bonus if you “voluntarily” resign before the day it is paid. What if, two weeks before bonus payment date, you resigned and left your job in fear that your boss might beat you up in one of his infamous uncontrolled rages?

Was your departure “voluntary?” I’d say no. Are you entitled to your annual bonus? I’d say yes, although I’m confident that most employers would disagree.

You have a strong, reasonable and likely winning argument that the bonus is yours, so long as you spot, appreciate and point to the word “voluntary.”

In Repayment Agreements, you might promise to repay your employer in, as examples, a Sign-on Bonus Agreement, a Relocation Expenses Policy, or a Tuition Assistance Plan if you “voluntarily” leave before two years of service. What if you left earlier than that because, all of a sudden, your salary was reduced by 40%, and your family likes to eat three meals a day? (Some kids demand 4 or 5!!)

Is feeding your hungry family “voluntary?” I’d say No. Was your departure to take a better paying job truly “voluntary?” I’d say No. For this reason, you have a very good, and probably winning, basis to argue, with likely success, that your repayment is not required.

So, in this circumstance, too, you may very well not have to repay any sign-on bonus, educational assistance, etc., so long, that is, as you spot, appreciate and raise in your defense the word “voluntary.”

The same goes for whether a Non-Compete Agreement is valid or void, according to its own words. If the non-compete says it is valid if you “voluntarily” leave your job, and you can show that you are allergic to the new paint used throughout the office, then it is void as to you, so long, that is, as you spot, appreciate and raise the word “voluntary.”

There are many other legal documents that may contain the word “voluntary.” Look for “voluntary” in any and every workplace document, whether in an agreement, a company policy, an Employee Handbook, Stock Award, or other document.

You may be VERY GLAD you did.

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Malus Payment – Key Words & Phrases

Published on October 6th, 2016 by Alan L. Sklover

Key Words

What is the meaning of:

Malus Payment?

In many areas of business, contracts commonly include what is called a “bonus-malus” provision.

This means that, if future results of an effort, a joint venture, or a sold business exceed a specified performance goal, one side may get an extra payment (that is, a “bonus” payment).

A “bonus-malus” provision would also provide that, if results fell below that same specified performance goal, or another specified performance goal, that same party might have to pay back money previously received from the other (that is, a “malus” payment).

“Bonus-malus” provisions serve to limit both the upside and the downside risks of unexpected events to both sides in a transaction.

Here’s an example. If party A sold a consulting business to party B, their contract might include a “bonus-malus” provision that provides (a) if the revenues in the first year exceed $10 million, then A, the seller, would be entitled to a “bonus” payment of $100,000. But (b) if the first ?year revenues were less than $8 million, then party A, the seller, would have to make a $75,000 “malus” payment to party B, the buyer.

Such “bonus-malus” provisions are starting to find their way into employment agreements and offer letters. Don’t be surprised if you see one in yours, or if such a provision is imposed upon you in coming months and years.

The keys to their negotiation are (a) careful due diligence, (b) reasonable performance goals, (c) accurate means of measurement of future performance, (d) exclusion of the effects of truly unexpected events such as changed laws, wars or natural disasters (earthquakes, etc.) and (e) proven bad faith by either party.

A “malus payment” is different from a “clawback” provision in that a “bonus-malus” provision is usually pre-negotiated into a contract, and does not suggest any misconduct, while a “clawback” provision is usually imposed by law or found in a compensation plan, and is usually imposed without a prior agreement, most often in the context of an allegation of bad conduct.

You read about it here, first.

Knowledge is power. The best things in life are free. Forewarned is forearmed.

That’s what SkloverWorkingWisdom© is all about.

© 2016 Alan L. Sklover. All Rights Reserved. Commercial Use Strictly Prohibited

“Bonus Disappointing? – Here’s How to Respond”

Published on March 3rd, 2015 by Alan L. Sklover

“When you permit disappointment to fester in your soul, it often leads to discouragement.”

– Joyce Meyer

ACTUAL “CASE HISTORIES: Brandon, 42, was a Software Sales Manager for a large software firm headquartered in St. Louis. He worked from his home in Northern New Jersey, responsible for managing salespeople located in four states. His compensation consisted of a modest salary, but a significant bonus opportunity, which was based on a seemingly simple formula. Determining Brandon’s annual bonus was a simple matter of calculating the year-over-year increase in sales in his territory, and applying an agreed percentage. Or so it seemed.

In the previous year, certain unexpected events made calculating Brandon’s bonus not so simple a task. First, in February, two of Brandon’s star salespeople resigned after booking large orders. Then, in May, his territory was adjusted by taking away Connecticut and adding Vermont. In August, Brandon was asked by the CEO to manage a company-wide effort to roll out a new software product – which took a lot of his time and attention – after being assured his efforts would not result in a lower bonus. In November, a large client moved its headquarters from New York to Texas, removing it from Brandon’s territory.

In March, when Brandon was told of the amount of his annual bonus for the previous calendar year, Brandon was sorely disappointed. It was far lower than he had expected because its calculations did not include the effects of the unexpected events.

Brandon came to us for help in resigning from his job, even though he did not yet have another one. He felt fooled and foolish. Instead of helping him choose between the alternatives of underpaid or unemployed, we counseled him to seek a third path: resolving the problem, that is, to remain employed and be fairly paid. He did stay, and he did try to solve the problem. To his satisfaction, (a) he received a supplemental bonus, (b) he was granted an additional week of vacation each year, and (c) he and his manager devised a plan to ensure that he would not be short-changed in the future.

LESSON TO LEARN: Annual incentive bonuses generally come in two varieties: (a) “discretionary” (based on subjective factors), and (b) “formulaic” (based on objective metrics.) Whichever type you may get, chances are that sometimes you may be disappointed. There are better ways of redressing the problem, and over time we have come upon one way that we have found works better than others. We refer to it as “Past, Present and Future.” Read on and you’ll see what we mean.

WHAT YOU CAN DO: To address bonus disappointment, in almost all circumstances we suggest a focused, respectful and effective appeal to either the client’s manager or an executive further up the chain of authority, presented by means of an email, addressing three themes. Here are the three basic elements of the “Past, Present and Future” method we default to when helping clients who have received disappointing annual incentive bonuses:
Read the rest of this blog post »

“Responding to a Retention Bonus Offer” – Ten Wise Steps”

Published on January 6th, 2015 by Alan L. Sklover

“All I’ve ever wanted is an honest week’s pay for an honest day’s work.”

– Steve Martin

ACTUAL “CASE HISTORIES: Jana contacted our office with an almost whimsical question: “I was just offered a bonus to stay in my job. What’s next . . . offer to pay me to keep breathing?” She honestly did not understand why her employer would pay her to stay in her job for six months, and was quizzical – and even a bit paranoid – at the same time.

In her consultation with us, we explained to Jana the two reasons why employers offer Retention Bonuses: to encourage employees to stay in their jobs either (1) during a period of heightened job insecurity, such as an upcoming merger, which makes people concerned about losing their jobs, or (2) to ensure that an important event or transaction goes smoothly, such as the closing of a large business deal or a major corporate celebration, when the employee is critical to company success. In both circumstances, the employer sees it as worth paying the employees an extra sum.

We also explained to Jana that, by its very nature, an offer of a Retention Bonus means that the employees receiving the offer are viewed as particularly valuable, and in our world that means that they might have leverage to negotiate better “rewards,” that is, higher payment, or lower “risk,” that is, less chance of not getting paid the bonus. With a little coaching, and a dose of induced courage, Jana did request both better “reward” and lower “risk” and to her surprise was successful in both requests.

Though Jana did get the Retention Bonus, her job was eventually eliminated after her employer merged with another company.

Sure was handy that Jana requested enhanced severance in exchange for agreeing to the Retention Bonus. She was the only one in her department who received extra severance. And for only one reason: she was the only one to ask for it.

LESSON TO LEARN: A Retention Bonus is exactly what its name implies: a bonus to stay in your job. For example, “We offer you (a) $25,000 (b) if you stay in your job until June 1st of this year.” By its very name and nature, such an offer says, “You are valuable to us, at least for a certain period of time.” If your employer offers you a Retention Bonus, chances are your continued presence is perceived by your employer as being significant valuable to it

Why do employers offer Retention Bonuses?: (a) to keep you on board after a merger until they decide which of the two Directors of Logistics will be kept on after the merger; (b) to keep you on board until they decide if they need you for the longer term, (c) to gain from you the critical knowledge or insight that only you have, (d) to ensure that there is a smooth transition of client relationships if and when there is a change in corporate structure or personnel, among many other possible reasons.

“Being perceived as valuable” is, in our minds, the precise definition of “having leverage” to negotiation for better terms. And for this reason, we almost always suggest that (a) Retention Bonus offers be read very well to locate hidden “trap doors” in the legal language, and (b) Retention Bonus offers be negotiated with an aim to both (i) increase what you are being offered, and (ii) decrease the chances that you will miss out on the bonus due to possibly “tricky,” unclear or evasive language.

WHAT YOU CAN DO: Here are ten steps you would be “work-wise” to take if you are offered a Retention Bonus: Read the rest of this blog post »

“Job Offer On the Way? – Consider Asking for a Sign-On Bonus”

Published on December 9th, 2014 by Alan L. Sklover

“If it scares you, it might be a good thing to try.”

– Seth Godin

ACTUAL “CASE HISTORIES: Carrie was not at all pleased with her job. Though it sure seemed glamorous to be in charge of all wholesale sales in South America and Latin America for her employer, a luxury clothing company, she soon tired of the constant travel. And, too, her boss and Carrie no longer saw things eye-to-eye, as they once had. In fact, she had grown to dislike him immensely. She thought, why not seek something new? Though the job market was anything but robust, Carrie contacted some of her friends in the fashion industry, and put out the word that she was “available” for the right job.

Through a recruiter she had met some time earlier, she learned of a position training and overseeing junior clothing salespersons. Though Carrie did not think of herself as the “teacher-type,” she did agree to an interview, and over her interviews, grew more and more interested in leaving pure sales and moving into the “human capital” field. It surely piqued her interest. After learning that she was among the top two candidates, Carrie was eager to accept nearly any decent offer presented. She was, however, concerned about the cost of relocating her residence for the job.

When Carrie consulted us, we suggested she consider asking for something she had never considered: a sign-on bonus to help her address relocation costs. After a little bit of coaching, and a whole bunch of nervousness, Carrie did ask for a sign-on bonus, and was elated when her request was agreed to.

LESSON TO LEARN: Acquiring and retaining the right “human capital” is seen today as a truly critical component of organizational success. When the right candidate is found, and when that candidate gives a good reason for a sign-on bonus, an employer will at least give serious thought to the request. These days, such requests – under the right circumstances and posed in the right way – are being granted with increasing frequency.

Here is a sample of a typical sign-on bonus agreement or provision:

“If you become an employee of the company, you will be paid a sign-on bonus of $30,000, less legally required deductions and withholdings. It will be paid to you 1/3 within thirty (30) days of your first day of work, 1/3 within sixty (60) days of your first day of work, and 1/3 within ninety (90) days of your first day of work. If you voluntarily resign before one full year of your first day of work, you will have to repay one half of your sign on bonus. If you are discharged from employment without having committed “cause” for firing, you will not be liable for any repayment of the sign-on bonus.”

Requests for sign-on bonuses are most appropriate when (a) the employee is being heavily recruited or is surely the number one candidate, (b) the employee is leaving an apparently stable position or location, (c) the employee will be forfeiting earned bonus or commission, or coming compensation, and (d) the new position will entail additional time, expense or investment of some kind by the employee, such as relocation costs, education costs, legal costs or clothing allowance.

HERE ARE 7 THINGS TO CONSIDER WHEN ASKING FOR A SIGN-ON BONUS: Read the rest of this blog post »


Alan L. Sklover

Alan L. Sklover

Employment Attorney
and Career Strategist
for over 35 years

Job Security and Career Success now depend on knowing how to navigate and negotiate to gain the most for your skills, time and efforts. Learn the trade secrets and 'uncommon common sense' of Attorney Alan L. Sklover, the leading authority on "Negotiating for Yourself at Work™".

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