“If I give in my notice of resignation, effective in two weeks, and bonuses are due in one week, can I lose my bonus?”
Published on March 4th, 2010 by Alan L Sklover
Question: Hi, Alan. I just discovered your blog, wonderful! I have a question that seems very common, but I didn’t quite find an answer for it on your site.
I have been offered a new job and they want me to start as soon as possible. It would be OK for me to start April 1. However, it’s also “bonus season,” and my present employer pays bonuses on March 30th. I would like to respect the usual two-week notice period. The bonus plan language says “You will not be eligible for bonus if you resign your employment before the payment date.” The way I figure, since technically my resignation is not effective until after the bonuses are paid, I should be safe.
If I give my present employer two weeks notice on March 16, which means I will still be employed by them on March 30, will my bonus be protected, or jeopardized?
Answer: I am very glad you came upon our blog, because otherwise you might not have your bonus.
For three reasons, I am certain – at least 99.9% certain – that you will LOSE YOUR BONUS if you provide notice of resignation before you receive the bonus amount:
First, the language of the Bonus Plan is not clear, but I think the more logical reading is this: If you give NOTICE of resignation before payment date, you will lose your bonus. That is, the more common sense reading is SUBMISSION of resignation, not effectiveness of resignation.
Second, in my many years of advising and representing people on bonus issues, I have many, many times seen people in your exact situation: every single one who took a chance and submitted notice of resignation before the bonus payment, indeed, LOST the bonus payment.
Third, understand that bonuses are paid to reward past performance, but from the employer’s perspective, they have a more important purpose: to incentivize future efforts. For someone who they know is leaving, that second – and more important – purpose is gone.
Please, please, please do not give notice of resignation until you have received your bonus. In fact I go further in counseling my own clients: You should not give notice of resignation until (a) the money is in your account, AND (b) you have moved it to a different bank. Why? That is because, if an employer auto-deposits payments into your bank account, that same employer can – and they sometimes do – take it out later. I’ve seen that happen, even six months later. I counsel clients in your situation to leave only $10 or so, to prevent just that.
As to the “timing” of your transition, I would tell your new employer that you cannot leave your bonus “on the table,” and for this reason you can’t start until the first or second week in April. If your prospective employer really balks at that, you can ask them, “Well, then, would you put into writing that, if I lose out on my bonus, you will pay that amount to me, to ‘make me whole?’” Most employers will just as soon wait the extra week or two.
Thanks for submitting this question. It is a very, very common dilemma, and a question that I am asked by my clients very often, especially this time of year, that is, “bonus season.”
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Best, Al Sklover
P.S.: Monies due you (commissions, bonus, wages, expenses, etc.) owed you by former employer? Your best bet is to make a written request. We offer a Model Letter Requesting Monies Due You by a Former Employer. Shows you “What to Say, and How to Say It.”™ To obtain your copy, just [click here.] Delivered by Email – Instantly!
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