Published on September 20th, 2012 by Alan L Sklover
Question: I am leaving my company to join a different employer offering better opportunity, responsibilities, and compensation. The problem is with my present employer: I have worked a long time to build up a base of business, and one that would pay off handsomely in my bonus at the end of this year. However, I would need to stay until March to get paid, which I am not prepared to do, as it would cost me my new job opportunity.
My new company is paying me a sign-on bonus that is greater than the earned bonus I am leaving behind. However, it does not seem that my good fortune with my new employer should absolve my present employer from its responsibility to pay me for my hard work. My present employer says that it pays its bonuses as late as it does to try to keep employees from jumping ship, but it seems to me that their policy would only make employees wait a while – that is, until they got their bonuses – before then “jumping ship.”
Do I have any recourse to collect the bonus I earned by my hard work during the first 3/4 of the year?
Answer: Dear Louis: Your question is a common one, but your “facts” and circumstances help me illustrate the simple – and important – points that people need to understand:
1. Rules are rules; agreements are agreements. Since your employer’s “rule” requiring you to remain employed until March to collect a bonus is simple and clear, and was known to you, you are expected to honor it, or suffer the stated consequences. We all set up “rules” in our relationships that we expect others – once told of them – to respect and honor, just as every city and town erects stop signs and red lights for the public safety. While I surely do understand your disappointment at not getting paid bonus for the nine months of your efforts, the rule is simple, it is clear, and it was known to you. For that reason, you are expected to follow it, or suffer the consequences of not doing so. Your employer has no “responsibility” to pay you a bonus for your hard work if you did not fulfill your end of the bargain: staying until March to collect it.
2. If you were laid off, I think you could argue that you should be paid at least 3/4 of your expected bonus, but it is a much tougher argument to make if you voluntarily resign. I am frequently asked whether an employee should get a pro rata bonus when laid off due to no fault of his or her own, and my answer is almost always “Yes.” One reason is that they did nothing to bring about the loss of bonus themselves. On the other hand, an employee who resigns for better compensation and other benefits somewhere else has in my eyes chosen to lose his or her probable bonus, in a calculated way.
3. Sometimes, in event of “involuntary resignation,” we successfully argue for a pro rata bonus, but “involuntary resignation” does not seem to be what you are doing. Though the words “involuntary” and “resignation” do not seem to fit together very well, by combining them we have invented this new concept that helps a lot of people. If a person resigns because, as examples, (a) he or she is facing extreme harassment, (b) he or she is facing demands to act in an illegal fashion, or (c) he or she is working in an unsafe workplace, their “resignation” is surely not “voluntary.” In these circumstances, an “involuntary resignation” is submitted, along with a request – quite reasonable in these circumstances – for pro rata bonus. The description you presented for your own resignation, though, contains no such exigent circumstances, and so I don’t think this option is available to you, either.
4. Any good relation – and especially a working relation – requires trying to see the world through the other person’s eyes. I cannot stress this point enough. Although I am a lifelong advocate for employees, I am also an employer, myself. The way I see an employer’s requirement that its employees stay until March in order to collect the annual bonus is that bonuses have two different purposes: (a) for the employee, it is surely intended as a reward, whereas (b) for the employer, it is surely intended as a retention measure. I think, just as “it takes two to tango,” both employee and employer are entitled to get something out of the working relation, and every part of it. Your email to me failed to take that other perspective into account. May I suggest you will do better in any workplace “navigation or negotiation” if you bear that in mind.
Louis, sorry if this is not the “good news” you wanted to get from me. But as you know if you read my blog frequently, I “call them as I see them.” The good part of your resignation, though, is that you are apparently headed to a more suitable, more remunerative, and more responsible position. So, what is there to complain about? See the bright side of things; it’s always a more enjoyable side to see.
P.S.: One of our most popular “Ultimate Packages” of forms, letters and checklists is entitled “Ultimate Resignation Package” consisting of two Model Resignation Letters, a Model Involuntary Resignation Letter, a Memo to HR pre-Exit Interview, and our 100-Point Pre-Resignation Checklist. To obtain a complete set, just [click here.]
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