Since the agreement is meant to keep your staff in your organization, what happens if someone is either fired or resigns? After all, things are happening. SHRM states that retention bonuses are usually refunded to the organization when a person terminates under the agreement. This can quickly get confusing, but if you remember that the bonus is paid out every year, it can be much easier. This agreement must be robust and easy to understand. So be sure to talk to your legal team before offering it, and even tell your employee that their lawyer needs to look at them too. The last thing you want, right after an important business event like a merger or acquisition, is to be judged. Imagine a retention bonus agreement as pretty much the opposite of a termination agreement. While a severance pay involves payment if the employee agrees that they have been terminated fairly, the retention bonus agreement offers them a payment to stay. You need to make sure that the amount you are willing to spend on the retention bonus agreement is enough to entice the person to accept the offer without affecting your end result, which can already feel the heat of all the turnover that can occur during an M&A.
After making this part crystal clear, you also need to add a few other legal parts to your agreement to make sure they hold. For example, if your agreement states that the person will work for you for two years, but will be terminated after 15 months, the company will pay half of the bonus. Next, you should also describe how the bonus works when the person stops. When you start writing your hold bonus agreement, you first need to understand how your bonus should work. Normally, companies find out how many bonuses they need to offer based on a percentage of the employee`s normal salary. In your agreement, you must define exactly how redundancies work. We don`t want to provide a complete sample here, because it really, really depends on how you structure your agreement. As always, make sure your legal team reads this policy to make sure you comply with all local, state, and federal laws. .