In the August 28, 2018 Ask The Headhunter Newsletter a reader feels pangs of guilt about keeping a bonus.
Question
When I was given my performance review they told me I was at the top end of my salary grade. Instead of a raise, I was given a 3% bonus that came on my last paycheck. Depending on the outcome of a recent job interview at another company, I might be resigning in a few days.
I feel guilty keeping a bonus that I got just before I quit! Had it been a raise, it would have been spaced out over a year. Should I offer to return the bonus when and if I tender my resignation?
The new job is in a field I have wanted to return to (consulting). I’m not counting any chickens before they hatch, but it looks good and the job offer could be as much as a $20,000 increase in my salary. I could stay here, but it would be foolish to pass up an opportunity to return to a field I love with such a dramatic pay increase and career advancement.
Should I return the bonus?
Nick’s Reply
You should use your own judgment, but based on what you’ve said, I see no reason to return a performance bonus. Here’s why:
- A salary increase is prospective – it pays for future performance.
- A bonus payment is retrospective – it’s a reward for past performance. That’s why it comes as a lump sum and is not recoverable by the employer, unless they made you sign something to the contrary.
It’ll be interesting to see if they ask you to return it. I’m assuming you didn’t sign any kind of claw-back agreement that would empower the company to take the money back — or you would have said so. As long as that’s accurate…
You earned the bonus
I would not return it. Of course, your employer may be upset about that, but that’s life and that’s business. Your employer chose to make it a bonus, not you. If they actually intended the bonus as some kind of compensation for your future work — or as an incentive to stay in your job — then they should have defined it that way and spread the payments over the next year. But it seems clear you earned the bonus for performance you already delivered.
The only other issue is, are you worried about burning the bridge? If you are, then act accordingly. But, in my opinion, if they expect the bonus returned, they’re being disingenuous. Keep in mind, these are people who don’t believe you deserve a raise. They’re the ones burning the bridge to you.
I’d keep the money without a guilty conscience and move on. (For more about raises, see They promised a raise but won’t deliver.)
Be very careful
Congratulations on the new opportunity. I hope you get the offer you expect. But please keep one very important thing in mind: You don’t have the new offer yet.
Do not take any action on your old job until you’re absolutely sure the new job is locked down. I regularly see employers rescind job offers right up to the start date. (See Job offer rescinded after I quit my old job.) Be very, very careful.
Use your best judgment. If you’re truly excited about the new opportunity, take it and don’t look back. And keep that bonus. I wish you the best.
Should this reader return the bonus? Would you? What other factors might play into your decision? What does it mean when an employer declines to give you a raise but gives you a bonus instead? (Hint: Does a bonus affect your benefits the same way a salary raise does?)
: :
Don’t tell them where you are going, when you resign.
If they are upset about you leaving shortly after receiving the bonus they might try torpedo your new job.
@Borne: That’s excellent advice. I’ve actually seen irate employers try to nuke a departing employee’s new job. It’s always best to avoid disclosing where you’re going until after you’re firmly installed and safe!
First I agree with Borne.
Also, companies who give a bonus in lieu of a raise could just as easily lay you off next month because of a reorganization. Years ago I got a performance bonus from the CEO when he was visiting our division and talked to staff about the positive future of the division. 2 months later he decided to close the division and I was laid off.
@Joseph: This does indeed cut both ways. Employers usually don’t feel guilty when they make a business decision to let someone go.
Keep the money unless there are circumstances that aren’t made clear in your original post.
If you are asked to an exit interview, there is no requirement to divulge any information regarding your next steps. At that point, you don’t really work there anymore.
@Tony: I advise against doing an exit interview, no matter what the circumstances. It cannot help you, but can hurt you. Please see https://www.asktheheadhunter.com/239/out-of-exit-excuses
there is nothing unethical about you keeping the bonus and looking for a new role, you should have no guilt or scruples about your behavior. Be warned, however, that a contract is just a contract, therefore, you may need your existing employer as a reference in the near future. Good luck!
This is an extreme case, but it offers some good ideas about how to substitute other references if your recent boss can’t be counted on: https://www.asktheheadhunter.com/9582/references-died
Following what Nick said about prospective vs. retrospective, keep the bonus.
Thought experiment: If you handed in your notice a week before you were to be told of the bonus, do you think your employer would still give it to you? Do you think they would even be conflicted in making that decision?
@Christopher: I love a good counter-example! Nice!
Keep the bonus. You earned it. Do not do an exit interview because your words could be used against you. I agree with a above, don’t tell them your new employer. Also be careful about updating LinkedIn and other social media for a bit.
One option you can consider is upon your termination of employment ask, “Would you accept the return of the bonus?” This could help clear your conscience and if they say “no thanks” You have gained some good will and if they say “yes” you aren’t under any obligation to return it either. Also worth noting, undoing an employee’s bonus payment is a pain for most payroll departments.
Why return the bonus? Since it was given based on your past (not future) performance, it’s earned.
Bingo! This is the equivalent of a payment in arrears.
Keep the bonus. As already noted, the bonus was given as a reward for your PAST performance, so you’ve earned it, and don’t feel guilty about keeping it.
If you had submitted your resignation before getting the bonus, do you think your employer would feel a smidgen of guilt for not paying you the bonus? His reasoning would be “why should I pay out the bonus when he’s leaving in a couple of weeks?”. I don’t think he’d lose any sleep over it.
If, however, you have a employment contract that requires you to pay back any/all bonuses should you quit, then you have to obey the terms of your contract.
He’s over engineering it. Look at it this way, the salary process is an administrative process. The company chose to pay via using a bonus. True he was at the top of the scale, but the company could have made an out-of-policy-raise, but chose a bonus route to avoid an internal hassle. Their choice.
As noted. It was earned. giving it back would be the equivalent of giving back your last % raise…
And if you ever recruited…a very common comment one hears about making a change…is I don’t want to leave until XXXX after I get my bonus
relax
That’s a logical decision on the part of the employee. I’m sure the policy at most (if not all) companies is that if you leave even 1 day before the bonus is paid, you lose it. Our company pays the performance bonus in March for performance in the previous calendar year. So, what sense does it make to leave in February?
Conversely, management will do the same from their perspective. I had the experience early in my career, where one of my managers was close to retirement. The company looked for any reason to get rid of him before some magic date where he would qualify for a large payout (I can’t recall if it was a pension or what exactly). Sure enough, they caught him saying something slightly offensive to a fellow manager and was fired for that and lost a large a sum of money.
This looks like the one question where it is unanimous – keep it, you earned it!.
The whole “you’re at the top of your salary range” thing is an excuse. It’s their salary plan, their company, their employees and candidates. They could change it, create a new position, any number of actions that would open up options for compensation. These one time bonuses are a way to avoid paying an increase over time. Period.
At one large employer I worked, so-called “bonuses” were given for “atta boy/girl” perf on customer sat surveys. Three in a month got you $50. (Whoop dee doo).The kicker is that you had to submit a receipt for anything in the amount of $50 and put it in as an expense payout. Why not just payout $50? Must be some way for them to get tax breaks, but at times it felt like applying was more than its worth. Once the taxes were taken out, it was more like $30.
Late to the party….
Keep the bonus as long as there is nothing contractual they can do to take it away.
Companies will have no problem firing/laying off workers if it benefits them, claiming “it’s just business.” You are essentially doing the same – taking a job at a time that happens to benefit you more.
As an armchair lawyer, I’d say keep the money. Most state laws are now ‘at will’ employment status meaning either party can terminate services, provided no law is broken. Employees may not realize this is a two-way street. Employee has the same rights as the employer who terminates when quitting the job. So unless there is a contract or condition set forth when accepting the one-time bonus. It’s yours to keep.
Keep in mind if you quit, depending on state law, accrued vacation, PTO, outstanding loan, etc can be withheld from your final paycheck. I’ve known employers that scrutinize every last penny before writing the last check. To include canceling your automatic direct deposit and waiting for a company check to be snail mailed a month later.
You must at your best when you are likely to guess the dealer’s gap card to gamble your money.