# Company Policy for Bonuses



## Barwelle (Feb 23, 2011)

I started a new job recently. During the interview, the manager mentioned that they do give out annual bonuses based on individual performance and how profitable the company was. Sounded normal so I didn't inquire further about it. 

Found out today that they withhold half of the bonus for 18 months, as an incentive for employees to stay with the company. I understand that a bonus is a bonus, and shouldn't be expected. I also understand the owners' desire to reduce turnover. But 18 months? Seems a bit excessive to me. 

Thoughts? Anyone care to share their company's bonuses and incentive programs?


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## carverman (Nov 8, 2010)

Barwelle said:


> Found out today that they withhold half of the bonus for 18 months, as an incentive for employees to stay with the company. I understand that a bonus is a bonus, and shouldn't be expected. I also understand the owners' desire to reduce turnover. But 18 months? Seems a bit excessive to me.
> 
> Thoughts? Anyone care to share their company's bonuses and incentive programs?


There were incentive programs where I used to work and recognition "cash" awards as well. 
Most companies offer that as a "perk" and it is not necessarily guaranteed that you will get it,
depending on the actual company's profitabilty/bottom line...it is taxable BTW.

The way it was explained to me (in my capacity as an engineer/troubleshooter), is that they would give them to employees that "pulled a rabbit out of a hat" for the company on some occasions..or they were able to "walk on water" when the situation required it... and you had to be recommended by the immediate manager "up the ladder"
to the commitee that reviewed performance bonuses....there was a caveat to that...in simplistic terms..
10 ATTABOYs -> LETS GET HIM ON THE BONUS/RECOGNITION LIST
1 AW SH*T! wipes out 10 ATTABOYS..(sorry buddy..you screwed up once!)

and that's how it worked....you didn't get your bonus right away..IF you were considered to be a RFT after 6 months of performance reviews and they decided to keep you on, you could be eligible for a bonus or recognition award
AFTER the first 12 months of employment as an exemplary employee...
ie: your performance met ALL THE NECESSARY CRITERIA OF YOUR JOB DESCRIPTION AND YOU DEVOTED 110%
OF YOURSELF TO SERVING THE COMPANY and *received an above average (ie: better than satisfactory) 6 month or yearly
performance review*, met ALL of your objectives in your job description... 
you would be recommended for a bonus/recognition award...(if the company was still handing them out at that point.)


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## Beaver101 (Nov 14, 2011)

> 18 months? Seems a bit excessive


...does seem abit excessive if your performance review is done "annually". But they may coin it as a "vesting period" as part of your entire compensation package. You may want to check iit out later if it is written in the company's policy manual. At least they were frank up front to let you know of a "bonus".


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## carverman (Nov 8, 2010)

Bonuses unless specifically written into your employment contract and signed
by an person of authority representing the company and countersigned by
you are generally optional based on the discretion of the company.

<from online sources>
*Bonuses*. *If tied to annual compensation and paid as a matter of course, seldom are bonuses truly optional.* Unless a contract provides otherwise, employees cannot be deprived of this pay upon termination. And even where contracts expressly state that bonuses are not payable following termination, court cases have construed that term to mean the date of legal termination, which can be many months following the day that the employee actively ceases work. 


also 
http://www.mcmillan.ca/Overtime-and-the-Salaried-Employee-in-Ontario-A-Disaster-Waiting-to-Happen

*Form of Compensation*

For the same amount of money and the same total hours, most employees would rather have a higher base salary and not earn overtime pay. This gives them the financial security of receiving the same amount of pay each week. It's also easier for the employer, because it makes record-keeping and budgeting simpler. Unfortunately, the law does not automatically presume that employees made this implicit trade-off. If employers and employees want to make this reasonable trade-off, they should consider specifying a realistic number of hours in a written employment contract. Employers who don't protect themselves in this way run the risk of paying for an employee's overtime twice; first through higher wages, and second through unpaid extra hours – at the already high wage rate.

*Another problem is extra compensation for hard workers through bonuses or promotions. Neither bonuses nor promotions count as overtime pay, should an employee bring a claim for unpaid hours.*


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## LondonHomes (Dec 29, 2010)

I think that term bonus is a bit misleading these days since they are not a true bonus. These days most bonuses are part of your compensation package that employees expect and it's paid out based on a specific formula. 

A true bonus imho is something your not expecting and the company has no obligation to pay.

You need to consider this bonus plan as part of your compensation that is "variable pay" or "pay at risk" to use an HR term.

These sort of bonus vesting periods are common in executive compenstation, especially those around stock options. But I don't think that your company's plan is overly common for non-executives.

I did work for a company that had a bonus that was paid out right away and there was also a stock purchase plan where the company matched your stock purchase. However, if you left before 2 years you lost the company's matching funds. 

The bonus is for the company to design and state the participation requirements. If you don't like it, I suggest you bail sooner rather than later.


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## OhGreatGuru (May 24, 2009)

Sounds a bit odd. But it depends on how you look at it. It's not a performance bonus for the current year. It's a retention bonus for staying on another 18 months. I think the company can pretty much make the rules, unless there is an employment contract that says differently.

PS: I do think it was misleading of the manager to refer to it as an "annual" bonus, if in fact that is what he called it. There is nothing "annual" about it. The normal practice would be to pay an annual performance bonus a the end of the business year, or early in the new business year. What he should have said, and what company policy should say is: _"We pay an annual performance bonus based on individual performance and how profitable the company was during the year. In addition, we pay a matching amount as a retention bonus 18 mos later if you remain with the company in the intervening time."_

It seems to me that if times were hard, the company could conveniently lay you off after 17 months to avoid paying the second half of this bonus.


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## carverman (Nov 8, 2010)

OhGreatGuru said:


> It seems to me that if times were hard, the company could conveniently lay you off after 17 months to avoid paying the second half of this bonus.


What you mentioned is true..however..
If you are DILIGENT, DESERVING EMPLOYEE, who is in good with the boss, cheerful, show up with minimal sick leave, and contribute to the bottom line, it is highly unlikely you would be on a "short list" of employees that could get
pink slips on the next cut..due to economic conditions changing.

In the first 6 months you are on probation as a new employee. Depending on your performance and ramp up on the new
job, they will review your performance and decide if they still want to keep you..so the first 6 months are generally
never included in any bonus scheme. The next 12 months of your employment might count..it all depends on the
company and how they allocate bonuses. If no bonuses are coming in that 12 month period..no matter how well
you think you deserve one..you won't get one...it's based on company discretion..unless specifically written into
your contract of employment..in which case you can quit and sue the employer..but good luck getting any court
to decide in your favour..if you quit to sue the company...it is considered counter-productive.
If your work performance is does not meet what the bosses/company feel it
should after 18 months, you won't necesarily get a bonus..but be happy
that you are not on the layoff list. Rarely do top performers get cut..
but it could happen if the company is heading towards receivership..in
that case all bets are off for any individual bonus or continued employment.

A bonus is a reward (perk) for doing an exceptional job for the company.
Just showing up for work and putting in 40 hrs a week, does not guarantee
you would receive a bonus...and even if you are a good employee..screw
up once big time on a customer contract..and you can kiss any bonus coming
to you goodbye..and maybe even your job too!


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## SW20 MR2 (Dec 18, 2010)

I work at a large financial company, and our company provides an annual bonus that goes up/down depending on our division's performance and my own personal rating. Top performers may get additional cash bonuses as well restricted stocks which vest 25% each year for 4 years.


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## Barwelle (Feb 23, 2011)

carverman said:


> 10 ATTABOYs -> LETS GET HIM ON THE BONUS/RECOGNITION LIST
> 1 AW SH*T! wipes out 10 ATTABOYS..(sorry buddy..you screwed up once!)


Sounds about right from what I know of the business world! Hahah...



carverman said:


> and that's how it worked....you didn't get your bonus right away..IF you were considered to be a RFT after 6 months of performance reviews and they decided to keep you on, you could be eligible for a bonus or recognition award
> AFTER the first 12 months of employment as an exemplary employee...


They have something similar at this company. The way he worded it, it is after 1 year of service that you become eligible for the bonus. A coworker told me that they are handed out in Nov-Dec since fiscal year for them ends in October... so from that and what the manager told me, it sounds like I will have to wait until late 2013 to get the first half of my first bonus. If I get one, of course!


@Beaver101: True, it was nice that he did tell me about it... but what I don't like is that he used it like a carrot to dangle it in front of me to come aboard, but then didn't tell me about the restrictions. It's like the investment advisors who tout mutual funds as the be-all end-all, but do not disclose the 3% MER and other fees that you will pay.



LondonHomes said:


> You need to consider this bonus plan as part of your compensation that is "variable pay" or "pay at risk" to use an HR term.
> 
> The bonus is for the company to design and state the participation requirements. If you don't like it, I suggest you bail sooner rather than later.


I should clarify... I'm not actually considering leaving the company over this, it just bothers me that they left out what I believe to be a relevant detail. So I thought to bring it up here for discussion.

If he hadn't told me about the bonus at all, I believe that would have been more fair to me (and to other hirees) because, as you say, the bonus is a bonus... "variable pay" and not a guaranteed form of compensation. It only bothers me because, the way I see it, he used the bonus as a carrot but didn't mention the mouldy part of the vegetable.

I can't blame them entirely though, I could have asked more questions about it. I just thought it would be straightforward.



OhGreatGuru said:


> What he should have said, and what company policy should say is: _"We pay an annual performance bonus based on individual performance and how profitable the company was during the year. In addition, we pay a matching amount as a retention bonus 18 mos later if you remain with the company in the intervening time."_
> 
> It seems to me that if times were hard, the company could conveniently lay you off after 17 months to avoid paying the second half of this bonus.


Agreed, that's what he should have said. It is in essence a retention bonus. I thought about the lay-off issue as well. I remember reading somewhere that some laid-off employees successfully sued company or companies for delayed bonuses that were not paid out after the layoff. I believe the idea was that these bonuses were for performance in a time frame in which the employee was still working for the company, and were not intended or explained to be retention bonuses.


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## carverman (Nov 8, 2010)

Barwelle said:


> Agreed, that's what he should have said. It is in essence a retention bonus. I thought about the lay-off issue as well. I remember reading somewhere that some *laid-off employees successfully sued company or companies for delayed bonuses that were not paid out after the layoff.* I believe the idea was that these bonuses were for performance in a time frame in which the employee was still working for the company, and were not intended or explained to be retention bonuses.


*Sueing can be very expensive and it depends on the outcome. It can mount up to several thousand in
legal fees up front preparing for the day in court. * 

If you had to do it, small claims might be the way to go..but only if it is allowed under employment law. 
Hiriing a lawyer at $300-$400 an hour + HST eats up any court award *real fast *unless the lawyer agrees to do it on a contingency basis...where you win, he takes his fee from the bonus....unless of course, *the judge agrees 100% in your favour and gives you costs as well.* 

It all depends whether the bonus is written into your employment contract and defined in black and white on paper...
stating what the requirements for the bonus to be paid are.

Ie; based on your successful performance where you meet ALL criteria of your job description in a given time period and the company is to pay you based on that criteria...is the only way you could successfully sue and hope to get anything.

If you are in sales and your sales employment contract states that if you sell X amount of products or services you are entitled to receiving X amount of bonus as extra compensation, you may have a better chance of winning..as
both your performance and the bonus to be paid to you can be considered quantifiable in that case by the judge and you would stand a better chance of winning....
...but if it's all verbal...with no paperwork to prove it...it all depends on whether the employer agrees to settle out of court..or take you on and argue their case in front of the judge....in that case, it's the luck of the draw..when it comes to bonuses which are not the same as vacation owing or pay not received.


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## Barwelle (Feb 23, 2011)

It is a small company, around 30 people. There wasn't an employee contract, I just had to sign the government tax forms and the form to apply for health benefits. So it is a grey area re: bonuses, etc.

About suing, sorry Carver, I should have added that I really don't plan on suing if this becomes an issue... for one, I'm not a believer in suing unless it is something truly terrible or a lot of money was involved. For two, this is a small town company with some connections to family as well, so I do have an image to uphold. Wouldn't want to lose honor for the family, if that makes sense.

I should have been more clear, I'm not actually that pissed off about it, it just put me off a bit when I found out and thought it would be interesting to see the discussion that came up here, see what others' experiences are, and maybe see if it isn't really _that_ unreasonable. I am of the entitlement generation, after all!


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## carverman (Nov 8, 2010)

Barwelle said:


> It is a small company, around 30 people. There wasn't an employee contract, I just had to sign the government tax forms and the form to apply for health benefits. So it is a grey area re: bonuses, etc.
> 
> About suing, sorry Carver, I should have added that I really don't plan on suing if this becomes an issue...


The other thing I forgot to mention about suing..is that you can kiss any recommendations on your good character by your former employer when you need references for another job in the future..sometimes these actions come back to haunt you when you least expect it.

If it were me, I would tuck that "bonus thing" mentioned, away in the back of my mind, leave it there, and get on with doing a good job... and get on with my life. If it happens then that's a "bonus"..if it doesn't, then in today's slow economic climate, I would still be glad just to have a job.


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## DanFo (Apr 9, 2011)

the 18 month waiting period for half the bonus is genius because it ensure there is always a carrot dangling to retain the employees. The bottom line is if the jobs not right a bonus hanging in the distance shouldn't keep you there and if it does than the job can't be all that terrible anyway.


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## humble_pie (Jun 7, 2009)

barwelle i have 2 1/2 messages for you, all quite separate, so i'll try & hang em together.

the first is, are you not the recent grad who set out from alberta 8 months ago to backpack around europe or perhaps the world ? you were setting out for london first ? if you are, perhaps you might be willing to share an adventure with us, perhaps in the coffee lounge ...

next, if my memory serves you are also the member who named kim's foal Vertical Challenge. At least, you're the person who proposed vertically challenged, while some outrageous persnickety grammarian shortened it to the plain noun form. And so that is how kim's little colt got named.

did you ever see the pictures of the colt that kim posted. Is he a beautiful animal or what. And well named, too, kim said, because she could tell from his birth onwards that he was going to be exceptionally tall.

if the pix have gotten lost or irretrievable in the archive, maybe some day kim will post some new ones. VC is truly a horse to admire, you'll be a proud godfather.

and the half message, about your current bonus concerns. At first i thought you were having qualms about the new job. But then i decided this could perhaps be your very first job, so you are just reacting to the newness of it all. There's class advice here from carverman: go do the job hell-for-leather, carver says, & don't even think about the bonus for now.

very best wishes in the new job.


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## Barwelle (Feb 23, 2011)

Carver, that's good advice, and that's what I'll be doing. If this job turns out to be a long term thing, it won't matter that much anyway.

Humble I always enjoy your posts. Yep, that's me, the one and only, good memory. It's been nearly 3 years since I graduated, feels like a long time but I suppose to some people that would be recent. I spent 3 months in Europe, starting in May. I didn't hit London; there was another young fellow on CMF who left on a trip shortly before I went, maybe he did. I've been avoiding the coffee lounge just because the thread is so huge! But sure, I'll make my way over there soon.

I also have to start up the Pub or whatever the proposed Young CMF'ers thread turns into... but I keep putting that off....

I didn't follow up on Kim's thread, I didn't realize she actually used the name. That outrageous grammarian used his persnicketiness to good use, because Vertically Challenged was too many digits! I'm glad the name fits though. Irony is my favourite kind of humour. I see you've got her working on a very picturesque photo of VC... if we could only get some decent snow!

As for the job, it is actually my sixth, but definitely the most career-focused and professional that I have had. I only have two qualms about it: One is that I had the opportunity to accept another career job that would have taken me in a different direction. I can't help but wonder if I should have taken the other. The other qualm is that it will be far more difficult to up and leave for another 3-month backpacking stint!

Thanks for the well-wishes.


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