According to the SHRM, employers generally pay retention bonuses to dismissed employees based on the length of their work under the agreement. 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. As you can see clearly, the last part of the bonus withholding agreement is heavily about laws, which means they are best written by a lawyer. We can`t say it enough: work closely with your lawyer to make sure your deal is firm and beneficial for both parties. It is a fact that mergers and acquisitions generate a lot of revenue (30% of employees can become redundant during the process). At the same time, companies also need to make sure they retain important talent during the move, where a commitment bonus can come into play. And the first step is to establish a commitment bonus agreement that your employees can verify and sign. 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. 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.
From there, you need to dwell on a few finer details, which respond to what happens when the person is terminated during the retention agreement. There are many reasons why a company wants to benefit from a retention bonus. However, the most important thing is to keep key talent on board for as long as possible during a merger or acquisition, given that in these turbulent times, top talent often goes into calmer waters (or is poched by competing companies). In any case, you need to fully understand the financial side of the bonus before providing the incentive to your employees. However, we recommend that you make an agreement in the early stages of the merger or acquisition and leave areas that you can fill out later, so that you have a document in the file and are ready to send it. Would you like to know more about custody bonus agreements? Download here our example: Because the bonus works every year, which means that the employee has concluded a year of agreement and gives him the right to pay it. They will not receive next year`s bonus because they have not concluded this part of the agreement. 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. SHRM passes through quickly and keeps the letter fluid. They include the title of the person, the expectations of the management, who is the hierarchical superior, what the person`s salary will be, how long the agreement will last, what the bonus amount will be and when the payment will be delivered….