Evidently a lot of people still do not understand how annual bonuses work. Now, there are multiple ways they work, but in a lot of cases, such as mine, such as a guy I know who just gave notice this week to his employer, they work like this:
- In the first couple of months of a year, the company determines what, if any bonuses will be paid out to employees for previous year performance (either at company or employee level)
- that money is paid out to the employee if they qualify for it and if they are still working at their employer on the date the bonuses are paid
I thought this was more common knowledge among bonus recipients, but it clearly isn’t. My wife just got a text from this guy’s wife that when he gave notice this week his boss indicated that he may not receive his 2018 bonus, even though he met his goals. This blindsided them.
I reviewed my company policy moments ago and it clearly states an employee has to be employed on the payout date. This means if my bonus is paid out on Feb 15 and I give notice on Valentine’s day guess who may not get a penny of bonus?
UPDATE re the anecdote of the guy I know he just received confirmation that he will not be getting his bonus. He was one pay check away from a low 5-digit payout which represents about 1/10th of his family’s total annual income.
TLDR If you are bonus eligible be very careful giving notice at the start of a year. If the money has not hit your account, it is potentially at risk, depending on company policy.