This blog is a continuation of our prior blog post titled “What to do if You are Offered a Retention Bonus – Part 1.” Below are a few more items to consider when you are presented with a Retention Agreement by your employer:
● It is common for a Retention Agreement to provide that the employee will be paid a certain amount if he/she remains employed until a certain date. However, it is equally as common for the agreement to also provide that the employer can let you go before the retention period expires and pay you the bonus at that time. In some cases, the employee may request that the employer agree not to terminate you until the retention period is over unless it is “for cause” due to your bad behavior..
● With the focus of a retention contract being on the bonus, it is important to remember to think about your continued salary as well. If your obligations or benefits are reduced, and therefore your compensation is also reduced, do you have to stay until the retention period expires before you get your bonus? An employee should consider negotiating a provision that provides if a demotion occurs or benefits are terminated, the employee can give 30 days’ notice and still qualify for the bonus. Another alternative is for the employer to agree that the employee’s duties, benefits and salary will not be materially altered during the retention period.
● An employee typically signs a retention agreement not only for the bonus payment, but also to have job security. Thus, it is a good idea to ask the employer to provide prior written notice and a reasonable severance payment if the employee is terminated without cause.
● If the Retention Agreement states that the employee must stay with the company until a certain event occurs (such as a merger successfully closes), it is wise to request an outside date to be set in case the event never occurs.
● Lastly, remember that every Retention Agreement is unique and can be customized to fit your individual circumstances. If you are a key employee the company wants to keep, use this leverage to address other issues you have to improve your life.
Negotiating and drafting retention agreements is Mailly Law’s primary area of practice. We have years of experience and understand the complexities involved. Let us fight for your rights and help obtain a contract that is the most beneficial to you as possible. Contact our office today.