Resigned and Company Refusing to Pay Bonus

Hi Ozbargainers,

I recently left my current employer (a consultancy) of ~3 years. They operate on a year ending March financial year (so 1 April - 31 March).

I recently resigned, and gave extra notice (6 weeks) to ensure the transition would be as smooth as possible for them and my teammates, the salary in the new role is ~40% higher, so the extra 2 weeks working in my old role comes as some personal expense.

A couple of weeks after resigning, it was announced that a bonus would be paid for the previous financial year (of which I worked the entire year). My personal contribution to the the company was significant during this period, and was evident from a number of perspectives (billable utilisation, extra hours, awards, performance review, promotion etc.). As an indication, I worked over 300 hours unpaid.

I recently found out that I am not eligible for the bonus since I am leaving the company. The payment of bonus is at the discretion of the board, so I have no legal standpoint here, however I wanted to ask the Ozbargain community whether this is a fair decision or not.

The decision to pay a bonus came more than 4 months after the financial year ended, a significant amount of time. A cynical person would think this was done to reduce the number of people getting paid a bonus (as people naturally leave over the course of the year).

Does this seem like an ethical decision?

Poll Options

  • 472
    You have no legal grounds here, move on
  • 37
    This is standard industry practice, move on
  • 28
    This seems unethical, push back

Comments

  • +17 votes

    It sounds like you should approach them about it, if they dont say yes to honouring the bonus, and you can still start your new job after 4 weeks, you reduce that notice period immediately and GTFO of there.

    • +2 votes

      Unfortunately they waited quite some time to give me a response, and this is no longer an option.

      • +5 votes

        Can you tell the employer that if they give you the bonus, that you won't resign? They say yes, you take the money, then you still quit. Fight fire with fire, I mean deception with deception.

        Not that I'm condoning this, or have done it myself, but it looks like an option.

  • +75 votes

    The less cynical person would say the bonus is a reminder to current staff of what hard work and loyalty in staying in the company receives. Nothing wrong in that message to the firm.

    • -2 votes

      A Bonus is an award in recognition of past contribution.

      • +2 votes

        A Bonus is generally an award in recognition of past contribution.

        •  

          A Bonus is generally an award in recognition of past contribution.

          to current members/employees who are still contributing.

          Never heard of retroactive bonuses to past-employed contributors.

      • +2 votes

        Its also discretionary. :)

  • +58 votes

    This is why loyalty never pays off. You have to look after yourself. Generally if a bonus is announced for the previous financial year and you're no longer with the company, you don't get the bonus. Same thing happened to an ex colleague. I told him I got the bonus and he enquired and was told no.

    At the end of the day you're a business too representing yourself. If you don't get your bonus, amend the notice period to the 4 week bare minimum and leave.

    Loyalty doesn't mean anything any more. There's no such thing as being a nice guy when it comes down to money. GTFOOT and make the extra money at the new place. Good luck on your new role and well done for taking the courage to leave at a difficult time.

    • +16 votes

      This is why loyalty never pays off.

      What? If OP was loyal he would still be at the company and would have been paid a bonus for his loyalty.

      • +9 votes

        The bonus should be paid for historical profitability not loyalty - its a performance bonus not an incentive scheme, that’s why I’m a bit miffed

        • +35 votes

          Bonus is also a carrot to keep employees. It's not given out of the goodness of their heart. Of course it's a incentive scheme.

          •  

            @James Nav: I had the same thing happen when I moved departments. Although my contribution to the previous dept was significant, because I changed departments I didn't get the bonus. I just had to accept it and move on. Nothing you can do.

            • +1 vote

              @Luckyalways: Your situation i do not agree with, you still work for the same company. I would be annoyed and probably looking for another employer if they did this to me.

              •  

                @stringbean402: I agree but finding another job in this current climate not so easy. I have continued in the new dept and am happy there so let it go even though I was annoyed.

          • +4 votes

            @James Nav: I agree a bonus is an incentive to keep working for the company and reduce staff turnover. Why would you even consider paying a bonus to somebody who has resigned? it's just a waste of company money.

        •  

          The bonus should be paid however deemed fit by the person paying the bonus IMO.

          That is unless it is a bonus written into a contact.

          which it seems in this case, it is not written in a contract.

    •  

      I've been in the game long enough to notice a very different culture on loyalty between large enterprises (3000+ staff) and SMEs.
      Being that the former, loyalty means nothing. Vertical promotions and bonuses are slow and they actually expect you to rotate horizontally to another company
      (if they know you have left at all).

      Very different in SME and non listed companies. In one role, the company was bought out by a lager corp and I made plans to yeet it out of there, as did almost 30+% of the staff. I decided to stay for 3 months which turned into 6, and help the IT operations transition smoothly. When the time came and i felt I had to go, without asking, the board gave me a 20% bonus / 6 months extra pay AND made the role redundant in recognition.

      • +3 votes

        very good result and lucky, its rare that would happen.

        •  

          Yes, I was amazed. Was a blessing really as we also had a new born during those months. :)

  •  

    yeah no good looking thisone

  • +39 votes

    It is standard practice to not pay a bonus to people who have resigned.

    This is why people will typically wait to get the annual bonus, before handing-in their resignations.

    • +10 votes

      Also make sure that the cash is sitting in your bank account before resign.

    •  

      I couldn’t lead on the new employer unfortunately, it was a really unique opportunity and I wasn’t willing to risk missing taking it up

      • +12 votes

        And a 40% pay rise! Sounds like you have had a run of good luck, so this minor setback shouldn’t be the thing you dwell upon.

        I I agree it sucks if bonuses are presented as being for performance, but are only paid for loyalty, but everywhere I have ever worked has demanded loyalty to get a bonus.
        There is some case law about sales commissions withheld, that went the way of the employee, but only after years of litigation. I don’t think a discretionary bonus has a chance, unfortunately.

        Maybe suggest to the highest boss you have access to that it looks really bad, and can they make you a special arrangement so it doesn’t lower the morale of your team mates who are remaining?

        •  

          The discussions have been directly with the CFO and CEO both of which I am familiar with in the office. It was a board decision (non-executive board) in the end.

          The risk for them is that I will be working in the industry for decades to come, as both a competitor and potentially a future client. This on top of some other things I won’t go into has certainly soured my opinion of the business.

          • +1 vote

            @Ghogger: the reality is bonus's like this are ALWAYS incentive bonus's no matter what label they put on them. They aren't giving them out because they are contractly obliged to or out of the goodness of their hearts, it is an incentive to staff and loyalty, neither of which apply to you so it makes sense for them to exclude you. And honestly if this affects how you deal with them as a company in the future then they are probably better off without you.

  •  

    Recently had this situation at my workplace. They won't pay it to people who have been there the full last FY and if you leave the day before they announce it, even though you were there the full previous FY you get nothing.

    On the surface level it would seem like a way of paying out less bonuses, depending on when you start in the year and when you quit with regards to FY dates you could work an extra 11 months and 25 days and not get the years bonus.

    •  

      And often if you start a day late you don’t qualify in the first year either.

  • +15 votes

    As they say "If you want loyalty buy a dog".

    Businesses nowadays don't expect employees to stay for the long haul and act accordingly.

    • +7 votes

      Businesses nowadays don't expect employees to stay…

      OP has literally announced their departure. Of course the employer isn't going to incentivize this particular employee to perform well.

  • +4 votes

    A couple of weeks after resigning, it was announced that a bonus would be paid for the previous financial year

    Looks like you already have an exit contract, ie resignation.

    Too late to (re)negotiate.

    •  

      A couple of weeks after resigning,

      Does this mean that the bonus came after they cleared out their desk or while they were still punching numbers on the keyboard?

      •  

        It means they've already made a deal.

        You can try to renegotiate your price paid for a car before you receive the keys, you'll get the same result.

  • +1 vote

    I'd probably call in sick for the last 2 weeks and start the new job early then.

    •  

      Then OP will need a medical certificate.

      Someone has to commit fraud for this option to proceed.

      •  

        You assume that op cares anymore and would have actually gone to get a cert. I wouldn't. They'll still pay a certain amount of days.

        •  

          Then why claim he/she is sick? Why deceive?

          Just not rock up to work.

        • +1 vote

          I believe in this case there would also be an argument for the employer withholding pay/leave entitlements.

  • +3 votes

    It was announced after you left, you're nothing to do with the company anymore, I have as much right to the bonus as you do.

    In my contract it is stipulated don't get the bonus if you have given notice even if the date it is paid is during your notice period. Once you hand in that notice, you forfeit all bonus entitlements

  • +13 votes

    Rookie error.
    Never resign until you've banked your bonus.

    Enjoy the pay rise in the new role and don't make the same mistake twice!

    • +4 votes

      I’ve been with the company for three years and they never paid us a bonus in that time - I was fully expecting they wouldn’t pay it. Lo and behold, 4 months after the financial year ended they announce a bonus (because of the stellar profitability, particularly from my team). Everyone was surprised about the bonus not just me.

      Either way, the new salary will be far higher than my previous salary plus the bonus anyway, I just thought that after all the hard yards I put in last financial year (and the 4.5 months of this financial year!) and given how long the financial year ended, it’s a real kick in the guts..

      • +4 votes

        Just the way the cookie crumbles …

      •  

        Yep… great financial results usually equals a great time to ask for that hard earned raised. Seems you bailed from the plane just as it was getting off the ground.

        I don't think people within your industry will take you seriously if you go trashing their name for not paying you a bonus after you tendered your resignation. It just reflects poorly on you, people respect loyalty.

        If you were so special and crucial to the company's future they would have made you a counter offer. Sounds like sour grapes to me.

        •  

          No sour grapes - they did counteroffer, they offered me 40% more than they were currently paying (only willing to do so once there was the prospect of me leaving.

          They tried very hard to retain me but the new position was a better opportunity for the mid-long-term.

          • +2 votes

            @Ghogger:

            they did counteroffer, they offered me 40% more than they were currently paying (only willing to do so once there was the prospect of me leaving.

            Unfortunately this is standard industry practice. I was previously in a management position myself and I would have loved to just increase key peoples salary to counter the possibility of them leaving. But there are checks and balances put in to prevent this so that you don't get a manager with a particularly generous disposition jacking up the salary expenses of the business unnecessarily.

            I feel that the directors and senior execs in businesses just weight up the risks and know that a large percentage of key people will accept the salary they are on and not move. When key people finally decide to leave the company can offer to match it with a chance to retain. Sure they will lose some key people but they are also saving lots of money on the key people who will never leave or speak up.

            Might not "feel" right at an individual level but for the business as a whole it is probably the right thing to do.

            As for the bonus situation. Pretty standard. If you are valued and it is a smallish industry I would probably let them know that you are disappointed and that its a small world and this would leave a bad taste in your mouth if you were to ever consider working with them again. I have seen bonuses paid for key people leaving who might be back at some stage.

      • +1 vote

        Wow, that is fairly unusual for companies to pay surprise bonuses of material size to whole teams.

        Well at least you can feel even better knowing there is no way you could have predicted it.

        Enjoy the new role.

  • +13 votes

    Man that sucks, commiserations. Just be glad you didn't buy a Rav4 without roof rails.

    Hope the new job goes well.

  • -2 votes

    🤣

  • +2 votes

    The payment of bonus is at the discretion of the board, so I have no legal standpoint here

    seems you just answered the main question no need to ask the community about it at all move on

    • +1 vote

      Just because it is legal doesn’t mean it’s the right thing to do. I appreciate the Ozbargain community’s input :)

      • +4 votes

        What's "right" is a matter of perspective. Flip it the other way and say you knew you were getting a bonus so you waited and resigned the day you got paid your bonus - some would say that's a legal but dog move.

      •  

        doesn’t mean it’s the right thing to do

        I thought you said you were working for a consultancy? This shouldn't surprise you…

  •  

    If you have not left the company yet and bonus announced, you are entitled. If you have left the company and then bonus announced you have already left before your entilement accrued, in this case no say if they don't want to pay.

  •  

    Try looking uptake word bonus.

    Maybe you just don't qualify

  • -3 votes

    The business has shown their true colours. Get out of their as quick as you can. If you ever happen to go back there again ask them how they will recoup the bonus they ripped you on.

    I've been in similar situations where I've worked my clacker off right up to the last day and then they shaft you. Treat it like a relationship breakup - remember the good times and know you are the better person.

    edit: I've never seen an extended notice to leave work well. I always give the minimum notice possible

  •  

    To add to the madness, the bonus where I work has 5 components. 2 of them, each worth 0.5% of annual salary rely on the employees filling out a survey. If the "satisfaction" results are above 75% we get a bonus.

    So basically they are asking us if we deserve a bonus. It's nuts.

    •  

      Its actually very smart on their end. Basically they are buying your "Job satisfaction" so they cab advertise how happy their staff are.

      •  

        It isn't a "happiness" survey but you are exactly right. The bosses have the same subjects as part of their KPI so our results benefit them.

        We stuffed one up as last year it was 54% and we needed 58% this year to get the bonus and it came in as 72%, so next year we will need 76%.

        The other parameter we did 73% last year and got 78% this year. That will probably plateau now and we won't get bonus next year so they will have to renegotiate that target in the next EBA.

        I've been on plenty of bonus schemes before and this one is the most stupid and meaningless.

  • -1 vote

    Take your case to one of those dodgy "no win no fee" law firms. Even if they want 90% of it, it'll be a giant headache for your old employer and you'll have the satisfaction you earnt with all of those extra hours.

    •  

      It's a small industry in which I am remaining, not worth the long-term ramifications to be honest.

  • +1 vote

    Enjoy your new job and salary OP, the sooner you forget about this the better!

    My company is similar, bonus is paid 3 months after the FY has ended and if you leave before the bonus payment date, you dont get anything irrespective that you have worked the full year etc, it is just how bonus is set up, always a At Risk component.

  •  

    What does the policy say?
    My company won't pay bonus if you resign or leave employ before the bonus is paid to your bank account. Simple as that.

  •  

    You get nothing - something similar happened to a college of mine ended up missing out on around 12k but he knew that might happen.

    He did write to the CEO to try and get the money but was given the old too bad….

  •  

    Does this seem like an ethical decision?

    It hurts but, think the following scenario:
    Star employee leaves (big Friday farewell party and all).
    Next Monday company announces big bonus AND a retroactive salary adjustment.

    Do you think the Star employee has any rights???

    •  

      They announced the bonus when I was still an employee and the bonus was part of the August pay run, a little bit different to this. Plus the bonus was for a period that ended on 31 March, quite a while ago..

  • +6 votes

    Do you deserve your bonus? Yes
    Are you entitled to it now that you've resigned? Unfortunately, no.

    Don't do anything stupid (like some of the responses have suggested) that could harm your career. It's not worth the ~$5k…

  • +1 vote

    Ethics and Organisations intersect only at a policy level. Outside of that expect nothing and give as much as you need to give to keep your job or meet your career aspirations. You're just a number on a spreadsheet.

  •  

    Sounds like maybe you are the reason the bonus was issued.

    Maybe they don't pay the bonus if you stay.

    The bonus is more impactfull because you left.

  •  

    Standard practice, move on

  •  

    What does your contract say?

  • +1 vote

    Maybe you got the new job because some other possible applicant was waiting for their bonus and hadn’t yet applied. It was a blessing in disguise.

  • +1 vote

    if you are still working there say you have a sore throat and a cough
    might be corona need to wait for the results to come back before you can come in again

  • +3 votes

    you got a 40% pay rise, there is your bonus.

    If you don't like the lack of bonus, take some sick leave, stay at home & chill for a few weeks.

  •  

    It's normal not to pay bonus to reisgning staff. The problem with peoples mindset with regards to employee rights is that you visit public forums like this and 99% of comments are made by people who watch too much TV and have no idea about how the law works in practice. Employers can get away with a lot, I have had colleagues get made redundnat, told to stay in the role for 6 months and if they were deemed to be slacking they would be fired instead and lose their redundancy. Workplace lawyer looked at it and said nothing they can do unless you want to spend your redundancy on legal fees.

  •  

    There is the concept of equity that over rides common law (e.g. contract law). I'd get some advice and see where it could go. Even an intention of legal proceedings can provide a result. My advice try to be as fair and reasonable as you can be.

  •  

    Year ending 31/3 ? Hmm… sounds like an Indian "consulting firm"
    Hire your neighborhood call center from back home and start harassing them.

    •  

      No, it’s not.

    •  

      A lot of companies do that. The last 2 companies I worked for run April-March and they were Japanese and American.

  •  

    Sounds like you needed to do a bit of research before you changed jobs.

    This is the standard in almost every industry.

    It’s a cut throat world, you’re paid for your future performance in addition to your previous performance. It’s a motivating compensation scheme and it’s not guaranteed. Whether it’s fair is irrelevant.

    That’s why they call it a “bonus”. You got paid your salary. Stop complaining about the icing on the cake you didn’t get because you left for greener pastures.

    Suck it up. Lesson learnt.

  •  

    you take the good with the bad, move on and don't look back in anger

  •  

    I’m just curious about how much we’re talking about here? Maybe a rough figure?

    • +1 vote

      It’s not a life changing amount, roughly $5k. Not enough to throw a tantrum over but enough to justify a couple of emails back and forth.

  •  

    You may lodge a claim for bonus in the small court. You don't require a lawyer for going to small court as long as your claim is less than $20k.
    Lodgement fees are around $400. I believe this is good investment and the company is most likely going to pay you the bonus than engaging a lawyer to go to court.

    •  

      Guarantee its money down the drain. Don't waste money in small claims court.

      If I were the employer, I would happily pay multiples of 5k in legal fees just to not set precedent.

      Also, you have no legal grounds. This was a bonus, unless its in your contract that it must be paid, you're wasting your time.

      Anybody who works in the finance, law, IT industries etc can tell you this is the standard of the profession and a reasonable person would uphold the same standard.

      You have zero chance of winning. Move on.

  •  

    Fair or not, there is no way I - running my own business - would pay a bonus to someone who has resigned. Bonuses would be for an incentive to keep up the good work. You have decided to move on, to a better job by the sounds of it. Suck it up, thats life.