Resigned and Company Refusing to Pay Bonus

Ghogger on 20/08/2020 - 17:11

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
Education & Work

Comments

  • OrderedChaos on 22/08/2020 - 15:47

    My experience, having been in Consulting for many many years, is that a Bonus is payable to any eligible employee who is on the payroll at time of payment. It's no more complicated than that. Pending resignation has never come into the fray. Resignation only applies to a Share Incentive Scheme. Future share allocations are forfeited - that's an incentive to stay.

    OP if you were still on the payroll at time of payout, then I'd suggest you should have received the Bonus however… smaller organizations might not follow industry norms. The lack of oversight allows them to set fairly arbitrary rules and I'm afraid if this is listed in an official Policy document, there's nothing that can be done.

    Good luck. Do empathize as one who's given a lot to an organization without commensurate reward.

  • Cunning Linguist on 22/08/2020 - 15:54
    +8

    It's mind boggling that people expect a bonus when they resign. A bonus is both a performance and a retention incentive - why on earth would a company pay a retention incentive to someone that is leaving - there is literally zero benefit to the company to pay this out.

    It's all discretion of course and it doesn't hurt to ask, but it's not entitled and you need to respect that. I've seen people leave and still get paid a bonus but they generally have really long tenure with recognised massive contributions to the company or are leaving with a really good relationship intact. For the average person though if you make the decision to leave before your bonus is paid best not to expect it - if for whatever reason it is paid then that's a bonus (pun intended)

    • Ghogger on 23/08/2020 - 00:35

      I don’t think this particular circumstance is ‘mind boggling’. The bonus should have been paid months ago, and waiting this long really just served to reduce the number of people the bonus is being paid to. I think I’m justified in being annoyed given that I contributed to both last financial year and almost half of this financial year profits..

      • Cunning Linguist on 23/08/2020 - 21:08
        +1

        3-4 months is pretty standard. Every company I have ever worked for have not paid bonuses until September - October in a regular financial year.

      • gromit on 24/08/2020 - 13:21

        Your bonus timeline is actually pretty fast and quite normal, I work for a US company that operates similar FY dates, our bonus's hit in september, very occasionally over the years they have hit in August. But no one expects them till mid sept.

  • syousef on 22/08/2020 - 16:49
    +2

    Why would you give more notice than you have to?

    • HeyHeyHeyIsItADeal on 22/08/2020 - 18:26
      +2

      He made the mistake of thinking the company gives two shits about him.

      REMEMBER in the corperate world. You are replacable. You are a number making them money. Always take care of yourself because no one else will.

      Rare occasions where people will look out for you but it's so rare you probably see it in the movies only.

      • Ghogger on 23/08/2020 - 00:25

        Whilst your point of view is a little harsh/crude, broadly speaking you are right - at least in the eyes of the executive team. While I was there making them money, working extra hours for free etc., sure they loved me. But as soon as I’m not doing that for them, they couldn’t give a rats what happens to me (I know for a fact the CFO is very salty about me leaving..)

        • HeyHeyHeyIsItADeal on 23/08/2020 - 01:23

          Sorry man I'm just speaking from MY pov as well because you're right. Same thing happened to me. I busted my ass but when it was time to do myself a favour and go study part time. They dropped all my shifts and hired young people. My cousin told me this but it's just the harsh reality of life.

  • dbun1 on 22/08/2020 - 18:14
    +1

    Whatever your contract says is what you are entitled to

  • yadq on 22/08/2020 - 19:05

    To all of those (including OP) saying the bonus should be given:

    What if OP resigned the day after previous financial year ended, had his last working day at the company in the second month of the new financial year and the bonus would get announced in the third month of the new financial year. Should it still be paid to the OP even though he wouldn't work there anymore?

    I'm not making statements, just curious if people would follow their thoughts on "bonus as recognition of contributions during previous financial year" up to such extend.

    • Ghogger on 23/08/2020 - 00:26
      -2

      This is clearly a different circumstance.. the financial year ended 4.5 months ago. This is a bonus I should have received months ago but they clearly delayed it to reduce the number of people they would have to pay it to.

      • yadq on 23/08/2020 - 07:50

        I know it is a different case, I would still like to know your answer - should the bonus in case described by me be paid?

        Also, when it comes to "delaying the bonus payout" - have you considered things like budgeting for the new financial year? I work for a stock listed company and in my case it's roughly 3 months before bonus information gets announced. There is a lot of factors to it unfortunately, reports coming through from different departments, a bunch of meetings regards budgets, analysis for upcoming law changes which could potentially affect the business, minimising the tax paid by the business as much as possible, and so on… the summary of previous financial year gets reported to the shareholders roughly at the same time (3 months past EOFY) even though the results were so good it would have been in company's interest to report it ASAP. From employee's perspective it's just "their greed" and I get it. Bonus IS NOT just a recognition of the past performance in my opinion.

        Also, going back to my original question - should you not get paid in the case described by me in my previous post?

        • Ghogger on 23/08/2020 - 08:18

          Well no of course not, the situation you described means that the employee is not longer even on the payroll or doing work for the company at the time the bonus is being announced and paid. Neither of which are true in the case I described.

          • yadq on 23/08/2020 - 19:21

            @Ghogger: I only tried to show you that bonus isn't purely just a recognition of past performance. It does indeed say an extra "thanks" for great results from the previous FY, but it's more of an incentive for existing staff to keep on pushing so they can get another bonus next year. Or to call "the business way" - it's an investment made by the business to get as good or even better return in ongoing year. And since you've already resigned there clearly is no point for them to invest into you anymore.

      • Baghern on 23/08/2020 - 23:14

        LOL… you receive it when they give not when you think it should be.

  • dufflover on 22/08/2020 - 20:52
    +1

    I think the OP's naivety about it shows in the post. Every man and his dog in a biggish company will say they contributed a lot to the company's profit, was dependable, achieved this and that, blah blah blah. That may be true, but basically it's all meaningless to them. You are another stat, another contract. Loyalty? pfft.

    Before COVID was already enough to make people cynical. Now with COVID you would be a fool to expect any "ethics" from big employers if there is money to be saved.

    Our company has done many changes recently that are obviously out to reduce liabilities. All under the guise of some fancy pro-employee reform ofcourse.

    • Ghogger on 23/08/2020 - 00:29

      Yes fair enough, I think there is a disconnect between the team I worked with directly, and the executive team I did not work with directly. I believe (and my team recognises) that I contributed directly and significantly towards the team’s ability to deliver millions of dollars over the last 3 years because of a unique set of circumstances and skills, but those skills are always replaceable (at a price) so it’s all just a numbers game in the end.

    • AustriaBargain on 23/08/2020 - 22:24

      OP should think about working somewhere where naivety and honesty is encouraged (except when it isn't), like the public service.

  • sparkles on 22/08/2020 - 21:12

    Definitely pull the pin on your extra two weeks, even if you just sit at home playing xBox.

  • john_conner on 23/08/2020 - 00:24

    If you were on the payroll the date the bonus is paid, normally I would have expected the bonus to be paid. It does seem overly mean spirited to deny due to resignation.

    However it was announced after you resigned, so I can see why they were able to make up whatever they liked and deny you…

    If you haven’t worked it out, the whole business model of a consultancy is to work employees to the max and pay them as little as possible. You shouldn’t be surprised this happened…

    No, it isn’t particularly fair or ethical (from an employee’s perspective anyway), but look you worked for a consultancy for 3 years so you should be used to being under paid - you got what you wanted (a massive pay rise) so enjoy that instead?

    • Ghogger on 23/08/2020 - 00:32

      You’re correct there, I exited because of systemic underpayment at various levels of seniority, I didn’t see there being much point sticking it out Working 50-60 hour weeks when being paid around 30-40% below market. I gave it a real shot for 3 years in the hope that the pay would start the climb more materially, but enough is enough.

      • john_conner on 23/08/2020 - 13:27

        Good on you.
        Unfortunately many companies operate on a “pay to attract” model where you will not be rewarded for loyalty but above market rates are paid to attract new hires.

        Sort of like how most banks offer the best rates to new customers who gradually get treated worse and worse as time goes on.

  • gstfree on 23/08/2020 - 10:25

    Please check your employment contract conditions of paying bonus. If it's discretionary bonus, normally you need to work til the day bonus is announced.

    You may talk to your boss and ask if any bonus can be paid as ex-gratia?

  • kaleidoscope on 23/08/2020 - 12:03

    Give it a fight and if going no where then, well move on mate.
    You’re getting 40% more on new gig. There are always shit companies like that. Bonus is normally paid in recognition of past performance, so it’s bs when they refuse to pay it…

    • Baghern on 23/08/2020 - 23:17

      There are always shit companies like that.

      Virtually every company does it though.

      This op is delusional

  • Brianqpr on 23/08/2020 - 14:30

    In my experience you only get a bonus if you are still at the company and have not resigned at the time bonuses are actually paid. It doesn't matter if you worked the full year bonuses relate to. Still, a 40% pay rise should be some consolation.

    • AustriaBargain on 23/08/2020 - 22:23

      Ya, quit after the bonus, not before. Put your poker face on and pretend like you're going to be there for years, then after the bonus oh what a surprise a new opportunity you can't refuse has come up, how unexpected.

  • yellowrain on 23/08/2020 - 17:29

    I worked over 300 hours unpaid.

    This must hurt more than not getting the bonus because you are legally entitled to be paid for time worked.

    • Ghogger on 23/08/2020 - 18:18
      +1

      Well.. it’s not that straight forward. Businesses are allowed to ask you to work additional hours if the job requires it (and it’s standard industry practice that this goes unpaid), but yes, >300 hours does hurt (and is equivalent to much more than the bonus would have been)..

  • AustriaBargain on 23/08/2020 - 22:22

    You goofed. Also kinda silly to work 300 hours unpaid in the first place. If your boss asked for a liter of your blood, would you have rolled your sleeve up?

  • this is us on 23/08/2020 - 22:48

    The concepts of what is fair, legal, moral, and ethical are complicated.

    I'd say that might be unfair and I empathise with that, but that's not illegal/imoral/unethical. Probably something you will have to accept and move on.

  • Baghern on 23/08/2020 - 23:13

    This is pretty standard, most employees with half a brain hands in the notice AFTER its paid.

    • Ghogger on 24/08/2020 - 06:20

      There was no way I could know the bonus was coming - I’ve been there 3 years and never been paid one before..

  • lainey13 on 24/08/2020 - 00:35

    So you'll be leaving with the bare minimum notice period now right?

  • Jules_d1 on 24/08/2020 - 09:03
    +1

    I work for a HR company and we provide HR advice to businesses so I have grounds to answer this.

    It's very common practice not to pay bonuses to staff who have given their notice to resign.

    If you really want to fight it:

    1. Check your contract for commission/bonus clauses. Many will have a clause that says commissions/bonuses are not payable to employees who have resigned.

    2. If it's not in your contract, check to see if they have a company policy surrounding it.

    If there is no policy on it then you MAY have more of a chance to fight it. It's unlikely though, especially if there has been no previous precedent set of someone getting a bonus after giving notice.

    Sometimes there can be a discrepancy between the difference between "Has resigned" and "Given notice of resignation" so feel free to try and get something in writing that states "Has resigned" and then argue you have not resigned yet, only given notice of resignation in the future.

  • InfiniteRegression on 24/08/2020 - 09:15

    Hi @Ghogger,

    If you have any proof or evidence that someone had set the precedence and was paid their bonus on exit then you definitely have a legal avenue.

    Your best bet is a negotiation with your manager explaining to him that you want to be eligible for the bonus to work the extra long notice period assuming you are contractually only obliged to work 4 weeks.

    I would be pretty positive that their bonus scheme / policy would cover not paying bonuses to employees that have submitted their notice.

    If the manager is insisting it is out of their hand - ask to withdraw you notice and submit it two weeks later and hope it is paid by then.

  • Choc83 on 24/08/2020 - 09:40

    Tough, but nothing you can do.

    A previous employer had a similar policy, and resignations were at their peak on the day when the bonus landed in people's accounts.

    They also said they were moving to a direct competitor, leading to immediate departure and 4 weeks of paid 'gardening' leave.

  • Raj09 on 24/08/2020 - 10:18

    Bonus is discretionary and the company decides. You should have resigned after the bonus.

  • JayEmmGee on 24/08/2020 - 10:23

    Had the same thing happen to me, just put it down to a life lesson and a learning experience.

    Like you, was going to a better job with a much better salary so didn't worry too much about it!

  • JuryWheel on 24/08/2020 - 10:47

    Can you tell them you are staying, get the bonus, then leave….? What sort of timeframes are we talking here?

  • acersaurus on 24/08/2020 - 10:47

    I would feel hard done by in your shoes, but if the company won't change its mind voluntarily then you can't do anything.

    When I say "can't" obviously you could get a lawyer but this is likely to be a bad idea, not least because of your reputation and potential need for referees from this company + the cost/hassle of the lawyer.

    Sounds like your timing wasn't unstrategic. If an opportunity for a 40% rise came up, then id likely take it regardless of forgoing a bonus. So it's just bad luck.

  • hikki on 24/08/2020 - 10:55

    hi OP,

    Slightly different story but may/may not work.

    I knew someone in my industry who was terminated at one point (he deserved to be terminated btw) and just few days/weeks to being paid for his sales OTE.
    Upon termination, he was told he won't be paid any of his OTE for the current sales period.

    So next day, he brought in his lawyer and engage the management and management agreed to pay his OTE.

    If you really want to fight for your stuff, get a lawyer and discuss with them first and see what is achievable.

  • crazyj on 24/08/2020 - 11:30

    I used to work for a big insurance company. I purposely left resigning until after I had the bonus in my hot little hands…

    As an aside, you've got an assured job elsewhere.

    Just go on a super go-slow, turn up late, leave early - - if they want to treat you like that it is a two-way street.

    So this insurance company - they used to sack non-performers and give them full 4 week payout.

    But the good workers they'd make work right through… so I just did the go-slow, went to the movies during the day - really made it obvious that I'm not of value to them anymore.

    They eventually said hey do you want to leave now - yoink!

  • Mintee on 24/08/2020 - 13:48

    I got made redundant from a role on Feb 28. They announced bonuses on March 1.

    We all got shafted, after a huge uproar, they decided to include the bonus payment in our package :) I guess it's a little different to resigning though.

  • fortune500 on 24/08/2020 - 18:03

    If you work in consultancy (and I have worked in 3 of the big 4) you will know that bonus is paid if you are actually working for them at the time they pay you irrespective of what contribution you have made. That is why it is called a short term variable incentive which is at their discretion to pay. There is an old unspoken rule that you resign only once the bonus hits your bank account or you have your payslip else you risk forefeit of your bonus. If the Partners in the firm are nice then you should have negotiated this when you offered to provide 6 weeks notice instead of 4 if there was potentially some important client work to finish off. If the money in your new place is so much greater then clearly there probably was no point in waiting to get your bonus payment and I would just move on if I was you.

  • Tgb on 24/08/2020 - 21:18

    Very standard practice to not be eligible for a bonus while in notice period / resigning.

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