Signing Bonus Agreement And Related Questions

A signing bonus is also termed as a sign on bonus

. The employer provides an incentive pay to motivate a new employee to join the employers company. In order to augment the companys compensation package, some employers provide signing bonuses. In the event that an employee does not know what to expect when signing a signing bonus agreement, it may become a legal issue. Below are a few questions that have been answered regarding signing bonuses:

There are two contracts that an employee has signed. The first one states that the employee would repay the sign on bonus while leaving the company, while the other one does not mention anything regarding repaying the sign on bonus. Is the employee required to repay the sign on bonus?

The first contract would be valid if the employee is still employed with the same employer and there is another contact that has been signed, unless the new contract has a mention of the sign on bonus in it. The terms of the first contract will be valid and carried through to the new contract. One would be responsible to repay the sign on bonus as mentioned in the first contract if one is leaving the company. As there is no mention of the sign on bonus in the new contract; the terms of the old contract regarding sign on bonus will hold good.

In the event that an employee quits a job, would he/she be required to repay the sign on bonus?

This is something that would depend on the terms of the agreement between the employee and the employer. A sign on bonus would generally be provided to encourage the further employment of the employee. The contract would be made in such a way that the employee would need to remain with the company for a set period of time. If there is no clause in the agreement that would indicate that the employee should return the sign on bonus while quitting the company, then the employee would not be required to repay the bonus.

If the employee wants to repay the sign on bonus through installments, would it be legal for the employer to refuse it?

One would need to repay the sign on bonus as a lump sum payment at one shot if the agreement does not specify that the bonus may be repaid in installments. However, if the terms indicate that the bonus needs to be returned, but does not give instructions on when it has to be repaid; one may be abiding by the terms of the contract as long as one continues to make payments. One may be sued by the company if one stops making payments.

Consider a situation where the start date has been changed by the employer after the contract has been signed. Would this employee be required to repay the sign on bonus as the change in the start date has made it impossible for the employer to start work?

If there is a confirmed start date mentioned on the contract, then the company may be in breach of contract. One should thoroughly go through the agreement and verify the clause pertaining to repaying of the sign on bonus. One may consider offering to repay a lesser amount to close the debt. The offer to settle the debt should be in writing and should be sent via certified mail with a return receipt requested to an official who has authority to make a decision. If the company agrees to the settlement; one would need to ensure that the agreement is in writing.

If there is no agreement that has been signed, is it required that an employee return the sign on and Christmas bonus upon termination?

Bonus is generally a gift from an employer to an employee and a company would mostly not expect it to be returned. In normal circumstances a gift that is given may not be requested back due to the employees termination. In the event that the employee has signed an agreement stating that all bonuses would be returned to the company in the event of a termination; then the employee would need to abide by it. In the absence of a written contract; it would be difficult to get back a Christmas bonus.

One may ask an employment lawyer when faced with a situation regarding sign on bonus rather than relying on advice from friends and coworkers.

by: MeghanJones

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