Then they should stop creating an expectation of pay in relation to the referral and make it clear that the company pays these in capricious manner which will depend on how much the CEO likes you that day instead of relating it to the performance of your job.
If the CEO sent an email about new "Capricious and Arbitrary Referral Bonus" then I'd tend to agree with you that the OP should have expected to be treated in a capricious and arbitrary manner in regard to the payment of the bonus.
For example in my options contract with my last employer it stated that the options were part of an employee retention program and should not be construed as remuneration.
After reading those lines I knew the options were a ploy to retain employees and not to actually expect to make a cent from the options. Upon quitting and being offered to buy out my options I said "The options contract states that it's for retention and not remuneration, why would I buy something that you've warranted as worthless?"
It's no different than an employer offering a 'bonus' for hitting a certain date for code. If I quit day after delivery it should make no difference as to whether I'm paid.
That doesn't make sense. A "nice extra that might disappear any second?" That's worth as much as a hole in my pocket. If giving referral bonuses is company policy, nobody would imagine that it might "disappear" retroactively if the management didn't happen to feel like paying you that day.
Regardless of whether it's legal, it's totally unethical to behave that way.
The third rule sucks, in my opinion. Referral bonuses are a good deal for the company: they help the company to (1) recruit good employees and (2) save money on recruiting, since these bonuses are usually much less than the hefty fraction of an employee's salary that they'd have to pay to a headhunter. If you leave a company after referring somebody, it doesn't change the fact that you found the company a good employee and saved them money, so it would seem unfair to refuse to pay you the bonus, even if you're no longer an employee -- in that case, they'd be able to profit from your connections without giving you anything in return.
They wouldn't be able to get away with not paying a headhunter just because he sent his invoice in after the company decided to not renew their contract with him. The fact that they can legally get away with stiffing an ex-employee doesn't make it any more ethical.
You guys can both be right and it still doesn't matter. If you're going to offer bonuses or incentive comp of any sort, plan on paying them. You should be allergic to any reason for not paying short of "there is no credible claim to being owed this bonus".
It's definitely true that bonus programs are usually intended for existing employees. Concrete example: my last employer blew out their numbers the year I left the company; I wound up in a 6 month transitional role (and a few additional months of outside consulting) after a cordial mutual understanding that I was going to leave. The whole company got a massive bonus. I got a negligible bonus, even though I was a full-time employee, and even though the bonus accounted for multiple years where I was a full-time, fully performant employee with no stated intention to leave.
Am I mad? Nope! Most of the (unstated) point of the bonus was employee retention. I was unretainable. Paying me a giant bonus was irrational.
I think that's the same sentiment 'cletus is talking about, and to that extent, I'm totally with him.
But the answer to most disputes about bonuses should generally be "I'm sorry we let this escalate to a dispute, it's important to us that everyone knows we deal fairly with the team, and so we're paying you the bonus. We wish you the best."
This type of post is really easy to say if you have some sort of personal equity in the business. The larger the business, the more that equity gets diluted.
I work in a MegaCo, which has these sorts of referral bonuses. In addition, teams in the company are spread out over individual clients. If I refer someone, it is more likely than not that I won't ever work with this individual. I'm paid by salary (not profit-sharing) so I don't have a financial stake in the efforts of the firm. I'm not management, so many decisions about what this new employee would be doing are removed from me.
If I don't get to work with my referral and I don't stand to gain equity from their work, a referral bonus makes the economic seesaw balance. Saying it's "pants on head stupid" is short-sighted and only applicable to extremely small companies.
2) It no longer becomes optional once you make the offer to your employees. At this point you have established intent; especially if it is provided in writing. You cannot take it back once the other party involved has upheld their end of the arrangement.
Yeah, I realized after the fact that the analogy was a little shaky there. It's not just a bonus but deferred compensation. But let's keep it simple for now. Androsynth had a problem trying to understand the idea that these options were granted in lieu of earned pay.
Yea, the bonus point is interesting, especially in finance where bonuses can be > 100% of base. You can't insist on firms paying last years bonus, or else people would just quit and get a non compete if they had an insane year. But paying only base also seems a bit unfair.
A thought I had was you'd have to pay whatever their new offer is paying. The argument is that if you want to prevent someone from working, you should have to pay them their worth - which, in the case of someone resigning with a competing offer - has just been priced by the hiring market!
Stop calling it a bonus, it isn't, it's payment for your services of recruitment. The offer came as part of a written agreement from an officer of the company in relation to the duties required by employees (adding the optional duty of recruitment) and their remuneration for performing said services (your payment for recruitment). Looks like a duck, quacks like a duck.
Bonuses are when you receive additional pay for performing your required duties as an employee. eg. you were hired as a programmer, you've doing great work, here's an extra 10K.
Not only did they fail to pay your wages within X days of termination, an egregious violation of the labour code but now they are misrepresenting the employment agreement as not including written amendments made by officers of the company.
Furthermore this policy they speak of has altered the employment agreement with out consent from the employed, and failure to disclose the policy at the time the offer was made constitutes negligent misrepresentation of the contract. I'm sure if you had known that you would have only received payment while still an employee, the offer would not have induced you to perform said services for the company. Failure to inform employees of changes to the employment agreement is also likely a violation of labour law.
File with your local labour board for unpaid wages, dealing with this should cost them easily more than $10K. The last thing they want is bureaucrats around their business.
Then file in small claims court for lost wages and breach of contract.
Attach the directors of the corporation personally to the suit as directors are liable for unpaid wages. (This may not be true in your jurisdiction)
Find the statute that says that all unpaid wages must be paid within X days of quitting / termination, add damages.
Add up all your time spend dealing with the recovery of this money, as well as reporting this to the authorities, add costs.
Hopefully after this you've reached the max allowable for a small claims suit.
That’s not how bonuses work. I think it is entirely reasonable to give employees extra, unexpected and non-compulsory payments of some large fraction of whatever real money they demonstrably saved the company.
I think it's fair to waive referral bonuses if someone is referred through the "trusted referral" process. If someone is dying for a bonus, they can still steer the candidate towards the company and let them go through the technical loop normally.
and they very well might owe him the 10k. i was simply trying to consider the other side, which we don't know as much about, and i am assuming they made the best decision considering all the circumstances. maybe not. really, the employee should have collected this bonus prior to quitting his job. this could have been avoided if he was paying attention. i'd have a calendar appointment set for the date i was to receive that bonus, if i was that employee.
1. I wasn't clear: the employer's getting the commitment itself for free. The labor is still being paid at the labor rate.
2. When I wrote the objection, I was more thinking about the retention of established employees: it's relatively common in my industry to offer a bonus of some kind in exchange for your experienced employee committing to not leave in the next, say, two years.
In that context, replacing the immediate bonus with a promised raise / promised bonus is problematic in that it benefits the employer (employee is more motivated to stay), while not restricting the employer (the employer can still lay off the employee at any time, having spent nothing). In contrast, most of the time the retention bonuses are only forfeit if the employee quits or is fired with cause, so if the employer has given an employee such a bonus it serves as a level of commitment to not lay off the employee, because they've already paid extra to retain them.
however the company did not specify at what point the bonus was due to him.
Of course it did.
Quote from the article:
the payout was contingent on said employee staying for a minimum of a 6 month period at the position
If that's the really the full text of the agreement (which seems plausible to me, I've seen similar e-mails) then there is nothing unclear about that. Even if he had quit immediately after referring that other guy he'd still get the bonus. Period.
I understand that bonuses are supposed to be performance based compensation. But if this guy is claiming that he's consistently performant and has a great reputation, maybe that portion of his compensation should have been moved from bonus to base. I can't blame him for leaving, but I also can't really sympathize with him for thinking any portion of the bonus was guaranteed.
I agree...to a point. Most referrals like this happen at lower level job descriptions where sub-$1000 bonuses are still a meaningful % of overall compensation. I know one consulting firm where a guy doubled his take home on referral bonuses.
Bonuses can be considered either contractual or discretionary. If there was any mention or implication that the referral bonus was discretionary, then the company can withhold payment for any reason, such as poor employee performance or low revenue/profits.
At my company, all bonuses are considered discretionary. They plainly and clearly lay out the parameters of the bonus structure, but they also reserve the right to withhold the bonus for any reason. They rarely reign in on their promise as it significantly hurts morale. However it is well known that if you leave the company before a bonus is paid out, that you will not receive the money, regardless of whether or not you have already fulfilled the parameters for the bonus.
hey, so I talked to my employee about this, and he echoed the concerns in your footnote, and he says "I can't imagine trying for a random bonus" - and it's really his opinion that matters here.
(shrugs) Well, that's legitimate. In a different company it may be different. But this is not the point.
The point is that:
1. They get to to be involved in making the decision, and
2. This kind of a process will create a clear distinction, in their consciousness, between the bonus money and their salary - since the process for obtaining the bonus money is different and special.
If the CEO sent an email about new "Capricious and Arbitrary Referral Bonus" then I'd tend to agree with you that the OP should have expected to be treated in a capricious and arbitrary manner in regard to the payment of the bonus.
For example in my options contract with my last employer it stated that the options were part of an employee retention program and should not be construed as remuneration.
After reading those lines I knew the options were a ploy to retain employees and not to actually expect to make a cent from the options. Upon quitting and being offered to buy out my options I said "The options contract states that it's for retention and not remuneration, why would I buy something that you've warranted as worthless?"
It's no different than an employer offering a 'bonus' for hitting a certain date for code. If I quit day after delivery it should make no difference as to whether I'm paid.
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