An employee left a  month before a discretionary bonus was determined and paid.  It is my understanding that the employee forfiets the bonus if he or she leaves before the bonus is determined and/or paid.  What is the typical company policy on this matter.

K2's picture

In most cases, bonus is always 'at the discretion of management'.  Otherwise it is a commission and a person has an automatic right to whatever they have earned.

Whether a person is entitled to a bonus (as opposed to having fairly deserved a bonus) may depend on the wording of your bonus scheme.  I've seen schemes that say that a person needs to be employed at the time the bonus is paid in order to be eligible.  This means that a bonus earned for 2012, but paid in February would not be paid to anyone who left before the pay is done in February, even if they had fairly earned it.

In other schemes, a person is entitled ot a bonus if they were employed during the earning period, even if it is not determined or paid until afterwards, and they have since left the company.

Thus, it may be the case they they have fairly earned it, but they may have excluded themselves from being able to share in it due to the way the policy is written.  Or, they may have fairly earned it, and still be entitled to it.

Even if you think the bonus policy is unfair, I don't recommend trying to fight City Hall.  You will expend an awful lot of good will, you may or may not be successful and the person has already left so you are unlikely to see much in the way of benefit.

Kind regards


mjpeterson's picture

I would think that it is relatively rare for a company to pay bonuses to people who have left the organization.  I have had discussion with people that were ready to leave their current role, but were waiting for their bonus check arrive, before giving notice.  If your bonus is done as a pool of money allocated at the discretion of the manager, then there would be no reason to give a bonus to someone who has left or even who has given notice.  

Despite this, my wife was laid off from a position that had potential for a bonus.  Out of the blue we get the check four months after her last day, because she had met the hours criteria to get a bonus.  It was a nice and unexpected surprise.  So it really just depends upon the company at its policy.   

backstage froth's picture
Training Badge

The key word is discretionary. A discretionary bonus is almost never paid to a departing employee. The one exception is if the employee has been dismissed, then a prorated bonus may be included as part of severance pay.

A non-discretionary bonus, accumulated deferred compensation, executive pay plan, retirement plan, or other compensation plan would have to be paid out in accordance with the plan.

jackking's picture

Well, I think if the employee terminates after the end of a defined bonus plan period they would be eligible to receive the full bonus because it would be considered "earned". I am assuming that this is not spelled out in the bonus plan document. If you don't have a detailed bonus plan document, I highly recommend that you put one in place that addresses what happens in the case of termination. Get more info out of

Smacquarrie's picture

Most bonus structures have a clause in them that requires said employee to be gainfully employed by the company and in good standing (not an outer elbow or under disciplinary review) at the time of the bonus being paid out.
I would be very surprised to find that this one is any different unless the company is smaller in nature.