A retention bonus agreement contract allows employers to offer a retention incentive to their employees for not leaving the company for a specific period. This agreement enables organizations to retain top talent by offering incentives in multiple ways, such as an extra paycheck, lump sum money, and ESOPs.
Organizations use a retention bonus agreement for many reasons, including:
A retention bonus agreement clearly states the relevant terms & conditions allowing employees to comprehend the benefits, obligations, roles & responsibilities, and termination conditions. Read the following guidelines on how to draft an error-free retention bonus agreement:
It would be best if you state the reason why the company is offering a retention bonus agreement to the employee.
For example- If you intend to retain an employee for the completion of a particular project, you must clearly mention that the employee is bound to put necessary efforts into it.
Terms and conditions are the most essential aspects of the agreement. They consist of:
The scope of the agreement should communicate the following essential points:
You can also briefly mention what work ethics, policies, and regulations the employee should adhere to.
Parameters for calculating the retention bonus based on the percentage of the employee’s salary or a lump sum amount agreed between both parties.
This section provides details regarding undesired activities that might attract disciplinary action against the employee. In the worst-case scenario, the employee may be denied the promised bonus.
At the end of the retention agreement document, both parties should mention their name, designation, and venue, along with their signatures.