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- from the desk of Ian Christie
CEO & Executive Career Coach
Timing Resignation with Annual Bonus Payout
If you are preparing to make a career move or contemplating a move and you have an annual bonus payment coming up, how to time your resignation with the payout is an important question. The obvious goal is to line up your resignation such that you receive your annual bonus payout. Learn how to do that in this article.
If you leave early (prior to payout), can you expect to get all or some of your bonus earned?
If you have a discretionary bonus, the short answer to the question is no, probably not. If your bonus is structured based on commissions or other performance metrics, then you may be entitled.
Read your employment documentation carefully. Unless otherwise stipulated in your offer letter or employment agreement that your bonus will be prorated upon voluntary departure, your employer is likely not bound to pay you any of your bonus if you leave early. Seek legal advice if in doubt.
In the case of termination (vs. voluntary resignation) in advance of the payout date, you would have more of a chance of receiving some form of bonus payout.
Of course, there are exceptions. If you have a great relationship with the executives of the firm you are intending to leave, and they have the ability to control the bonus payout with discretion, and you handle your resignation properly, you might find that your performance bonus gets paid out. It happens. But, it is an exception.
In general, if you need to leave early, you leave without the bonus payout, unless formally set out in your compensation plan.
If it is important to you that you receive that payout (i.e. opportunity cost of leaving early vs. waiting for bonus day), then you will have to stick it out.
When should I time my resignation with my annual bonus payout?
Most companies require that you be an active employee at the time of the payout. This means, you’d need to resign, with proper notice, after you have cash in hand.
This also means not sharing your intent to exit prior to your bonus payout.
Check the terms of your employment agreement and local laws as well as HR documentation to determine if your company allows for bonus payout prior the date. Seek legal advice if in doubt.
That doesn’t mean that you can’t be fully prepared or even have an offer from another company in place.
Why you should proactively line up your career move in advance
Don’t let this happen to you…the 2+ year exit
One warning note based on working with many career coaching clients over the years is to avoid the delayed exit.
I have seen many times when a client had “decided” that they would move after they received their annual bonus.
Then, they didn’t take effective action or fully commit.
Q1, then Q2 passed and while they wished they had moved, they were already eyeing the next year’s bonus and feeling they didn’t want to forego that.
Which meant, being stuck for a year in a job they intended to leave.
If you are determined that you’re ready to make a move, feel bored or stuck, are looking for a change, or generally want to find a better opportunity for yourself, start doing your homework early.
You can easily engineer a proactive career move
Get clear on what you want to do, what you have to offer, and where you fit. Check out our services to learn more.
Make sure your resume is in order. Hint, do more than “dust off your resume.”
Ensure that your LinkedIn profile is professional, forward-looking and represents you well.
Think in advance about your professional references.
Develop your network further.
Start marketing yourself.
Consider investing in professional support. Not only do you get expertise, insights, and clear steps. You also get accountability. Set up a Discovery call with us to explore how we can support your strategic career move.
What to do if you have a job offer that requires you to start before your bonus payout
When it comes to the annual bonus, I recommend that you look at the big picture.
If the perfect opportunity comes your way prior to your ability to collect your bonus, and the size of your bonus isn’t a big part of your compensation package, think carefully about whether foregoing a really strong professional opportunity is worth a one-time payout.
Another factor is decision timing. If you reach a decision to leave your current job, let’s say in the summer, and your bonus will not be handed out for another 6-8 months, that is a long time to put up with whatever it is that made you decide to leave. Are you doing your resume any good? Are you accomplishing anything?
Be Intentional about the career move you want to make
Money plays an important part in our lives, and it often makes sense to wait it out.
However, do look at the big picture.
Analyze the opportunity cost of staying vs. going.
And, do start marketing yourself. Having an exciting opportunity to go to will help you make your decision.
Get in touch, confidentially, to discuss how we can support your career growth.
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