Timing Resignation with Annual Bonus Payout

Planning your resignation

This is that time of year when it is natural to think about job search after you get your annual bonus. A lot of people time their departures to fit the annual bonus payout.

A question asked was if you leave early (prior to payout), can you expect to get all or some of your bonus earned.

The short answer to the question is no, probably not. 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.

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. If it is important 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.

Which doesn’t mean you shouldn’t be preparing for your job search. If you are determined to find a better opportunity for yourself, start doing your homework early. Get clear on what you want to do, what you have to offer, and where you fit. Make sure your resume is in order. Think in advance about references. Develop your network further. Start marketing yourself.

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 of 10-15% of your salary.

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?

Money plays an important part in our lives, and it often makes sense to wait it out. However, do look at the big picture. Do 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.

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