Q: I have learned that one of my employees plans to resign immediately after they receive their upcoming bonus. This seems to be an “open secret” among colleagues. What steps should I take?

A: It’s often said that making assumptions can lead to misunderstandings, and anyone who has managed a team knows how quickly office gossip can escalate.

Employees opting to wait for their bonus before resigning is a situation many managers encounter, and it requires careful handling.

To navigate this effectively, it’s crucial to determine whether the bonus in question is contractual or discretionary. A contractual bonus typically has defined criteria that employees must meet, as outlined in their employment contract. In contrast, a discretionary bonus is awarded at the discretion of the employer.

If the bonus is discretionary, you have the right not to pay it. Just because a discretionary bonus has been awarded previously does not obligate you to pay it consistently, and employees should not assume they will always receive it.

On the other hand, if it’s a contractual bonus, you cannot withhold it based solely on rumors. It’s possible the rumors are unfounded, and if the employee meets the required conditions for the bonus, failing to pay may result in an unauthorized deduction.

Employees can file a claim with an employment tribunal for unlawful deductions if they believe their bonus has not been honored as promised. Claims can be initiated within three months of the disputed deduction, and if early conciliation is utilized, this deadline may be extended.

The first step I recommend is to have a conversation with the employee in question to clarify their intentions and to see if they are indeed planning to leave.

Approach this discussion thoughtfully, ensuring your tone is neutral and that you’re not making accusations. This meeting should be a fact-finding mission to understand their job satisfaction and identify any issues that may be addressed. If your goal is to retain the employee, try to uncover the underlying concerns and explore how you might encourage them to remain.

If the employee confirms their intention to depart and you believe there’s no advantage in persuading them to stay, your next step is to review their employment contract.

Most contracts specify the eligibility criteria for bonus payments, which often require employees to be employed at the time of payment and not serving their notice period. Employees usually recognize that resigning before a bonus is paid may result in them forfeiting it, leading to this kind of strategic resignation timing.

Employers often protect themselves against this possibility by including clauses in employment contracts about bonus repayment. For instance, consider structuring the bonus payment over time: paying half upfront and the remaining balance later can provide some security against resignations, but eligibility criteria must be clearly defined.

If your policies are crafted carefully, you might have grounds to withhold the bonus or recover amounts if payment has already been made.

Some employment agreements feature clauses that allow for the deduction of pay to recover bonuses if an employee resigns within a specified period following the bonus payout, such as three months.

If this is applicable, you may utilize future salary payments to recover the bonus amounts. It is necessary to confirm that the employee is aware of this clause, which can often be found within the main contract or a separate document.

Ensuring all contracts and agreements are signed is a prudent practice, as it proves that employees have received and acknowledged the terms.

Peter Done, co-founder and managing director of Peninsula, specializes in employment law, HR, and health and safety advice.