A Bonus Agreement helps a company to keep its top talents while the company is being merged with some more prominent company. The first company gets the legal rights to keep the talents in their favour, even in an odd situation like merge-up and takeovers. A Bonus Agreement assures the first company and gives them all rights to get the benefits of their talent. No one wishes to boost a rival company with their talent. Skilled employees and talents are like the assets of any company.
When You Need a Bonus Agreement?
When a company is undergoing a merge-up with another company but wants to keep its most valuable and resourceful employees, then they need this agreement. Those selected employees need to sign the agreement. Bonuses are sometimes offered at the joining also. For example, a sign-on bonus agreement can help you select the top talent for your company over alternate offers.
Purpose of a Bonus Agreement
That agreement is the legal documentation of their consent about staying in the previous company irrespective of any situation. Through this agreement, first company retain the resources and stop them from joining the rival company. It also helps the first company to save their time and money in training new employees.
Inclusions in Bonus Agreement
A bonus agreement sample usually includes the following:
- The title or designation of the person the company is willing to keep.
- The details about the remuneration, whether it will remain the same or more after the whole bonus agreement process.
- The department and superior of that employee will be same or not.
- Company’s expectation from that employee.
- The tenure of the agreement.
- The total bonus amount and when the bonus amount to be paid.
All these things are to be cited clearly in this agreement. It should be clear that all the employees who are willing to retain fully understand and agree with all the terms of the agreement
[ Also Read: Bonus Plan Agreement ]
How to Draft Bonus Agreement
- The language of the agreement should be simple and understandable. One should always avoid using complex jargons while drafting an agreement. The best way to write an agreement is to follow a general format.
- The details of the company and proper documents supporting the identification of the employee are essential for this agreement.
- The bonus amount, date of paying the bonus amount and the tenure of the agreement should be mentioned in the contract.
- Highlight the essential paragraphs with numbers.
- Avoid using complicated legal terms.
- Use proper punctuation to avoid future confusion.
- Authorization on every page is mandatory. It confirms that both the parties are aware of all the details about the agreement.
- Further amendments should be documented under the presence and agreement of both parties.
- The essential points to comprise in this agreement are sections concerning the designation of the employee or job title, salary and company’s expectation from him or her, etc.
Benefits of Bonus Agreement
- This agreement legally safeguards the rights of the company to retain its workforce.
- It helps the company to save time and resources in training the whole new employees.
- It also controls the business relationship between the company and its employees.
- It manages unforeseen risks associated with the employee.
- The contract clearly explains the scenario under which the employee is going to work and the expectation they can have from their employer
- This agreement states the rights and responsibilities of the employer and employees.
- It creates mutual trust and helps to maintain a healthy work atmosphere.
- Appropriately crafted agreement can prevent the employees from being picked up by your rival companies and using them against you.
Types of Bonus Agreement
This agreement can be of many varieties. But here we will be talking about the three significant examples of this agreement.
- Employee Bonus Agreement
Employee Bonus Agreement is a type of bonus agreement where the company is offering an amount as a bonus for their uninterrupted and continual service to the company even when the company is facing a challenging time. By this kind of agreement, the company gets the assurance about the retention of their employees.
- Retention Bonus Agreement
The retention bonus agreement is also known as an employment bonus agreement. When the private sector employing company gets traded, the necessity of a retention bonus agreement arises. It permits a company to hold one or more treasured personnel of the company. This retention, though; must abide by the federal laws.
- Sales Bonus Agreement
A sales bonus agreement outlines the sections to allocate the advantages and bonus among the salesclerks. It is mostly the additional profits generated by the salesperson, i.e., revenue generated after accomplishing the pre-set sales target.
Download a Bonus Agreement Template Now!
You can download a bonus contract template below.
Download this USA Attorney made Original Agreement for only $9.99
This agreement is made between the Company and Employee on the effective date of 21st November, 2011.
Company represented by
Ms. Judy Dench
Alta Media Inc.
Address: 425 West 53rd Street #506, New York NY 10019
Contact number: (212) 586-4979
Employee represented by:
Mr. Jacob Smith
Address: 230 Riverside Drive #2N, New York NY 10025
Contact number: (212) 757-9940
Terms and Conditions:
- The said employee “Ms. Dench” is currently employed by “Alta Media” in the position of Senior Manager – International Operations.
- The main aim of this Bonus Agreement is to provide said Employee with sufficient bonus, incentives, and other encouragements so that she can remain with “Alta Media”.
- According to the terms and conditions mentioned in Section 3a of this Bonus Agreement, no officer, director, or shareholder of “Alta Media” will be personally liable for the payout of bonus to the said Employee.
- If there is an “Acquisition Transaction” in “Alta Media” in the near future and if the said Employee is employed with the Company at that point in time then she will receive a retention bonus from “Alta Media” equaling to six (6) months of the then salary of the Employee minus standard payroll deductions.
- This Bonus Agreement will supersede any bonus agreements made in the past where severance and bonus payment is concerned related to the termination of the said Employee’s employment with “Alta Media”.
IN WITNESS WHEREOF, the parties “Company” and “Employee” have executed this Bonus Agreement as on the date set forth which is 11/21/2011 (MM/DD/YY).
SIGNED FOR AND ON BEHALF OF COMPANY BY:
SIGNED FOR AND ON BEHALF OF EMPLOYEE BY: