What happens to earned bonuses when an employee resigns or is terminated?

What happens to earned bonuses when an employee resigns or is terminated?

• A. Earned bonuses are not paid at all; only base pay remains.
• B. Unearned bonuses are forfeited regardless of policy.
• C. Bonuses are paid only if the employee stays for a specified period.
• D. Earned bonuses are paid per policy; unearned or forfeited bonuses may be forfeited depending on the terms of employment and policy.

Answer: (D)

The concept here is that bonus payout after leaving a job isn’t automatic; it follows the company’s policy and the plan terms. Earned bonuses are paid according to that policy, meaning if you’ve truly earned a bonus under the plan’s criteria, the company should pay it even if you resign or are terminated. The portion that isn’t yet earned or that is subject to vesting or retention conditions may be forfeited if the terms say so. In short, you get what the policy defines as earned, and any unearned portion or forfeitable portion depends on the specific terms of the employment agreement and the bonus plan.

The concept here is that bonus payout after leaving a job isn’t automatic; it follows the company’s policy and the plan terms. Earned bonuses are paid according to that policy, meaning if you’ve truly earned a bonus under the plan’s criteria, the company should pay it even if you resign or are terminated. The portion that isn’t yet earned or that is subject to vesting or retention conditions may be forfeited if the terms say so. In short, you get what the policy defines as earned, and any unearned portion or forfeitable portion depends on the specific terms of the employment agreement and the bonus plan.