Rights to Bonus if Terminated

Can My Employer deny me a pro rata share of my bonus if I’m fired before the end of the year?


Unfortunately, the answer to this question is “it depends.”  Courts have come out both ways on this issue, and whether you are entitled to any bonus payments most likely depends on the language of the bonus agreement.

For annual bonuses, whether you will get a pro rata share of the bonus may depend on whether you were terminated or you quit.  If you quit, you may not be entitled to a pro rata share of the bonus.  This may depend, however, on the language of the agreement.  If you were terminated, whether you are entitled to the bonus may depend on (1) the type of bonus awarded and (2) the reason for your termination.  If your employer wrongfully terminated you to avoid payment of a bonus, you will be entitled to the bonus.  If you were terminated for another reason (such as a reduction of the workforce) or simply for no reason at all, whether you are entitled to the bonus may again depend on the language of the agreement and the type of bonus awarded.

Where bonuses are paid annually but are based on employees meeting certain individual criteria, you likely will be entitled to your bonus or at least a share of it based on whether you have met the criteria.  This is because in these circumstances, courts have generally considered bonuses to be wages (compensation that you have earned and are entitled to under the law.)  Where bonuses are based on factors other than individual performance (discretionary bonuses based on company revenue or meeting certain company goals, for example), whether you are entitled to the bonus may depend on the language of the agreement.

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