So you’re quitting your job? You may be jumping ship to better terms but just make sure you aren’t leaving money on the table on your way out. Don’t hand in your notice, and definitely don’t leave the building, before getting a few things straight.
Bonus
Resigning from a job can feel like a divorce. You want to go, they want you to stay, both sides invested in the relationship but now it’s about who gets what in the break-up. You raked in a tonne of sales this year, so they’re definitely going to pay your bonus, right?
Before breathing a word about quitting, dust down your contract and the employee handbook. If there’s a hefty bonus at stake, giving notice at the wrong time can leave you out of pocket by thousands of euro.
“Most bonus schemes would say if you’re gone, you’re gone. You don’t get anything pro-rata for the time you were there,” says Anne Lyne, partner specialising in employment law at Hayes Solicitors.
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“But if you are still there on the payment date and the scheme doesn’t disallow payment in the notice period, you could argue, ‘well I’m here and I’m entitled to it’,” she says.
When it comes to planning your exit, read the small print. While a bonus might accrue until December 31st, don’t assume it gets paid in January. Some companies delay payment as a retention strategy. A bonus may not get paid out until March. Pulling the plug at the wrong time may mean you’re gone before payment hits.
On the flip side, be careful too of delaying your exit for a bonus described as “discretionary”. There can be 10 pages in the employee handbook detailing how you and the company must perform for a bonus to be paid, but if the bonus is discretionary, there are no guarantees.
If there’s a meaningful sum at stake, you might do well to keep schtum about quitting until that discretionary bonus is safely in your bank account.
You’re entitled to your bonus if it’s linked to service, says Caroline Reidy, managing director of the HR Suite, an NFP company.
“Say you hit your targets, which are to December, and your bonus is scheduled for January and you hand in your notice in January, you are entitled to the bonus up to the end of December because you earned it in that you have hit your targets,” says Reidy.
“If you left in October, however, but the bonus accrued until the end of the year, usually it’s not payable unless you are still in employment at the end of the year because it’s based on the total year’s target. Therefore you would not be entitled to it,” she says.
If the bonus is based on quarterly performance or targets and you were there for the relevant quarter, you are likely to be entitled to it.
A “long-term incentive plan” rewards key talent for meeting long-term company goals over a period of three to five years. These are designed to retain and motivate executives to contribute to the company’s sustained success by aligning their rewards with the company’s long-term performance.
“These are really retention bonuses so if you leave midway through, you don’t get it. You must stay the full three or five years to benefit,” says Reidy.
If you’re joining a new employer midyear, ask them about your entitlement to bonus too. Sometimes it will kick in from the day you join; other times it will be after you complete probation.
Shares
Shares and share options can be hard to get a handle on. As a perk, these can be best viewed as birds in the bush, but not in the hand.
If you have actual shares in a business, where you have a share cert or, nowadays, electronic proof of ownership, you can quit the job but retain the shareholding. Share options, however, are a different story.
“Companies are looking at mechanisms to bring people in and retain them with these share option schemes. But when you look at them, the option really only becomes tangible on its sale, or at a certain point in time,” says Lyne.
“If you look at it, you don’t actually own a part of the company,” she says. “It’s not a ‘Ferrari’, it’s a picture of a Ferrari.”
Study the scheme rules, she says. “Most have a vesting date. You are offered the share options today, but they don’t actually vest for five years and if you leave before the vesting date, you lose out on them,” she says.
Check the vesting date and see if it’s worth hanging on. And even if they do vest soon, do they just vest into something else?
“People can use the word ‘shares’ or ‘share options’ to describe what they have been given but it’s not an old school shareholding in a company,” she says. “Most scheme rules are clear; if you leave, you lose them.”
Study
If you studied for an MBA on company time, they can’t exactly take back the qualification if you leave. If you qualified on the company dime however, they may well claw something back.
A part-time executive MBA can cost up to €40,000 for a two-year programme. Most employers will stipulate that if you leave within a certain amount of time, they will claw it back. For instance, if you leave within two years, they might claw 50 per cent of it back, says Lyne.
If quitting your job within the clawback period leaves you out of pocket, let your new employer know.
“They might look at giving you a sign-on bonus to reimburse you so that you can pay it back,” says Lyne.
Similarly, professional memberships paid monthly will be stopped when you leave. An employer is unlikely to claw back the balance of an annual membership however.
Maternity leave
If you leave shortly after returning from maternity leave, an employer may claw back what they paid during this leave. This will vary by employer so check your contract and the employee handbook.
“It may be that if you leave within the first weeks of your return, 100 per cent of your maternity pay is clawed back, or if you leave within a year, 50 per cent is clawed back,” says Lyne.
“If you are leaving and moving to a new employer, expect that your employer may look to enforce that clawback.”
If you are not leaving for another role however, the company may be less likely to pursue reimbursement. Check your contract of employment and the staff handbook, says Caroline Reidy.
“If you were paid your full salary while on maternity leave, or if they funded your MBA, 99.9 per cent of the time the employer will say, we’ll pay, but you must stay for at least a year after,” says Reidy.
“If you keep your end of the bargain, you get to keep the money and no more about it. You contractually sign up to it, that’s what counts.”
Health insurance
With paid health insurance, find out from your employer or the insurance company to what date you are covered.
Before your cover expires, contact your insurance provider to arrange a conversion to an individual plan to maintain coverage and avoid a lapse that could affect waiting periods for pre-existing conditions.
A break of less than 13 weeks is usually fine for maintaining your “loading,” which is a credit for previous time insured.
Holidays and notice
If you didn’t take annual leave this year with the expectation of a bumper final pay packet when you resign, think again.
“An employer could require you to take untaken holidays during the notice period,” says Anne Lyne. “They could say, I want you to go on garden leave for three months, you’ve accrued 10 days holiday so take them during the garden leave period. They are entitled to ask that,” she says.
In a near-full-employment economy, employers are more likely to ask you to come to work throughout your notice period.
On the flipside, if you’re tired of the place you want to take all of your accrued holidays during the notice period, they can’t realistically force you to come in, says Lyne.
“In practice, forcing you to work right up until the last day, are they really going to get the best out of people?”
The bottom line, says Reidy, is when leaving a company, try to be as honourable as possible.
“What we find is that a new employer is happy to wait the notice period. If you have a three-month notice period, be clear with them about that at the outset.”
Garden leave of three months may be a contractual requirement to break the relationship you had with a company’s clients, for example.
“You’ll want a reference from your current employer and the more honourable you were, the more your reference will reflect this,” says Reidy. “They might say, you had a contractual agreement and you didn’t honour it. The new employer might wonder, will they do the same to me?”
Difficult parting
If you are leaving without completing your notice period, or leaving to join a competitor, things can get contentious, says Lyne. “In those cases, you can have tricky engagement between employer and employee on their departure,” she says
“There may be threats around a non-compete clause where the employer writes to the employee, or to the new employer,” says Lyne. “But in Ireland, enforcing non-competes in a small economy isn’t done in practice,” she says.
“There can be letters and threats of litigation but actual litigation is something you see more of in the UK where it’s bigger. In any sector in Ireland, people know each other,” she says.
“In an 100 per cent employment economy in the past three years, we’ve sent letters on behalf of employers. But non-competes aren’t about the individual in reality, they are about a business thinking, ‘I need to protect my business’. The employee is just in the middle of it all.”
Your employer may ask you where you are moving, but you don’t have to tell them.
“You don’t have to tell them, but if you have a non-compete clause, the employer can remind you of that. They can’t force you to say where you are going, but they’ll find out when you update your LinkedIn.”
Professionalism, or lack of it, when you quit may bring its own dividend. Burning bridges in a small country can prove costly.
Is there an ideal point in the financial year to leave a company, or join a new one? “Not really,” says Caroline Reidy. “Sometimes the ideal job that someone has been waiting for just comes up. It’s advertised and they go for it.
“Generally, the ideal job now is linked to flexibility as well as salary and bonus. For a lot of people it’s, ‘Am I getting the flexibility I need’. We are seeing that to be more and more the case.”
For the right job, you’ll resign at any time.
