askST Jobs: How to time your resignation to avoid losing out on your bonus

In this series, manpower reporter Tay Hong Yi offers practical answers to candid questions on navigating workplace challenges and getting ahead in your career. Get more tips by signing up to

The Straits Times’ HeadSTart newsletter

.

Q: Is it possible to time my resignation to ensure I don’t lose out on bonuses?

A: There are different types of bonuses and different norms across different employers, which yield different outcomes upon resignation, says recruitment veteran Linda Teo.

Under Singapore’s Employment Act, variable wage components such as the annual wage supplement (AWS), as well as both annual bonuses and performance-based bonuses are not compulsory, notes Ms Teo, country manager at ManpowerGroup Singapore.

Instead, the bonus amount, if any, and timing depend on what is stated in company policy, the employment contract or a collective agreement.

However, employers typically provide annual bonuses and AWS as a one-time payment to reward employees based on their good performance and the company’s overall financial performance for the past year.

It is also a retention tool meant to boost morale as well as incentivise future efforts.

Common payout timings for these bonuses are between December and March.

“Meanwhile, performance bonuses can have frequencies ranging anywhere from monthly, quarterly and half-yearly, to annually,” says Ms Teo.

She adds that these performance-based bonuses are more closely linked to an employee’s individual performance, or the performance of specific teams and departments, than a broader annual bonus.

Taking the range of bonus types into account, Ms Teo says: “Resigning at different periods of the year and at different times of the bonus cycle will affect the bonus payout and can result in either a full bonus, a pro-rated bonus or no bonus at all.”

This means both contract and permanent employees need to understand their employment contract terms and company policies before resigning to understand which scenario is most likely to happen.

“Employees who resign before the bonus payout would likely have to forgo their discretionary bonus as the details are typically not known until after the company announces it.

“However, when it comes to performance-based bonuses, it may be possible for employees to still receive a pro-rated amount or even the full amount,” she says.

While it seems like a good idea to resign after a bonus has been deposited into a worker’s bank account, Ms Teo cautions that some employers may have stipulated that they reserve the right to recover the full bonus amount if employees resign within a certain period of receiving the bonus payout.

She advises: “Instead of solely looking at the bonus, it may be beneficial for employees to look at the quantum in terms of overall monetary gain rather than be focused on the bonus.

“For example, if the jump in pay from taking the new job outweighs the bonus amount, it may be worth forgoing the bonus with the current employer.”

She also suggests that employees consider other factors such as job stability, job satisfaction, career progression and long-term career goals when deciding whether to wait it out for the bonus or take a job offer they have on hand.

In some cases, switching from one employer to another with a significantly different bonus structure could mean a long wait to qualify for your first bonus with your next employer.

For such people, Ms Teo advises negotiating the bonus terms before signing the new employment contract.

“Typically, once the employment contract is signed, exceptions are rarely made.”

Instead, candidates should broach the topic directly and respectfully while discussing the contract terms with the hiring manager or the human resources team.

Ms Teo adds: “Those looking to negotiate for bonuses should be prepared to highlight their skills and experience as well as the contributions they can make to the company.”

Candidates can set additional targets to be agreed on to qualify for bonuses that were not initially offered, but these goals should be properly documented to avert future disputes.

Some employees may wish to time their resignation such that they can receive a bonus from the previous employer, and qualify for a bonus from their new employer as soon as possible.

While this is not impossible, Ms Teo says the practice can be tricky as the bonus cycle varies from company to company.

“The advice for employees looking to do this would be to ensure they are clear on the terms of the employment contract – both of the company they are leaving as well as the company they are joining.”

For their part, Ms Teo suggests that employers who want to reduce the chance of employees resigning after annual bonus payouts consider structuring the bonus plan to offer payouts throughout the year, instead of as a one-time annual payment.

Have a question? Send it to

askst@sph.com.sg