Sign-on bonus repayments upon leaving a company

manpreet Best Answer 3 years ago

I'm leaving my company (in the US, IL) before one year cycle. And I have to return the $5000 relocation lump sum that I received (I actually received only $3000 after tax), under the condition that if I leave voluntary, I have to return it.

The language says: Should you choose to end your employment with XXX prior to completing 12 months of service in this new position, you will be responsible for reimbursing.

Two questions:

1- Should I return $3000 (after tax), or $5000 (before tax)?

2- At one point upon group change, my manager actually told me "You have your green card, and can leave the company if you don't like it". So I'm not really leaving "voluntary". Can I negotiate that and avoid repayments?!

Advice from anyone familiar with this would definitely help.

UPDATE: After I talked to the HR guy at my exit interview and tried negotiating, they said they just forfeit my last pay check ($4200 before tax, $2850 after tax and benefits), in place of $5K bonus repayments (before tax) + 13 hrs of PTO owing (=$750)! They said that saved me around $1300. I think it was a good thing for me.

manpreet 3 years ago

You can re-read your contract, but a few things:

1. Most of those contracts force you to repay the bonus unless you are laid off; they often have language that says something like if you decide to leave or if you are let go for performance reasons. Edit in response to the language being added: "Should you choose to end your employment" means that if you decide to leave due to a conflict with your boss you will have to repay the company in most any circumstance.
2. The language usually specifies that you have to repay the entire bonus and not the portion you get after taxes; the good news here is that you should be able to adjust your tax filing accordingly.

Many people in these situations decide to stay until the 1 year mark and then leave to avoid the penalty.

TL;DR if you decide to leave, you are most likely going to have to pay back the entire $5000.