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Hello Everyone, I have a query related to Retention Bonus.
1. Is it a part of fixed CTC?
2. If yes, can a company recover Retention Bonus during F&F once paid, if an employee leaves the company before completing 1 year and as per company policy, the company can do so.
3. If no, how a company should pay a Retention Bonus?

From India, New Delhi
Dinesh Divekar

Dear Priyanshi,

Your company wishes to pay some amount of money to the employee. In lieu of the disbursement of this amount, which you are referring to as "retention bonus", the employee should serve 'X' number of years in the company. If he fails to serve, then you wish to recover some amount from his FnF.

Rather than treading on the boggy terrain, I have two suggestions. First, rather than paying the "retention bonus", you may pay him a "stay bonus". If the employee serves for 'X' number of years and also delivers a desired level of performance, then commit to the payment of a certain amount. He becomes eligible to get this stay bonus provided he does not quit the company.

The second option is to increase the employee's monthly salary. Nevertheless, neither there will be a commitment to serve nor there will be a recovery.

However, I would like to add a caveat. Whatever option you choose, there is a risk of making the company pecuniary-centric. Employees should stay in the company because they feel that there is a culture of autonomy or empowerment in your company or they feel that their self-actualisation need is fulfilled by staying in the company. If you start paying a bonus for their stay, it is nothing but a trade-off. Please ponder over the unhealthy consequence of the culture of quid pro quo.


Dinesh Divekar

From India, Bangalore

Retention Bonus is usually paid after a certain period of retention ( end of 1 yr, 3 yrs, 5 yrs etc.) in the organization. To my opinion it should be part of CTC but to be paid only after fulfilling the conditions i.e end of 1 yr, 2 yrs, 3 yrs etc.

It is better to keep the time period maximum 1 yr or 2 yrs. Not to be paid before the retention period is over.

S K Bandyopadhyay ( WB, Howrah)
CEO USD HR Solutions

From India, New Delhi
Nagarkar Vinayak L

Dear madam,

If you share terms and conditions governing the Retention Bonus, it would facilitate giving a useful reply.
Otherwise, it would be taking a shot in the dark.


Vinayak Nagarkar
HR and Employee Relations Consultant

From India, Mumbai
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