Should Retention Bonus Be Prorated And Paid In Case Of Involuntary Termination?

Hello Seniors,
Have a situation where I could use your inputs and experience.
Recently, my company terminated an employee due to business reasons. He was eligible for a retention bonus at the end of the year, however he was not able to complete the period of year. Now he is demanding that we pay him the retention bonus prorated for the period he has served albeit less than a year, as it was the company that initiated the separation.
I believe he is not eligible for the prorated retention bonus as he has not completed the one year period which is a prerequisite for the entitlement.
Can some of you please share your views on this?

Hi Mariam,

i assume the following:

(1) I think the word "prerequiste" itself solves the case here. Moreso, if the same requirement is clearly drafted in either ee service rule or the HR manual. No question of prorata.

(2) many companies do not pre-define the same requirement in manuals but rather prefer to deal on situation to situation basis. i.e. mgmt decides on similar case keeping in mind issues such as but not limited to: type of employee, performance and attitude, amount of retention bonus, reason of termination (i think if you elaborate a bit more on the business reasons you have mentioned, it will bring a different insight to this case). But, then this approach should generally not be implemented as it discourages standards and "one rule for all" concept.

To conclude: on a very simple and staright forward thought, retention bonus is a consequence of having stayed in a company for a pre-defined time period. If an ee leaves before that, s/he should not be eligible for it. To make your case stronger, it is always advisable to have your retention bonus and eligibility criterias clearly pre-defined.

Thanks

Thank you for your reply.
We have very clear and precise verbiage in our Appt. Letter as well as Employee Handbook, never the less, I felt the need to get an expert opinion on this matter.
The argument the employee put forth was that since the retention bonus is a fixed component, it should be prorated for the period he has completed. But since he didnt qualify the condition, we have denied the prorated RB to him.
Kind Regards,
Mariam