Negotiating Pay: Should I Include a One-Time Retention Bonus in My CTC for a New Job?

Hi, I have a CTC of 5L, and the employer is paying a retention bonus of 77k, which is not included as a part of CTC. They have mentioned that it's a one-time payment. Can I include this retention bonus amount in my CTC for my next company to negotiate better pay?

In my opinion, CTC refers to the recurring annual costs, including actuarial costs of employment, incurred by an employer towards an employee.

Retention Bonus

Retention bonus, being one of the methods to ensure the continuous service of an employee to the organization, is not necessary for an employer to adopt as a regular feature of employment. It can also be ensured by means of a bond to serve a minimum period in the organization or initial engagement on a fixed-term basis to be followed by regular absorption. If it is a deliberate attempt to enhance your compensation package under a prospective employer, well, there is no guarantee that he would consider the retention bonus paid by the previous employer as an integral part of your employability.

Therefore, my personal view is that the inclusion of the one-time retention bonus into his CTC by the poster may not have a tangible impact on salary negotiation elsewhere as he expects.

Retention bonuses and their schemes

Retention bonuses have several schemes. They may be paid at the end of the year, at the end of 3, or 5 continuous years of service, etc.

If the bonus is paid at the end of each year, it may be considered as part of the CTC (yearly). In other cases, it may not be.

Retention Bonus and CTC Consideration

Actually, they had mentioned that my retention bonus would be around 1.5k over the period of two years (from Jan 2019 to Dec 2020) and that it would be provided in quarterly installments.

So now, I received an offer from another company. There, the company HR said that your retention bonus was not included in the CTC, and they clearly mentioned that this bonus would be applicable only until Dec 2020.

So now, my question is, will they consider my retention bonus (77k, half of the amount) as part of the CTC?

It transpires that there will be a quarterly payout of the incentive amounting to 75k at the end of the year. This earning may be considered as part of CTC (Cost to Company) while negotiating remuneration with a new organization. Whether this component will be included in CTC is determined by the organization's policy. However, in my opinion, it should be a part of CTC.

Thank you.

Understanding CTC and Retention Bonuses

Anything that is paid to you by the employer to retain your service is called CTC. Your company does not show this as a part of CTC. This is kept away from the claim of the employee since it is not documented if the employer did not pay.

Do not misinterpret that your employer is doing charity by paying 77K at 6.5K per month at the end of the year. This amount is yours and is very much a part of the CTC.