Results 1 to 3 of 3

Hybrid View

  1. #1

    Default How to Use Bonuses to Keep an Employee from Resigning

    My question involves labor and employment law for the state of: Hawaii

    Hello, I run a small construction business which consists of 5 employees (bookkeeper, mechanic, foreman and 2 laborers). I work 60+ hours a week estimating projects, project management, sales, and everything in between to keep the business running. I will keep this simple and short...

    My foreman is a very valuable employee who is capable of building my project from start to finish with little or no help from me. In the 10+ years I have been in this business, I have never found anyone as competent and capable as my foreman. I do not have any backup players who can replace him. Finding a replacement would take the remainder of the year to find and train (or may prove to be impossible). We have a good respectful relationship and I desire to retain him until the end of time and help him grow in his career (financially and in his position).

    I currently pay him an hourly wage which comes out to $95,000/yr. In addition, last year I created a bonus incentive program to create the "golden handcuffs." I offered him $500 every 6 months, and this bonus compounds by $500 every 6 months as well. (in year 5 he will make a $5k bonus in June and $5,500 in Dec., etc...) I also provide 6 paid holidays per year. I currently do not offer 401K, paid vacation, or any other incentives.

    My foreman has decided to move to another state in 2 months. Unfortunately, I heard this through another employee rather than himself which now affects my trust with my foreman and his lack of loyalty to me and the operations of the company. I asked him what he needs to stay. He says, he would like a $30k bonus to stay until December and will complete current work and help train new foreman. (or) He wants a 50% increase in pay (up to $150k/yr) to stay indefinitely. He says that his desire to leave is not because of his current pay or position, he says he simply cannot afford Hawaii and cannot buy a home here. He says he needs to make $150k/yr to afford a home here.

    The $30k bonus is affordable and absolutely necessary in order to complete work and train new employee.

    The increase to $150k/yr is about $40k/yr more than the industry standard here in Hawaii for VERY talented and bright individual.

    I have decided that I want to keep my foreman and do whatever it takes to keep him here and employed with me. I'm willing to pay him the $150k/yr, but I'm afraid that he may still have intentions of leaving despite the raise. This would allow him to save up a significant down payment on a home in another state.

    The reason for this post is.. How do I structure his salary so that he is incentivized to stay year after year? What kind of terms are LEGAL to put in an employment contract? Are there any enforceable terms of an employment contract that could persuade my foreman to give me proper notice (6 mos min) before he quits?

    I have considered paying my employee his current salary and paying a $55k annual bonus. This way I have security that he will stay long enough to receive the bonus and hopefully at that time he is incentivized enough to stay another year to receive the next $50k bonus, and so on.. Is there any legal framework that I should be aware of or that could help me structure this deal so that he doesn't leave the company?

    Thanks,

  2. #2
    Join Date
    Sep 2005
    Location
    Behind a Desk
    Posts
    98,846

    Default Re: How to Structure an Employment Contract

    [QUOTE=lookingforanswer!;1069363]The $30k bonus is affordable and absolutely necessary in order to complete work and train new employee.[quote]
    Then agree to pay him the bonus and have him train the employee.
    Quote Quoting lookingforanswer!
    The increase to $150k/yr is about $40k/yr more than the industry standard here in Hawaii for VERY talented and bright individual.
    Then you have the option of making a lower offer and, if he says "no", hiring one of the other bright, talented people to do the job.
    Quote Quoting lookingforanswer!
    I'm willing to pay him the $150k/yr, but I'm afraid that he may still have intentions of leaving despite the raise. This would allow him to save up a significant down payment on a home in another state.
    He has the right to quit.
    Quote Quoting lookingforanswer!
    How do I structure his salary so that he is incentivized to stay year after year? What kind of terms are LEGAL to put in an employment contract? Are there any enforceable terms of an employment contract that could persuade my foreman to give me proper notice (6 mos min) before he quits?
    If he finds the proposal acceptable, you can make his bonuses retention bonuses that are only paid out if he's still employed with you at the date they are scheduled to be paid. But you have to deal with the fact that he could still quit after receiving a bonus.

    You will need to find an arrangement that is acceptable to your employee. You should have your business lawyer draft the contracts and policies.

  3. #3
    Join Date
    Jun 2006
    Location
    Massachusetts
    Posts
    24,521

    Default Re: How to Structure an Employment Contract

    My answer is no different than it was when you first posted. Six months notice is outrageously unreasonable. Before I'd even consider any contract that required me to give six months notice, you'd have to guarantee me a bonus so large that it would pay all my living expenses for that six months all on its own and it would have to locked in so tightly that you couldn't wiggle out of paying it no matter what I did. What's he supposed to do, tell a new employer he can't start for six months? What new employer is going to wait that long? He's a free agent; you don't own him.

    Talk to an attorney in Hawaii but if I were your foreman, I wouldn't be at all interested in continuing to work for someone with such unreasonable expectations.

    1. Sponsored Links
       

Similar Threads

  1. Resignation: Is an Employee Entitled to Commissions After Resigning
    By waarons in forum Employment and Labor
    Replies: 1
    Last Post: 08-12-2015, 11:20 PM
  2. Resignation: How Much Pay Should a Salaried Employee Receive After Resigning
    By Xtina32680 in forum Employment and Labor
    Replies: 1
    Last Post: 12-01-2014, 02:26 PM
  3. Resignation: Not Given Promised Bonuses
    By Lilmissta in forum Employment and Labor
    Replies: 14
    Last Post: 12-30-2013, 09:37 PM
  4. Job Benefits: Employee Bonuses
    By betty2 in forum Employment and Labor
    Replies: 1
    Last Post: 11-24-2008, 02:41 PM
  5. Bankruptcy Issues: Payment of Bonuses To The Trustee
    By M'sta Mikey in forum Bankruptcy Law
    Replies: 6
    Last Post: 06-06-2007, 10:40 AM
 
 
Sponsored Links

Legal Help, Information and Resources