Employee retention plays a vital role in every company. When a company is going through a tough time in business, it offers financial incentives to senior executives and key employees to convince them to stay with the company until it is stable. The financial incentive is called a retention bonus. However, it is crucial to write an agreement to document everything. But writing contracts for employee retention is not easy. Luckily, we have shared our downloadable employee retention agreement templates. Use them to get started. Keep scrolling to see more.
FREE 4+ Employee Retention Agreement Samples
1. Employee Retention Agreement Template
2. Employee Retention Bonus Agreement Template
3. Retention Incentive Service Agreement
4. Sample Retention Agreement
5. Employee Attraction and Retention Policy
What Is Employee Retention Agreement?
An employee retention agreement is a document that outlines the agreement between the employee and the company that the employee will remain working at the company and get a retention bonus. If a company wants an employee to stay in their business and not leave during a corporate transition or merger, the employee may sign an employee retention agreement. This contract sets out the terms and conditions for the employee to stay with the company for a while. The contract should state the exact amount of the employee retention bonus and the effective date on which the employee is eligible to claim it. It will also cover the terms of termination for the employee and how to handle the bonus when termination occurs.
How to Write an Employee Retention Agreement?
There are many reasons why companies use employee retention agreements and the bonus itself. The main reason is to keep an employee working in your company. It is better to keep talented employees that you can trust than hiring new ones, which are very hassle and time-consuming. Another reason is that your employees will continue to perform and do their best if they receive attention and bonuses that motivate them. However, writing a retention agreement is not as easy as you think. Here are some tips that can help you get started:
1. The Introduction
Like any other agreement, a retention agreement should also start with the details of both parties. However, when you’re writing a retention agreement, you first need to understand how you want a bonus to work. Usually, companies figure out how much they can offer based on the standard salary percentage. You must also fully understand the financial side of the bonus before presenting it to your staff members. Also, you have to make sure that the company is willing to spend on the retention agreement. It is also a good idea to write a letter to inform your employee that they’re eligible to receive the bonus.
2. Establish the Important Details
The next part of the agreement discusses details like how the employee’s role in the newly formed organization will change, the termination, and how much they’ll get if they stay long enough. There so many details that you need to cover. That is why it is best to work closely with your senior management team, executives, and legal counsel to guarantee everything you offer in this document was agreed upon before you send it out. Also, you need to include details such as the employee’s position, salary, department, supervisor, termination of the agreement, the amount of the bonus, and the date it will disseminate. It is to make sure that both parties fully understand what the contract is all about. The very last thing you want is to either have an employee confused and unwilling to accept the offer or have countless employees come up with simple questions that you might have answered in an email or an agreement.
Many intricate points need to pay attention to when the employee is either terminated or quit during the retention agreement period. One way to handle this situation, employers often pay their terminated employees based on how long they have worked under the agreement period. You need to specify how terminations will work in your agreement. Also, you need to spell out how the bonus will work if the person quits. Most of all, ensure your legal team reads this policy to ensure that you comply with all local, state, and federal legislation.
What is a retention bonus?
A retention bonus is an identified payment or reward outside the regular salary of an employee offered as an incentive to keep a key employee on the job during a particularly crucial business cycle, such as a merger or acquisition, or during the critical production cycle. Such a payment, which keep an employee from leaving their position, is usually a one-time payment.
Why is the retention of employees important?
Employee retention is very crucial in many companies. Having such a high retention rate helps the companies keep staff members work for them in the long-term. It can also reduce the time and resources needed to train new staff and build loyalty to run a business. Consider the amount of time, resources, and money spent on training a new employee.
What is a retention strategy?
A retention strategy is a method used by many companies to retain their key employees working in their company for a while. Its main objective is to meet employees’ expectations without losing the company’s goal and objectives to ensure a return of investment.
How much is a typical retention bonus deal?
The usual retention bonus amount is 10-25% of the employee’s basic salary. The percentage of the basic salary offered is determined by any number of factors, from the competitor’s income to the amount of compensation available to the company.
In the end, both you and the employees you are trying to retain should benefit from your retention bonus agreement. By providing a bonus, you can get your best employee stay and help you meet your business goals after a merger or acquisition. At the same time, you reward the dedication of your employees. This agreement needs to be sound and easy to understand. So it is best to talk to your legal team before offering and providing it to your employees. The next time you will write an agreement for employee retention, you can use our downloadable employee retention agreement templates. They’re a great help for you. Download it now!
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