What Do You Think?

I think a lot of the answers depend on the nature of the agreement (and the jurisdiction they were made in) and how different the job turned out to be from what was promised.

Whether he can be made to repay the money is a legal question, does the agreement made state that he can be so compelled, is there a get out clause he could reasonably use, is there a legal precedent or statute he could reasonably use and would a court uphold it? The agreement itself may be unlawful, unenforcable in law or even illegal (I've seen a few 'Golden Handcuffs' deals such as this overturned because they were deemed incompatible with employment law and in one case laws around the abolition of slavery, that was an extreme case though). It might be that by varying his job from the one promised the employer have invalidated the agreement, the agreement related to the job offered but they have sufficiently changed the job as to make it a different job.

As for how much he should repay, he should repay as much as he received. If he is able to reclaim the sum held back for tax as a tax rebate then he should repay it but I think it would be quite reasonable for the employer to have to wait until he had received the rebate.

Getting fired is not a good idea. Even if the employer you are going to knows the situation and knows that you engineered the firing to go to them there's always a chance that your next employer might want to go back to that employer for a reference or may just know someone from that company who might tell them you were fired. Whether in that situation he would still have to pay would depend on the agreement, see second paragraph above.

As for what I'd do... By the time I got to be looking for another job I would have made my new management aware of my concerns about the differences between the job offered and the one I found on arrival (this isn't hypothetical, it happened to me once, but without the 'Golden Handcuffs'). Any job is going to be a little different to what you thought you were getting, recruiters play the game as much as recruitees if not more and will play up the positives whilst hiding the negatives as much as they can and things change over time. The job you start on day one should, however, be very close to the job you were offered and accepted (I don't know about anywhere else but here in the UK job descriptions frequently form part of the contract of employment so a change to the duties is a contractual change).

By the time we got to this stage, where I was actually leaving, I would expect to have had several meetings with my managmement to outline my concerns and try to find a mutually satisfactory outcome, I would have taken legal advice on the agreement (indeed, before I signed any agreement like that I would have had a lawyer go over it to chack that I wouldn't be laying myself open to anything unpleasent) and have at least attempted to negotiate about the bonus. They would know whether I intended to repay it or any part of it, how I had reached that decision and why I felt that was a reasonable and legally defensible decision.

I cannot wait to hear your response. If all goes well I am about to live this scenario in just a couple of weeks. I accepted a bonus from my current employer not to offset lost bonuses from my previous employer but as a way to defray relo costs and temporary living expenses. The company did not specifically pay for relo as a policy so the bonus was meant not as additional personal income.

I never gave a thought to not repaying the bonus but like the others who responded here, I will include the amount owed in the negotiation process with the new company. But since the signed agreement stated the bonus amount at a particular dollar amount "to be grossed up for taxes," I don't feel it would be expected to pay more than the amount promised. If I were to pay back the entire amount, I would be taxed on income for the year that I did not receive.

I do not feel financially obligated to the current company because of the bonus payment but I do feel obligated to do what is right by repaying if I choose to leave.

Gotta gotta gotta do the ethical thing - he should try to negotiate his release from the company; either offer to pay the full amount back or maybe try for a pro-rata repayment. But avoid getting the lawyers involved if at all possible - everyone loses when that happens (except perhaps the lawyers of course).

Maybe if the new company wants him badly enough he could get them to help pay the current company his dues. I certainly agree that there's probably fault on both sides and a negotiated solution is the only way.

Perhaps something to keep in mind is Covey's assertion that here's (nearly) always a third alternative - but sometimes it takes a while and lots of talking to find it. Taking any course that doesn't leave the relationship intact (like taking it to court or getting them to fire him) will only result in something other than a win-win.

Open, frank negotiation is my answer.

The question was what would *I* do, so I'll refrain from hypothesising about how someone else might extract themselves from this difficult and in my view avoidable situation.

My solution would be to not accept any bonus before I earned it. If I left the previous company before the bonus payment was due, then I would be doing so in full knowledge of this fact. Yes, I might want to use the likely loss of a bonus as a negotiation point, when discussing the remuneration package with the hiring company, but I wouldn’t accept a package that put me in a position of financial dependency (above and beyond the norm of course).

To be honest, I would consider it to be poor practice for the hiring company to want to put me in such a dependent situation. If I wasn't happy in my role, then it is likely that I would be less motivated and less effective than had the position been a barn-stormer. By putting me in such a position, the company would effectively be encouraging an unhappy staff member to remain. How would that help their business? It doesn’t sound like the best place to work.

Happened at my last place (I was the hiring manager). I expected him to make the offer to repay the entire amount, taxes, too. We did not make him repay any of it, but chalked it up to learning experience for us on hiring practices. Had he not have offered, then we would have perhap asked for it back. Since he did the right thing and offered, we wrote it off.

THis goes down in my "do the right thing" catagory. If I try to live up to the legal letter, then I find others more willing to bend in my direction. I seem to always get into trouble if I push the limit in my favor.

I think employers (at least I did) realize it is a two way steet when a hiring situation isn't what we think it will be. Mistakes are obviously made on both sides, but I don't want a person hanging around any longer than I have to if they are going to be looking to get out anyway. Had it been a 6 figure bonus, I perhaps would think otherwise. Good will can be purchased easily this way. You know that ex-employee isn't going to bad mouth the company if we don't make him repay, even if we could legally do it.

1. Can his present company make him repay the bonus?

Maybe. Probably not directly because the present company cannot force him to open his checkbook and sign over some dollars. The present company would have to go through legal channels, or other established business channels such as arbitration or withholding payroll or other compensation due.

2. Would he have to pay the full amount, or just the part he received?

If the withheld amount was deposited to the tax authorities under his SSN, then he owes the part he received directly plus the part that was deposited to the tax authorities.

3. What if he found a way to make them fire him - would he still have to pay?

He is taking absolutely the wrong approach. "Finding a way to get fired" is simply unethical and will cost him way more that the 5 figure bonus in the long run.

4. What would you do?

Clearly when considering the new opportunity, I would weigh the new opportunity versus the current situation. If the pros and cons of the new situation were more favorable than the current situation, I would change jobs. Note that one of the factors to consider when changing jobs is that you will have to pay back the present company for the bonus that was given. So the new opportunity must compensate for that potential loss. One way I've seen this approached is to negotiate with the new company and indicate that you have an agreement with the old company and will lose this amount when you change jobs. That way the new company will have the opportunity to step up and cover that loss as part of the cost of bringing him onboard. If they don't step up, add this to your list of pros and cons in the appropriate area.

1. As you described it - his present company has a valid claim to recover the bonus because the conditions were explicitly stated in the contract. He agreed to it - legally, it seems pretty well tied up unless there is some kind of exclusion. Losing or repaying a bonus to a previous company is exactly the situation that this bonus was intended to cover.

2. He should only repay the portion that he received. It should be possible for the company to treat this as a return of overpaid salary (bonus), which results in an overpaid tax asset for the company. The company will recover the overpayment by withholding a little from their next tax payment. If the executive were forced to repay the entire amount, it could potentially result in the company receiving the tax repaid twice.

3. The company would lose their claim if the executive were force to leave involuntarily. It creates a pretty perverse reverse incentive situation - the employee is treated better if they act worse. This probably should have been considered before the contract was offered. There is a strong question of ethics involved here that should prevent the executive from even attempting it.

4. I would repay what I received, subject to personal cash flow requirements. It was agreed to and it is fair. My overriding goal would be to to exit the company gracefully. Mistakes were made during the hiring process, but I presume the mistakes were made by both parties. I would be very pleased if the company offered to let the repayment go, but I would not expect it.

A bad situation, all around. There's probably a legal answer, but attorneys always muck up handshake agreements.... so here's my take.

I feel for the guy, as the job isn't what he signed on for, but he's more at fault.
1 -- There's no indication he has worked the problem;
2 -- Things change. I don't think the company acted in bad faith -- I've seen folks hired in the midst of organic changes, and everyone makes do. Everyone feels bad about it, but those are the breaks; and good managers are expected to move around. He could spin (I know it's a bad word with negative connotations) this to his superiors as a way to tell them, I can do this job, as well.
3 -- He should leave and the company should let him go. There's no trust left between them.
4 -- I wouldn't ask him to repay it, but I'd sure expect him to volunteer to repay part of it.
5 -- There's a chance he may run into the old "you'll never work in this town again" syndrome.

Walt

Not having been in such situation, I will take a shot at making some guesses.

1. Can his present company make him repay the bonus?

I think the company can legally make a claim, but I also think it will largely depend on whether the company wants to enforce the collection or not. If the candidate strongly believes his job was substantially different from what he was led to accept and can provide acceptable evidence, he would have built a good case for himself. Either way, I think it will come down to both side doing nothing, settling in private, or settling in litigation as the worst case.

2. Would he have to pay the full amount, or just the part he received?

If the candidate lost the case in court, more than likely he will have to pay the entire amount. I don’t believe the government is going to cough up the tax withheld portion, but is there some sort of deduction the candidate can make later on when filing the tax return?

3. What if he found a way to make them fire him - would he still have to pay?

Technically, I guess getting fired is one way to get out of this because I was assuming the bonus clause stipulates that the candidate will have to pay it back if the candidate decided to initiate the separation from employment. I personally would not think the bonus is worth tarnishing one’s own reputation and work performance. Money can be made back quickly some day, but a wrecked reputation can take a long time to repair.

4. What would you do?

Personally, I would tackle the problem head-on by working with the present employer to find a mutually amiable way to stay on or to separate. If there is indeed nothing left in the present employer and it is time to go separate way, I would consult with an attorney on the best way to settle the bonus issue, if necessary. I would like to think that, by showing willingness to work out the problem in good faith, the bonus issue will be a little or non-issue for both parties. If it comes down to the worst scenario, I will either pay just to move on or settle it with the legal help, depending on the costs I will have to incur one way or the other.