Legal Question in Employment Law in California

What is the difference between a retention bonus and severance pay?

Asked on 11/14/13, 11:44 am

1 Answer from Attorneys

Timothy McCormick Libris Solutions - Dispute Resolution Services

This is not a legal question and there is no special or specific legal definition of either term, but the answer is that they are not even remotely similar. A retention bonus is a payment in addition to regular salary or other compensation, that is made if an employee stays with a company. There are many different structures, but most commonly it is a one time pay-out if a certain milestone is reached, such as staying with the company for two years. Severance pay is money paid when someone is fired or laid off. The only connection between the two is that severance pay is often but not always calculated based on how long a person worked for the company before being fired or laid off.

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Answered on 11/14/13, 11:55 am

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