Sign-On Bonus Sample Clauses

Why do companies offer a sign-on bonus?

A sign-on bonus will be offered to you to create a more attractive package for a candidate. It could help the employer motivate you against other competing offers and make your first year at the company more profitable and competitive to another offer. Below are the main reasons that lead companies to give out sign-on bonuses:

• Skill: People having sought-after skills are more likely to be offered a sign-on bonus. A sign-on bonus provides the employer an added advantage over their competitors.
• Salary compensation: Sometimes the employers may offer you a sign-on bonus as compensation for the salary, as they can offer you the salary you want.
• To kill competition: Companies usually offer you a sign-on bonus depending on your demand in the market. The more in-demand you are, the more likely you are going to be offered a sign-on bonus to win you away from the company's competition.
• To make up for benefits: Consider you are a master at your job and have to leave your old company to join a new one. When you change your company, you might have left behind a potential bonus, and thus your new employer wants to offer you a sign-on bonus to make up for that loss.
• Internal accounting: Employers may offer you a sign-on bonus because they might fail to meet your counter-offer because of their company budget or policy. Companies and employers offer potential candidates a sign-on bonus to maintain salary equity.

How Can You Ask an Employer for a Sign-On Bonus?

If your employer is giving you hints that they want you on board, there is a healthy chance for them to provide you with a sign-on bonus. You should not assume that the amount offered to you is not negotiable and should try to hike up the sign-on bonus. An employer that is resisting increasing your base salary will surely be on board with providing you a sign-on bonus. In fact, they might be happy to provide you one as it makes their job offering more attractive.

Should You Negotiate A Sign-On Bonus?

Yes, it is always preferred to negotiate your sign-on bonus if you would like a higher base salary and would like to enjoy other employee benefits. For example, you can ask your employer to pay you a smaller sign-on bonus that would make you eligible for a higher overall salary as opposed to a higher sign-on bonus and smaller base salary. You can also negotiate to have a smaller sign-on bonus in exchange for other employee benefits you would like to have.

You need to do your research before negotiating your sign-on bonus deals with your employer. Some companies and employers might be flexible, whereas some employers may not afford to offer such high base salaries to their new employers due to company policy.

You can negotiate a higher sign-on bonus with your employer if they can not afford to offer you the base salary you would like or might not offer you with other employee benefits. To be negotiating your sign-on bonus, you should first be confident about your value and worth as a professional individual. It is also important for you to know the average salaries for your work and profession before you start negotiating with your employer.

How can you negotiate a sign-on bonus?

Having negotiating skills is extremely important for any job seeker. A few things that you as an employee should keep in mind before you start your negotiation are listed below:

• Knowing your worth: The first and foremost thing while negotiating a sign-on bonus is to know how valuable you are in the market. You should have the skills which are in demand in the market and make your potential employer have interest in you.
• Give solid reasons: You should back yourself and make a strong case for yourself. Give your potential employer solid reasons why they should give you that sign-on bonus. It could be that you have to travel more than other employees or because you have more experience as a professional. A good solid reason will help you get that bonus you are looking for.
• Look beyond the number offered: Do not get carried away with what the employer is offering you, but see if the sign-on bonus is worth it in the long run. The employer may give you a great offer for a sign-on bonus, but once it is paid out, you should make sure that your salary is suitable too.
• Read your job contract: You should make sure that you know exactly what the employer is looking for before you accept that sign-on bonus. You should thoroughly read your job contract and make sure you understand all the terms before accepting the bonus.
• Scrutinize your starting salary: Look at what your employer has to offer you. If you are not completely satisfied with your base salary or if the employer is not willing to go higher, then it's time for you to negotiate a sign-on bonus.

Aside from the sign-on bonus, if you need to negotiate your job offer or salary package, this article will be helpful for you.

Pros and Cons of A Sign-On Bonus

Getting a sign-on bonus to join a new job could seem fancy, but it has a catch to it as well. It is not bad to sign off on a sign-on bonus, but you should be well known of the pros and cons that come along with a sign-on bonus.

Pros:

• Rapid Money: If you want to get some extra money real quick, then a sign-on bonus is the best deal for you. Especially if you have to move to a new city for this job, the sign-on bonus can help you bear those new expenses.
• Additional Compensation: If you are offered a sign-on bonus with a decent salary, then the additional compensation is a benefit.
• Future Negotiation: After placing your hands on a sign-on bonus, you can use it for future negotiating tactics with either your present or future employer.

Cons:

• Bonds: Most sign-on bonuses come with the condition that you have to work for the company for a certain amount of time. If you decide to leave the company before the bond expires, you will have to repay the sign-on bonus.
• Long Term Cost: An employer may use a sign-on bonus to get you hired on a lower salary. If you work for the respective employer for a certain amount of years, then the money you gained from the bonus will be less than the money you would have made with a higher salary.
• Taxes: An unexpected increase in income comes with an increase in taxes. In some cases, the employer will offer you the taxes of the sign-on bonus, but if that is not the case, then you must factor this in your final negotiating price.

This article further dives into the pros and cons of a sign-on bonus.

A sign-on bonus can help you kick start your role advantageously when you are starting a new job. It is a great incentive for you to take up the job and join your new employer. Usually, a sign-on bonus will be offered to you during the interview by the employer. It can be regarded as a percentage of your base salary.