Bonus structures can seem like a great incentive when you’re signing an employment contract. But not all bonuses work the same way, and how your agreement defines them matters.
Employers hold a lot of control over bonus terms, which can change when and how you receive payment.
Types of bonuses in contracts
Bonuses usually fall into two categories: discretionary and non-discretionary. A discretionary bonus depends on the employer’s choice. They might base it on your performance, company profits, or other undefined goals. These bonuses aren’t guaranteed, even with strong performance.
A non-discretionary bonus ties directly to clear goals—like sales numbers or project completion. If your contract includes this type, your employer must pay it when you meet the terms.
Timing and payment issues
Some contracts require you to stay employed until the bonus payout date. That means if you leave the company—even after meeting the bonus goals—you could lose the bonus. Check the language around when you “earn” the bonus versus when they “pay” it. If the contract says you need to stay employed until a future date, leaving before then can cost you the bonus.
Enforceability in Pennsylvania
Pennsylvania courts enforce a bonus clause when the contract uses clear language. Vague promises or casual conversations about bonuses won’t hold up. If the bonus ties to specific performance goals and you meet those goals, you may have a legal claim to the money. But if the employer sets the bonus at their discretion, winning that claim becomes harder.
Why details in writing matter
You should understand how the employment contract describes the bonus. Focus on whether it depends on performance, company results, or management’s decision. Ask questions before you sign, especially about timing and eligibility, so you avoid surprises when payout time comes.
