You will be able to tell a guaranteed bonus from a discretionary one and spot conditions that could cost you money.
Kai Wen's offer letter mentioned three kinds of extra money. A thirteenth-month payment. A "performance bonus of up to two months' salary". And a S$10,000 sign-on bonus, paid with his first salary. The recruiter called it a package worth well over S$90,000 a year. When Kai Wen read the clauses behind each one, he found that only part of that money was certain, and part of it he might have to pay back.
Bonus clauses are where the gap between what you're told and what you're owed is widest. This lesson shows you how to tell the two apart, and how to spot the conditions that could cost you.
The first question for any bonus is whether it's contractual or discretionary.
A contractual bonus is one the contract promises, on stated terms. A fixed thirteenth-month payment, often called the annual wage supplement, is the usual example: if the contract says you get one month's salary in December, and you meet the conditions, it's owed to you like salary.
A discretionary bonus is one the company may pay, but doesn't have to. The wording gives it away: "may be paid", "at the company's discretion", "subject to company and individual performance", "up to". A clause that says "a performance bonus of up to two months' salary" promises nothing. Zero is also up to two months.
Kai Wen's thirteenth month was contractual. His performance bonus was discretionary. So the certain part of his package was thirteen months of salary. The rest depended on decisions he didn't control.
That doesn't make a discretionary bonus worthless, and it may well be paid every year. It does mean you shouldn't count on it when you plan, borrow or compare offers. Compare offers on what's contractual, then look at the discretionary part separately.
Even a contractual bonus usually comes with conditions. The most common is that you must still be employed on the payment date. Many clauses also say you must not be serving notice on that date, whether you resigned or were let go.
That second condition matters for timing. If the bonus is paid in March and you resign in February with a month's notice, you'll be serving notice on the payment date and may lose it entirely. Someone who waits until after the bonus is paid, then resigns, keeps it. The difference can be a month's salary or more.
Read the clause for the exact wording. Some contracts pro-rate a contractual bonus for part of a year, for example in your first year. Others pay nothing unless you've completed the full year.
A sign-on bonus is paid when you join, but it often isn't fully yours yet. Many come with a clawback clause: if you leave within a set period, you must repay all or part of it. Sponsored training, courses and certifications that the employer pays for often come with similar clauses, sometimes called training bonds.
The clause should say how long the clawback lasts, whether you repay all of it or a share that shrinks over time, and whether it applies if the company ends your employment as well as if you resign.
Kai Wen's sign-on clause said that if he left within 24 months, he'd repay the S$10,000 pro rata for the months remaining. Here's what that means with his figures. If he left after 15 months, 9 of the 24 months would remain, so he'd repay S$10,000 times 9 divided by 24, which is S$3,750. If he left after 6 months, he'd repay S$7,500. If the clause had said "in full" instead of "pro rata", leaving at month 23 would have cost him the whole S$10,000.
He asked one question about this clause: whether the clawback applied if the company let him go. The recruiter confirmed in writing that it applied only if he resigned.
Bonus clauses often use words that sound specific and aren't. "Performance-based" doesn't say whose performance, measured how. "At the company's discretion" doesn't say what the discretion depends on. "Eligible for" doesn't mean entitled to. "Target bonus" doesn't mean expected bonus.
You won't turn a discretionary bonus into a guaranteed one by asking. But you can ask how it's decided, when it's paid, whether it's pro-rated in your first year, and what the conditions on the payment date are. Ask for the answers in writing, by email if not in the contract, so they're on record. Ask before you sign, because once you have, you have much less room to negotiate.
Kai Wen's list ended up short and much clearer than the recruiter's summary. Thirteenth month: contractual, paid in December, pro-rated in his first year, conditional on being employed and not serving notice. Performance bonus: discretionary, up to two months. Sign-on bonus: S$10,000, clawed back pro rata over 24 months if he resigned.
His package was still a good offer. He now knew which parts he could plan on, and what leaving at any point would cost him. Have your own contract or offer letter beside you, and look for every clause that mentions a payment beyond basic salary.
List every bonus or incentive in your contract and mark each as contractual or discretionary, with any clawback period.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).