Retention Bonus
Retention Bonus
A Retention Bonus is an additional payment or monetary compensation beyond an employee's normal wages, given as an incentive to keep significant employees at the organization for a certain period. It is usually employed for keeping employees during pivotal projects, company changes, or times when their experience is needed most.
Frappe HR enables you to set up and control Retention Bonuses for workers within a specified time frame. When set up, the platform will automatically create an Additional Salary entry with Payroll linkage so that the bonus gets paid correctly during salary processing.
1. Pre-requisites
Prior to creating a Retention Bonus, it is recommended to create or have the following in place:
- Employee:
The employee should already be set up in the system with all the required information like Company, Branch, Department, and Date of Joining.
- Salary Component:
Define or find a particular Salary Component (e.g., "Retention Bonus") which will be used to classify this payment.
The Salary Component should be of type Earning.
It should be flagged as Allow on Additional Salary so that it will be included during payroll processing.
Set the component to taxable or non-taxable based on company policy.
2. Creating a Retention Bonus
Navigate to Retention Bonus list and click New.
Choose the Employee for whom the bonus is to be awarded.
Select the Bonus Payment Date — the date the bonus should be paid or regarded as due.
Input the Bonus Amount that the employee is to be paid.
Choose the Salary Component on which you wish to pay the bonus.
(Optional) Enter any comments or reason for retention payment, e.g., project name, contract date, or performance remark.
Save the record.
After reviewing, Submit the document.
Upon submission, an Additional Salary document is automatically generated for the given Salary Component and employee. This will be retrieved automatically when a Payroll Entry for the payment period is generated