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I approached HR for a raise at my current company. I enjoy working with my team and doing things, but I'm feeling a bit underpaid with respect to my duties and the current market value.

HR offered me two possibilities:

  • Raising yearly income to $X; no caveats, but below the average market value.
  • Raising yearly income to $X and agreeing on staying at the company for a fixed N number of years, in exchange of $Y yearly raises for each of the N years. If you leave before N years from the agreement, you have to give back all of the $Y raises. Let's say $Y is currently 10% of the $X offered and income would match market value.

Just to give some random numbers in 3 years. Base salary is 100k, increase is 20k for each year, you get 120k for the first year, 140k for the second year, 160k for the third year. If you leave before these three years, you have to give back all of the 20k raises.

Personally I don't like this option. I think that giving back raises when leaving is absolutely not fair. One should be free to leave for any reason, including but not limited to money. For this reason, I'm about to refuse this kind of raise formula and trying to negotiate on a higher conventional raise.

It would be great to continue in my current company, but I'm concerned by the fact that refusing to make this mid-term commit would kill my career path here, which is important to me in order to stay. Is this a fair concern? Is there actually a point in further negotiating after refusing this raise formula or should I start looking elsewhere?

As a side note, my current contract says I can leave at any time without any sort of constraint.

Edit: Answering to some of the comments.

This is based in EU (Italy). At least here, clauses like these lie outside the scope of the work contract and must be signed in some kind of written agreement by both parties.

To some asking for giving back money including taxes: raises are given including taxes, so they expect to be given back them, so yes, I should give back the raises including taxes. I'm not sure about the implications on my yearly income, though.

I'll definitely talk to a lawyer, should I consider this offer. I was quite reluctant at first, but at this stage, accepting it seems just not worth it, and reading all your thoughts have been helping clearing my mind.

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    Honestly, you need to work this stuff out for yourself. Only you can decide based on your personal circumstances which option is right for you. Mar 13 at 12:00
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    It's unlikely anybody here can tell you what you should do, but I want to point out, it's not very unusual to have part of numeration tied to some conditions. Though I would call it a retention bonus. Mar 13 at 12:04
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    A company that is underpaying you now will continue to do so in the future. Why is it important to you that you continue your career here instead of with someone that will pay you fairly for your talent?
    – Seth R
    Mar 13 at 15:15
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    @BittermanAndy Rather trivially. If you agree to a contract, your obligations don't magically disappear when the relationship does. At the end of the day, the company could actually sell the debt to debt collectors to recover as much money as they can. Mar 14 at 4:44
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    @BittermanAndy You can, and people do, put all kinds of things in contracts. Retention bonuses are not that exotic. You can read more about them here: maillylaw.com/payback-of-retention-bonuses Mar 14 at 8:01

5 Answers 5

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This deal feels like a trap. I wouldn't take it in any circumstances without consulting an employment attorney, and would strongly advise against doing so even afterwards.

What I fear will happen is that they'll abuse the threat of up to a $100k penalty for quitting to pile massive amounts of work on you, and then let you go just before the 3 years are up and demand all the money back anyway.

One of the main reasons I strongly recommend having a lawyer in the loop before agreeing is to try and cut down on the number of reasons they could decide to terminate you and demand the money back. But while you may be able to negotiate away being penalized if let go because the company needs to cut costs or because your department/etc is reorganized out of existence, and possibly even due to claims of 'poor performance'; there's essentially no chance they'd agree to let you keep the money if you were fired for cause.

And this offer is predatory enough I fear that they'd end up spending the 3rd year manufacturing a totally BS policy/etc violation that they could use to justify terminating you and demanding all the money back.

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  • If they make the raises repayable on firing/redundancy (as opposed to leaving by choice), that's a terrible deal. Even if not, probably very wise not to spend much of the increase until you've passed the point when it's not refundable. Mar 13 at 21:12
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    @JuliaHayward I think it's a terrible deal under any circumstances, and fear that a company willing to propose it is going to make it worse under every way they can get away with. Mar 13 at 21:18
  • @JuliaHayward just for clarification, this is applicable only on leaving by choice. And yes, that doesn't make it a better deal.
    – Marco
    Mar 14 at 21:47
  • Well if you don't care that much about your reputation, it can be a great deal, if you only have to pay the money back when you quit yourself. If you would want to quit, just stop doing any useful work. Either they fire you and you get what you want, or you just sit around the rest of the contract period doing nothing. But of course this depends on the exact wording of the contact and if you are the person able to just stop working and tell them to fire you.
    – Josef
    Mar 15 at 15:44
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I'm concerned by the fact that refusing to make this mid-term commit would kill my career path here,

By presenting you this offer HR appears to be playing a game. Refusing the offer starts you on the road to leaving. Plus refusing the offer tells them you are on the road to leaving.

Accepting the offer means you have to set aside all your extra money just in case you leave before the time is up. It also means you are vulnerable to being made redundant since letting you go early gets them cash back. Though they have to be careful not to leave a paper trail that makes that plan obvious.

One option is to slow roll the acceptance by asking more questions and asking for the new contract language. Meanwhile start looking outside the company for a new job.

If you do decide to stay and accept the offer, then watch the tax issues. Paying back the whole amount without accounting for taxes would be bad.

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  • Thanks for your reply! Next week I'll dig further in the details, including the tax issue. You're absolutely right when saying to put aside the extra money. Basically it would mean, better not to spend the extra money until the agreement finishes. From this point of view, it's better to look elsewhere to get that amount of money (if not more) without worrying about spending them.
    – Marco
    Mar 13 at 18:40
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    Does any company on earth have a contract that says if you get fired you must return earned wages? If that was a thing wouldn’t it have become the norm to hire people then fire them and get your money back? I don’t understand the fear in all the answers that the company or OP would offer/sign such a contract. Mar 14 at 6:54
  • If they won't/can't fire you they might be able to make working there so painful that you quit. Tell you your position is ending but they have a position on another project an hour away, or on night shift, or programming using a language you never heard of. Mar 14 at 10:38
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If you want to to be paid a market value salary, the easiest way is to enter the market. You've already mentioned they offered a below-market increase or market value with caveats — a new role will not have these.

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Is there actually a point in further negotiating after refusing this raise formula or should I start looking elsewhere?

Start looking elsewhere.

The offers you have been presented prove that the company is perfectly capable of paying you market share. If they value the work that you are doing then they would pay you market share with no strings attached. Obviously they are not going to do this so your best bet is to find a company that can pay you what you are worth.

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With your numbers, think what (might) happen if after 2 1/2 years the company finds it doesn't need your services anymore. Instead of giving you notice and saying "goodbye and we wish you all success in the future", they now have any reason to make life as unbearable as possible for you so that you quit. That's not a good situation. With your numbers, they would get $80,000 of your money if they make you quit. I don't like that at all.

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