Key Employee Retention Letter

A confidential letter from the employer offering a key employee a retention bonus if they stay through a sale and for an agreed period afterwards. It sets out the amount, when it is paid, what happens if they leave, when it must be repaid and the strict confidentiality the employee must keep about the deal.

• When a buyer has identified key people it needs to stay
• Usually once heads of terms are signed and the employee must be told about the sale
• Can also be used without a sale, by deleting the transaction conditions

• Agree the cost and who bears it with the buyer before sending (it is often built into the price)
• Choose the payment structure in clause 4 and the leaver treatment in clause 5
• Decide whether clawback in clause 6 is appropriate
• Send two copies; the employee signs and returns the acceptance form