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Retention Agreement Review: Key Terms, Tips, Legal Help

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Quick Facts — Retention Agreement Lawyers

What is a Retention Agreement Review?

A retention agreement is a contract between an employer and employee. It offers the employee compensation for staying longer at the company. It’s common to use a retention agreement during a company’s transitional period, such as if they’re merging with another business.

If you’ve had a retention agreement drafted, you’ll want to review it carefully to ensure it’s clear and reasonable to both parties.

Read the rest of this article to explore what key terms you should review in a retention agreement, tips for reviewing it, and why you should hire a lawyer for help with the process.

What Key Terms Should Be in a Retention Agreement?

A retention agreement usually contains the following terms for clarity between parties.

  • Period. The retention period, such as six or 12 months, must be clearly defined so that there’s no confusion about when the retention period comes to an end.
  • Payout. The bonus provided to the employee might be paid in one lump sum, installments, or at the end of the retention period. This must be clearly stated.
  • Clawback provisions. There might be times when the bonus needs to be repaid, such as if the employee terminates the agreement before its end date.
  • Duties. The agreement must specify the employee’s required job role and duties. If these are going to be changed during the retention period, these changes must be listed.
  • Taxes. Since the bonus can be considered supplemental income, there should be clarity about how it will be subject to taxes.
  • Dispute resolution. The agreement should explain what happens if parties disagree. There should be a dispute-resolution method included, such as arbitration or mediation, to resolve conflicts quickly.

What are Tips for Reviewing a Retention Agreement?

When reviewing your retention agreement prior to signing it, you should look for the above-mentioned key terms and then consider other important tips to protect your interests.

Consider the Offer

As an employee, you should review the offer mentioned in the retention agreement. This bonus amount must be strong enough to persuade you to remain with the company. Compare it to offers you’ve received in other job roles to assess if it’s worth accepting.

Look for Transparency

Both parties should review the retention agreement to ensure that all details are specific and clear. Transparency is key to maintaining a strong working relationship and avoiding disputes.

Flag any vague words or phrases, such as “reasonable” or “from time to time,” as these leave the contract open to misinterpretation.

Read the Entire Agreement

You mustn’t skim over any sections of the retention agreement. Check every sentence for clarity. If you notice anything unclear or challenging to understand, don’t ignore it as it could put you at risk.

For example, if there is a retainer fee that’s non-refundable, this could affect your right to regain the money if the agreement is terminated suddenly.

Consider Termination

A big concern that your retention agreement should tackle is what happens if the employee leaves the company before the term ends. Make sure that termination clauses are fair, such as by not requiring very long notice periods or stating that there are hefty penalties for the employee who resigns.

Think About Non-Competes

If there is a non-competition agreement already in place, this could affect the employee’s future employment. When signing a retention agreement, a non-compete should be cancelled so that the employee won’t struggle to find employment after the contract ends.

If you can’t remove a non-compete, you and the other party might be able to negotiate it, such as by reducing its geographic scope or restricted period.

Do You Need a Lawyer for a Retention Agreement Review?

While you don’t always need to hire a qualified lawyer to review your retention agreement, it’s advisable, especially if you’re dealing with significant compensation or the retention agreement is unclear.

A lawyer will help you in the following ways:

  • Spotting hidden risks. A lawyer will use their legal expertise to notice clauses that can carry significant consequences, such as hidden clawbacks.
  • Explaining complex terms. This will help you to understand everything in the agreement so you feel confident to accept its terms.
  • Checking payment is fair and reasonable. The payment structure must match the benefits the employee is going to receive.
  • Flagging unfair or unbalanced terms. An example involves one-sided termination clauses that put the employee at a disadvantage.
  • Negotiating terms. If the agreement has clauses that should be changed, a lawyer can negotiate with the other party on your behalf.
  • Preventing future disputes. Litigation can be expensive. A lawyer helps you to avoid conflict by revising terms so that they can’t be misunderstood.

Where to Find a Lawyer for a Retention Agreement Review

If you need to hire a lawyer for a retention agreement review, you can easily find a qualified lawyer on an online legal platform like ContractsCounsel.

ContractsCounsel is an online legal marketplace that connects you to a network of vetted lawyers with experience in contract drafting and review.

It’s simple to ask a lawyer to review your retention agreement. Follow these easy steps online to connect with a reliable lawyer:

1. Go to the ContractsCounsel marketplace, where it’s free to post your project. Include a few details to help you match with the most suitable lawyer.

2. Wait for bids. You’ll receive multiple bids from lawyers directly on the platform who are experienced to assist you.

3. Once you receive the lawyer bids, review the lawyers’ profiles. There’s lots of info on the platform to help you choose the best lawyer, such as their location, client ratings, years of experience, and field of expertise.

4. Connect with a lawyer you think is best suited to your requirements and hire them to review your retention agreement.


ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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