Employee Referral Bonus

An Employee Referral Bonus policy explains who can earn a bonus for referring a candidate your organization hires, how eligibility is determined (including any role-based or relationship-based exclusions), when the bonus is paid, and how it will be taxed and reported as wages.

How to Write an Employee Referral Bonus Policy

• Start with "why" and introduce the concept.
• Define who can participate and what kinds of referrals qualify.
• Explain how to submit a referral and how the referral should be attributed to the referring employee.
• State when a referral bonus is earned and confirm the referring employee must remain employed to receive it.
• Describe the bonus amount structure, including any role-based variations.
• Explain how the bonus is paid and note that taxes and withholdings apply.
• List key exclusions and guardrails, including former employees, nepotism or conflict-of-interest limits, and HR team ineligibility.

For advice on writing an Employee Referral Bonus policy in a specific jurisdiction, see below.