Calculate employee buyout amount, salary, years worked, or buyout rate from the other three values using dollars and percent inputs.
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Employee Buyout Formula
The basic employee buyout formula used by the calculator is:
- B = buyout amount in dollars
- S = employee’s annual salary in dollars
- Y = number of years worked
- R = buyout rate as a percentage
When you select Annual salary, the calculator rearranges the formula to solve for salary:
When you select Years worked, it solves for years worked:
When you select Buyout rate, it solves for the rate:
Select Buyout amount to estimate it from salary, years worked, and the buyout rate. Select the value to solve for and enter the other three values; no blank-field guessing is needed.
Illustrative Buyout Rates
Buyout rates vary by employer, contract, industry, and negotiation. The table below shows how different rates affect the payout as a share of annual salary per year worked.
| Buyout Rate | Meaning Per Year Worked | Example on $60,000 Salary |
|---|---|---|
| 5% | 5% of annual salary for each year | $3,000 per year worked |
| 10% | 10% of annual salary for each year | $6,000 per year worked |
| 15% | 15% of annual salary for each year | $9,000 per year worked |
| 25% | 25% of annual salary for each year | $15,000 per year worked |
Buyout Estimate by Years Worked
This table shows sample buyout amounts using a $75,000 annual salary at different rates and service lengths.
| Years Worked | 10% Rate | 15% Rate | 20% Rate |
|---|---|---|---|
| 3 years | $22,500 | $33,750 | $45,000 |
| 5 years | $37,500 | $56,250 | $75,000 |
| 10 years | $75,000 | $112,500 | $150,000 |
| 15 years | $112,500 | $168,750 | $225,000 |
Example Employee Buyout Calculations
Example 1: Calculate the buyout amount
You have an annual salary of $80,000, worked 6 years, and the buyout rate is 12%.
The estimated buyout amount is $57,600.
Example 2: Calculate the required buyout rate
You know the buyout amount is $45,000, the annual salary is $75,000, and the employee worked 5 years.
The buyout rate is 12%.
FAQ
What is an employee buyout?
An employee buyout is a payment offered to an employee in exchange for leaving a job, retiring early, ending a contract, or accepting a separation agreement. The amount may be based on salary, years of service, a fixed severance formula, or a negotiated package.
Does this calculator include taxes?
No. The result is a gross buyout estimate before taxes, benefit deductions, retirement plan effects, legal fees, or other offsets. A buyout may be taxed differently depending on where you live and how the payment is structured.
How do I choose the value to calculate?
The formula has four variables: salary, years worked, buyout rate, and buyout amount. To solve one unknown value, the other three values must be provided. Choose the unknown value in Solve for, then enter the other three values. Zero-factor inverses may have no solution or no unique solution.
