As the job market continues to improve, employers are looking for ways to keep their best employees. A steady paycheck and free coffee and donuts are no longer enough.
One interesting approach is to offer a forgivable loan. The idea is to offer the loan with a repayment schedule that includes forgiving specific amounts of the debt in exchange for a specified time the employee remains with the company. For example each year an employee stays on board may be worth 20% of the loan balance.
If done correctly, the loan proceeds go to the employee as a lump sum but and only the amounts forgiven each year become taxable income to the employee. Of course if the employee leaves before the balance is paid he or she is obligated to repay according to the amortization schedule specified at the time the loan is granted.
For more see this article.