Avoiding Bonus Payments To Terminated Employees Just Got Tougher

On August 9, 2016, the Ontario Court of Appeal released two decisions addressing employee entitlement to damages in lieu of a bonus on termination.

Generally speaking, the Court confirmed the principle that if a bonus forms an integral part of an employee's total compensation package then, in a wrongful dismissal action, he or she is entitled to damages in lieu of the bonus unless there is enforceable bonus plan language that limits the employee's entitlements. Where such language exists, it will be strictly construed.

The two decisions are summarized below:

Paquette v. TeraGo Networks Inc.

In Paquette, a 49-year-old employee with 14 years of service was terminated without cause. At the time of his termination, he held the position of Director, Billing and Operations Support Services. He sued for wrongful dismissal and brought a summary judgment motion to determine his entitlements. At the summary judgment motion, he was awarded 17 months of pay in lieu of