A discretionary bonus may not be discretionary upon termination
of employment. If a bonus has become an integral part of an
employee's compensation, an employee may be entitled to that
bonus during a reasonable notice period. In making this
determination, courts will consider factors such as whether a bonus
is received each year, whether bonuses were historically awarded,
whether the employer had ever exercised discretion against the
employee and whether the bonus constituted a significant component
of the employee's overall compensation.
In a recent decision, the BC Supreme Court found that where,
over the course of employment, a discretionary bonus has been
awarded in a way that leads the employee to believe that the
discretion will be exercised in the employee's favour, an
employer's refusal to pay the bonus in a manner that is not
fair or transparent can lead to a finding that the employer has
breached the employee's contractual rights.
