Bonus Plans: Being "Actively Employed" May Include Being Fired

When does a bonus form part of compensation owed during a terminated employee's notice period? According to a very recent decision from the Court of Appeal for Ontario, notional bonus entitlements will be part of compensation in lieu of reasonable notice unless a contract unambiguously says otherwise.

In Paquette v. TeraGo Networks Inc. (2016 ONCA 618), the Court of Appeal closely scrutinized a bonus provision which required participants to be "actively employed on the date of the bonus payout."

Trevor Paquette was awarded 17 months' reasonable notice at trial, but was not granted damages for lost bonus payments. The trial judge found that while Paquette was "notionally" an employee during the reasonable notice period, he was not "actively employed" at that time. The Court of Appeal found for Paquette and held that the "active employment" obligation did not exclude compensation for bonuses to which the employee would have been entitled during the reasonable