Limiting Bonus Entitlements When Employment Ends

The Ontario Court of Appeal recently upheld a lower court's dismissal of an employee's claim for payment of a bonus after resignation because the employer's non-discretionary bonus policy included an "active employment" clause. The decision in Bois v. MD Physician Services Inc., 2017 ONCA 857 (affirming 2016 ONSC 8133), confirms that an agreement made by the parties will govern when bonuses are declared, earned, accrued, and payable.

Background

An "active employment" clause in a bonus policy generally requires an eligible employee to be actively employed at the time a bonus is paid in order to receive that bonus. These clauses are often the subject of litigation in wrongful dismissal suits because employers rely on them to refuse payment of a non-discretionary bonus that would otherwise have been earned by an employee.