Canada: You Raise The Issue - Reducing An Employees Resignation Term And Paying Bonuses To Resigning Employees

Last Updated: June 5 2015
Article by Frank Molnar

Reducing an Employee’s Resignation Term

Question: Recently an employee gave us four months' notice of resignation. Do we have to keep that employee until his resignation date or can we let him go now?

Answer: Four months is an unusually long notice period. Alberta's Employment Standards Code requires an employee to provide a minimum of one week's notice of resignation if the employee had been employed for more than three months but less than 2 years and two weeks' notice of resignation if the employee had been employed for 2 years or longer. The Courts have held that some employees may owe a longer notice period to their employer because they possess special or unique skills which are difficult to replace. In rare circumstances, an employer may be able to successfully sue an employee who has not given proper notice of resignation.

In your case, four months notice is obviously too long. You should advise the employee that the company will be able to manage without him and propose a more reasonable resignation date. If the employee agrees, confirm the new resignation date in writing.

If the employee does not agree, then the employer has the option, pursuant to section 59 of the Employment Standards Code, to terminate the employment relationship by paying to the employee the wages he would have earned during the minimum termination notice period that the employer is required to provide under the Employment Standards Code. For example, if the employee had been employed for more than 10 years, the Employment Standards Code requires the employer to pay eight weeks wages.

Section 59 does not necessarily end the matter there. Since you have now terminated the employment relationship, the employee can bring a civil action for wrongful dismissal. In other words, the case is no longer one of resignation, but one of termination. The Alberta Court of Appeal has confirmed that section 59 does not take away the employee's right to sue for any additional entitlement to notice of termination as determined by the courts. In your case, it is possible that a court could be influenced by the resignation notice period initially offered by the employee and set the period of reasonable notice of termination at four months. It is also possible, where the employee has long service, that the court could assess the reasonable notice period (of termination) as being greater than the four months' notice of resignation provided by your employee.

Consequently, you should carefully consider the risks before terminating the employment relationship under section 59. If the employee has relatively short service, such that four months' exceeds his entitlement to reasonable notice, then there is merit to invoking section 59. In the event the employee has long service, such that his entitlement to reasonable notice of termination, likely exceeds four months, you will want to carefully consider whether to invoke section 59.

Paying Bonuses to Resigning Employees

Question: Do we have to pay an annual bonus to an employee who is resigning?

Answer: The answer depends on many factors. Firstly, a court will consider whether the entitlement to a bonus is in the sole discretion of the company or whether it is non-discretionary. If the payment of a bonus is entirely in the discretion of the company, then it is your decision whether or not to pay a bonus or part of a bonus to the employee. In the absence of an employment contract or letter of hire which makes the bonus part of the employment contract or which defines whether the bonus is discretionary, the courts will examine what has been done in the past to determine whether the entitlement to a bonus is discretionary or non-discretionary. The courts have usually found a bonus to be non-discretionary where the employee has received a bonus in each year, or the employer has never exercised its discretion against an employee, or the bonus represents a large portion of the employee's overall compensation package.

Secondly, if it is non-discretionary, a court will look at the terms of the bonus plan or information provided to employees setting out the conditions of the bonus program. Some bonus plans state that an employee has to be in the active employ of the company on a certain date in order to receive payment under the plan or that the entitlement to a bonus is waived in the event of resignation or termination of employment. Even if such a condition exists in your plan, some courts have refused to apply conditions like these where the employer could not establish that they had been brought to the employee's attention. Furthermore, some courts have been reluctant to apply a provision which purports to take away an employee's earned bonus merely because they have resigned.

Thirdly, it may depend on whether the bonus year has concluded (in which event the employee would be claiming a full bonus) or whether the resignation is effective prior to the completion of the bonus year (in which event the employee is seeking a pro rata share). Unfortunately, the cases are not consistent in this area. The employee may have a stronger claim where the bonus year had concluded prior to resignation, as the employee can argue that he is entitled to the bonus because he had already "earned it". This argument fails to consider that there are usually two components to a bonus: a reward for past service and an incentive for future service. Clearly, that second component is lost for a resigning employee. Nevertheless, the courts appear more willing to make an award for a lost bonus where the bonus year has concluded than to award a pro rata share of the bonus. However, as stated, the cases have not been consistent and go both ways.

As this is a complicated area of employment law, you should provide the relevant material and background information to your legal advisor for their advice on the particular circumstances in the event the employee claims entitlement to a bonus.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions