In the recent case of Fraser v. Canerector
Inc., a 46 year old senior executive employed
for 2.8 years asserted that he was entitled to his year end bonus
on the termination of his employment in June, 2014. Mr. Fraser was
earning a salary of $205,000 per year plus benefits and
participated in an executive bonus program. He claimed that his
bonus entitlement was an integral part of his employment contract.
The history of bonuses which Mr. Fraser received was $50,000 for
his first part year, $75,000 for his second year, and $175,000 for
his last full year in 2013.
The court denied that Mr. Fraser was entitled to any bonus
on the termination of his employment. Reasonable notice of
termination in Mr. Fraser's case, as determined by the court,
was 4.5 months. However, Mr. Fraser had found new employment
quickly and was re-employed 11 weeks later. The court concluded
that Mr. Fraser was not entitled to bonus monies for two
The bonus plan was fundamentally discretionary, subjective, and
lacked any formula for calculation.
As the 4.5 months reasonable notice would only bring Mr.
Fraser's employment to October 25, 2014, he was ineligible to
receive a bonus for the year 2014.
Generally, employees are entitled on termination of employment
to compensation for lost bonus monies that they would have been
entitled to receive during the period of reasonable notice of
termination. Where the employment contract is silent as to bonus
entitlement, whether orally or in writing, a determination will
have to be made as to whether the bonus has become an integral part
of the employee's wage or salary structure. Courts will
consider the following factors in determining whether bonus
payments are a component of the employee's overall compensation
to which the employee is entitled upon termination of
Whether the payment of bonuses is discretionary.
Whether the company has a formal bonus policy.
Whether a bonus is received each year and in what amounts.
The history of payment of bonuses and whether the employer
failed to pay bonuses.
The basis upon which a bonus is calculated or determined
including whether there is a necessary pre-condition that must
exist to be eligible for a bonus (e.g., requirement of active
employment on the bonus payment date).
Whether the bonus formed a significant component of the
employee's overall compensation.
The likelihood of whether the employer would pay any bonuses as
a result of its financial situation or general business
Employers and employees can provide more certainty with respect
to how bonuses will be construed on termination of employment by
clearly setting out the bonus program in an employment
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 Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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).