Canada: Recent Ontario Court Of Appeal Decision Reduces Notice Period But Preserves Bonus Entitlement

Last Updated: July 3 2019
Article by Susan Crawford

The issues of common law reasonable notice for long serving senior employees and bonus entitlement through that notice period can be thorny ones for employers.   Surprisingly, there is not a standard practice for awarding common law notice and the courts will look at a number of factors to determine the appropriate notice where the parties are not bound by termination provisions in an employment contract.  Similarly, workplace parties often end up disputing entitlement to bonuses during that notice period – employers begrudge paying bonuses to employees who are no longer employed and contributing to the profitability of the company while employees argue that if they had received actual notice rather than severance payments they would have been in a position to contribute and should therefore receive their bonus through the notice period.

These were the issues facing a Judge in a summary judgment motion in Dawe v. Equitable Life Insurance Company of Canada.    Both parties sought summary judgment of these two issues and agreed that claims for moral and punitive damages would proceed to a full trial.

The facts: Mr. Dawe was dismissed as Senior Vice President after 37 years of service at age 62.  He claimed he had planned to work until age 65 and sought 30 months’ reasonable notice which would bring him to his 65th birthday.   He also argued that his bonus entitlements under various plans should be included as part of the 30 month notice period given they were integral components of his compensation and the language in the various plans restricting his entitlement at the time of dismissal were ambiguous and/or had not been brought to his attention by the Company when introduced in 2006.

The Company argued that the appropriate period of common law notice was 24 months, which was offered to the plaintiff at the time of his dismissal.   Equitable Life argued that there were no extenuating circumstances to support an award higher than two (2) years.   The Company also argued that the language in the bonus plans were both unambiguous and brought to the plaintiff’s attention many time between their introduction in 2006 and the time of his dismissal.  The plaintiff’s bonus entitlement in the last year of his employment was almost $400,000.00 so there was a lot riding on the judge’s decision for both parties.

The motions judge sided with the plaintiff on both issues.  Relying on “societal” changes in attitude concerning retirement (for which there was no evidence tendered at the motion) and the end of mandatory retirement in Ontario in awarding 30 months’ notice, his Honour determined that prior appellate authority was no longer good law.  In fact, the motions judge said he would have awarded 36 months had the plaintiff not been asking for only 30!  The Court of Appeal disagreed.  In holding that its 2006 decision in Lowndes v. Summit Ford Sales Ltd. that only exceptional circumstances will support a notice period in excess of 24 months was still good law, the Court of Appeal reduced the notice period to 24 months in favour of the Company.  It found that the motion judge erred in relying on both the end of mandatory retirement (which had been introduced at the time of the Lowndes decision) and the motion judge’s own “societal change in attitude” towards retirement in reducing the notice period for Mr. Dawe.

On the issue of bonus entitlement, the Court of Appeal determined that the language limiting entitlement to bonus payments during the notice period was clear and unambiguous and as such, the motions judge was again in error.  However, the Court of Appeal agreed that the plaintiff had not accepted the unilateral language inserted into the 2006 plans because the Court was not satisfied he had knowledge of same or that the specific language had been brought to his attention (despite his senior position and his role in the terminations of other employees where the language in question formed part of the severance offer).   

This case exemplifies the difficulties for employers in creating enforceable limiting provisions in bonus plans.   Our courts require not only clear language limiting entitlement but also clear acceptance/knowledge of same by the employee in question.  Had the Company required a sign off/acknowledgement for the bonus plans’ terms when provided to the plaintiff, they could have demonstrated that the plaintiff had agreed to the terms the Company was now relying on.   Alternatively, having the language in the employment agreement itself, as was the case in the Kielb v. National Money Mart decision argued successfully by CCP, the chances of enforcing the limiting language would have improved dramatically.     

CCP can assist employers in drafting enforceable bonus limiting language in bonus plans and employment agreements as well as providing expert advice in how to implement bonus plans to increase the likelihood of defending these terms before the Courts.  Click HERE for our team members who can assist you with all your employment contract issues.

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
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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