by Shane Todd
In an attempt to their limit severance exposure, employers often require that an employee be “actively employed” on the bonus payment date in order to be eligible to earn a bonus. The idea being that the severance payable to a dismissed employee would not have to take into account an employee’s bonus earnings as the employee would not be able to satisfy the “active employment” requirement contained in the applicable bonus plan. However, as the Court of Appeal for Ontario recently confirmed in Paquette v. TeraGo Networks Inc., 2016 ONCA 618, “active employment” requirements are insufficient to remove or limit a dismissed employee’s rights.
Trevor Paquette was employed by TeraGo Networks for 14 years. He earned a base salary and was eligible for an annual bonus. The bonus plan required Paquette to be “actively employed” at the time the bonus was paid in order to receive it. In November 2014, Paquette was terminated without cause. The parties could not agree on a severance package and so Paquette sued TeraGo for wrongful dismissal. read more…