‘You must be actively employed to receive bonus’—or not, says Ontario court

October 02, 2016 0 COMMENTS

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.

What happened

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…

Incentive plan entitlements on wrongful dismissal

November 08, 2015 0 COMMENTS

By Richard E. Johnston

In Canada, the wording of incentive plans can have a significant impact on the payments required on termination without cause. This point was highlighted by three Ontario decisions earlier this year. read more…

Bonuses may be part of equation when calculating pay in lieu of notice

May 25, 2014 0 COMMENTS

By Myriam Robichaud

Most employers in Canada understand that when terminating an employee, reasonable notice of termination or pay in lieu of notice must be provided. While this principle appears simple, determining which elements of compensation must be included in pay in lieu of notice can be complicated. read more…

Breaching duties and cashing checks: An employee’s entitlement to bonuses after termination

October 14, 2012 0 COMMENTS

by Marisa Victor and Christopher Copeland

Can a Canadian employee who is fired for cause sue for outstanding bonuses? What about if those bonuses relate to the period of the employee’s wrongdoing? This was the issue in Mady Development Corp. v. Rossetto, when a terminated executive sought to claim his bonuses for a period when he was found to be misappropriating company resources.

Facts

Leonard Rossetto was employed as an executive with a group of corporations (Mady). In fall 2007, he diverted labor, materials, and funds from Mady to renovate his house. He was fired on December 12, 2008, when Mady discovered his wrongdoing. Mady then sued him to recover the misappropriated corporate funds and resources. Rossetto counterclaimed for his bonuses for 2007 and 2008. Pursuant to his employment contract, he was entitled to an annual bonus equal to 30 percent of Mady’s profits after overhead. The parties ultimately submitted their dispute to arbitration. read more…