In Wilste v Saestar Chemicals ( 2020 BCSC 658) Saunders J. determined that an employee fired without cause in July of 2018 was entitled to 16 months notice. About 1/3 of his total comp was pursuant to a bonus plan which had a clause which said that in order to be entitled to a bonus payment, the employee had to be employed as of March 31st, the end of the fiscal year.
A bonus policy may state that employees who are eligible for bonuses must also be actively employed to receive their bonus payments. That is, employers may institute an “active employment clause”. Courts will uphold valid active employment clauses, as demonstrated by Bois v. MD Physician Services Inc., 2017 ONCA 857 (CanLII).
MD Physician Services Inc. (“MD Physician”) awarded Mark Bois bonuses under its Variable Incentive Plan (“VIP”) in 2009 and 2010. Bonuses are paid in three equal instalments in the three years following the calendar year in which MD Physician awarded the bonus.
Under the VIP, any employee who leaves, or gives notice to leave the organization on or before the bonus payout date was ineligible to receive a bonus payment. Mr. Bois and MD Physician signed a letter to this effect.
Mr. Bois resigned before MD Physician paid out the final instalment of the 2009 bonus and … Continue reading “Employee forfeits $115,000.00 in bonuses by resigning; active employment clause valid”
Employers would be wise to review their current agreements and policies with respect to bonuses and ensure that any eligibility requirements upon termination are clearly set out and have been expressly communicated to employees.