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.
The employee in this case acted hastily, and the employer prevailed against his constructive dismissal claim. However, the employer may have avoided the time and expense of litigation if the bonus agreement had contained clear, concise language.
In the last few months, there has been an influx of commentary on the enforceability of contractual provisions purporting to limit an employee’s bonus entitlements upon termination. Following the Ontario Court of Appeal’s seminal decisions in Paquette v. TeraGo Networks Inc. and Lin v. Ontario Teachers’ Pension Plan, much of this commentary has focused on the language needed to oust an employee’s implied right to their complete compensation package during the reasonable notice period. This focus on semantics has overshadowed one other consideration that remains instrumental to the enforceability of bonus provisions—the need to sufficiently communicate to employees the preconditions of bonus eligibility.