Active Employment Language Does Not Remove Dismissed Employees’ Entitlement to Bonus

It is common in Ontario for an employer who provides a dismissed employee with pay in lieu of reasonable notice of dismissal to not include payment of any bonuses that the employee would have earned had he or she been given working notice of dismissal. To justify this position, the employer will often point to language in its bonus policy that requires the dismissed employee to be “actively employed” at the time bonus is paid.

However, in Paquette v. TeraGo Networks Inc., 2016 ONCA 618 the Ontario Court of Appeal rejected this argument. The Court found that a term in a bonus policy that requires active employment when the bonus is paid, without more, is not sufficient to deprive an employee terminated without reasonable notice of a claim for compensation for the bonus he or she would have received during the notice period, as part of his or her wrongful dismissal damages.

In reaching this conclusion, the Court began by reviewing the principle that is to be applied by a court when determining damages for wrongful dismissal. At paragraphs 16 to 18 van Rensburg J.A wrote:

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