{"id":1086,"date":"2023-04-19T09:00:07","date_gmt":"2023-04-19T13:00:07","guid":{"rendered":"https:\/\/www.debousquet.com\/blog\/?p=1086"},"modified":"2023-04-18T18:09:19","modified_gmt":"2023-04-18T22:09:19","slug":"you-earned-that-bonus-even-if-youve-been-fired","status":"publish","type":"post","link":"https:\/\/www.debousquet.com\/blog\/2023\/04\/19\/you-earned-that-bonus-even-if-youve-been-fired\/","title":{"rendered":"You Earned that Bonus! (Even if You\u2019ve Been Fired)"},"content":{"rendered":"

Many employees receive bonuses from their employers, whether it is a small amount for the holidays or a significant sum. In fields such as sales, that \u201cbonus\u201d can account for everything an employee earns above minimum wage.\u00a0<\/span><\/p>\n

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This means that many employees depend on their bonus as part of their overall compensation package to cover both expected expenses, such as a Christmas bonus earmarked for presents, or unexpected ones, such as car trouble. If you are depending on a bonus, it can be devastating if you\u2019re fired and don\u2019t receive it.\u00a0<\/span><\/p>\n

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Many employees incorrectly believe they are not entitled to their bonus. This belief is far-reaching and often due to it being viewed as \u201cdiscretionary\u201d or \u201cnot guaranteed.\u201d Employers are partly to blame for this belief, whether passively benefiting from it or, more often, aggressively pushing it, to keep all the fruits of your hard work for themselves. This is especially true when employees are terminated.\u00a0<\/span><\/p>\n

Termination Packages Are Not Optional<\/i><\/b><\/h2>\n

If you are terminated without cause, your employer should pay you a termination package. This termination package should include your <\/span>full<\/i><\/b> compensation, including any bonus you would have received.\u00a0<\/span><\/p>\n

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If you have found yourself terminated for cause, contact us at De Bousquet PC to speak to a lawyer today, as the Courts overturn the vast majority of terminations for cause. You may still be entitled to a termination package, including any bonuses owed.\u00a0<\/span><\/p>\n

What is a Bonus?<\/span><\/h1>\n

Generally, an employee receives three categories of compensation:<\/span><\/p>\n

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    \n
  1. Wages<\/span><\/li>\n
  2. Discretionary Gifts\/Bonuses<\/span><\/li>\n
  3. Benefits<\/span><\/li>\n<\/ol>\n

     <\/p>\n

    Wages<\/b> are a fixed or calculated amount that you would receive no matter what. Per the <\/span>Employment Standards Act, 2000<\/span><\/i>, it includes monetary remuneration such as hourly wages, salary, commission, and legal allowances such as room and board. Wages do not include tips, expenses, or benefit plan contributions. They also do not include discretionary gifts or bonuses. However, <\/span>if the gifts or bonuses are related to your hours, production, or efficiency, then they are wages.\u00a0<\/span><\/i><\/p>\n

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    Discretionary gifts and bonuses<\/b> are amounts paid to an employee that are not required to be paid and are paid solely because the employer wants to.\u00a0<\/span><\/p>\n

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    Benefits<\/b> include everything else an employee receives from their employment. Health Insurance, Pension Plans, company cars, phone allowances, and employee discounts all fall into this category.<\/span><\/p>\n

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    When it comes time to pay termination packages, however, these definitions are unfortunately almost always completely ignored by most employers.\u00a0<\/span><\/p>\n

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    A common reason for ignoring these definitions is that employers claim that \u201cPerformance Plans\u201d which reward bonuses are entirely discretionary and not guaranteed. In contracts or employee handbooks, these \u201cdiscretionary\u201d bonuses are often followed by a detailed table that shows how the bonus is directly calculated based on hours, production, and efficiency. As stated above, but worth repeating, <\/span>if the gifts or bonuses are related to your hours, production, or efficiency, then they are wages <\/span><\/i>and not discretionary!<\/span>\u00a0<\/span><\/i><\/p>\n

    Damages In Lieu of Reasonable Notice\u00a0<\/i><\/b><\/h2>\n

    The purpose of damages in lieu of reasonable notice is to put the terminated employee in the same position as if they had continued to work for the entire notice period. Your employer is bound to the terms of your employment when calculating these damages, and it is illegal for your employer to change any of the terms of your employment after providing notice of termination.\u00a0<\/span><\/p>\n

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    This is why if you are owed damages for employee discounts and the value of health insurance over the notice period.\u00a0<\/span><\/p>\n

    An \u201cActive\u201d Employee Isn\u2019t Out for a Jog<\/b><\/h3>\n

    Most employees are told that they are not owed a bonus for a variety of reasons.\u00a0<\/span><\/p>\n

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    One common line employers give (and ignorantly, sometimes genuinely believe) is that because their plan specifies that you have to be an \u201cactive\u201d employee to receive your bonus, you will not receive yours because <\/span>they<\/span><\/i> view you as not being \u201cactive.\u201d\u00a0<\/span><\/p>\n

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    The thing is, in the eyes of the Court, you are still an \u201cactive\u201d employee throughout your notice period, even if you were given damages in lieu of reasonable notice.\u00a0<\/span><\/p>\n

    \u201cDamages\u201d Are Not the Default<\/b><\/h3>\n

    Most people who are terminated are given damages in lieu of reasonable notice, but this is not the \u201cdefault.\u201d The default is that if you are terminated, you are given reasonable notice as to your last day of work and continue to work up until that day. Considering you would \u201cactively\u201d work up until the termination date, you would receive all wages, non-discretionary bonuses, and benefits during this period.\u00a0<\/span><\/p>\n

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    While this is the default, most employers don\u2019t want someone that they have terminated to stick around and keep working.\u00a0<\/span><\/p>\n

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    Most employers instead give damages in lieu of reasonable notice, which enables a clean break between the employer and employee and ensures that the employee is paid what they would have been paid during that notice period \u2013 including non-discretionary bonuses.\u00a0<\/span><\/p>\n

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    Bonus plans that try to avoid paying bonuses to terminated employees will fail when challenged because your contract is not considered \u201cterminated\u201d until the reasonable notice period has expired.\u00a0<\/span><\/p>\n

    No Such Thing as Near Cause<\/b><\/h3>\n

    Another common line that employees are fed when they are terminated is that they are not entitled to a bonus because of poor job performance.\u00a0<\/span><\/p>\n

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    If you are terminated without cause, your employer may try and argue this, but they cannot deny you a bonus by citing your job performance. This is because your job performance, as stated by them in terminating you <\/span>without cause<\/span><\/i>, is irrelevant.\u00a0<\/span><\/p>\n

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    If an employer wants to claim that they denied you your bonus because of performance issues, they need to explicitly tell you that and include their reasoning in your termination letter.\u00a0<\/span><\/p>\n

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    Considering there is no such thing as near cause in Ontario, an employer is going to be facing an uphill battle trying (often egregiously) to claim that you aren\u2019t owed your bonus due to job performance issues when they terminated you without cause.<\/span><\/p>\n

    Do You Pass the Test?<\/b><\/h3>\n

    The Supreme Court of Canada in <\/span>Matthews v. Ocean Nutrition Canada Ltd<\/span><\/i>.<\/span><\/a> distilled the above into the following test for determining whether an employee who has been wrongfully terminated is entitled to their bonus.\u00a0<\/span><\/p>\n

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    1. Would the employee would have been entitled to the bonus during the notice period?\u00a0<\/span><\/li>\n
    2. If so, is there is something in the bonus plan that clearly, unambiguously, and legally would specifically remove the employee\u2019s entitlement in this exact situation?<\/span><\/li>\n<\/ol>\n

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      If you have been terminated and it is your employer\u2019s opinion that within your bonus plan there is some clear, unambiguous, legal reason you should not receive it, chances are that they are incorrect.\u00a0<\/span><\/p>\n

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      If this is happening to you, please contact us at De Bousquet PC for an actual legal opinion <\/span>before signing anything<\/b>. You should never simply rely on what your employer (who has just terminated you) is telling you. You may find that your employer grossly misinterpreted their obligations.\u00a0<\/span><\/p>\n

      Consequences of the Bonus Test<\/b><\/h4>\n

      One recent case by the Ontario Court of Appeal, <\/span>Nader v. University Health Network<\/span><\/i><\/a>, shows how the Courts will evaluate bonuses for employees terminated with proper notice.\u00a0<\/span><\/p>\n

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      Mr. Nader\u2019s Employment Agreement outlined that his compensation would include \u201celigibility to receive an annual performance-based bonus of up to 25% of his annual base salary,\u201d which was approximately $90,000.00.\u00a0<\/span><\/p>\n

      The Ontario Court of Appeal awarded Mr. Nader his bonus, due to the following factors:<\/span><\/p>\n

       <\/p>\n