Bonuses for Terminated Employees: 6 Common Misconceptions

Bonuses for terminated employees – Common Misconceptions

Generally, employees are entitled to damages for loss of a bonus as part of damages for wrongful dismissal. However, employers tend to argue the opposite as a money-saving tactic. Employers may seek to rely on their bonus plans, employment contracts, their own discretion, and anything else that sounds even halfway plausible.

Often, these arguments directly contradict or ignore the law. “Your employer might even know that their arguments will not stand up to a brisk wind. But employees who know their rights will not be intimidated by these paper tigers,” explains Nick Goldhawk, Toronto Employment lawyer at Share Lawyers. Here are some of the most common arguments employers will try to make to deprive dismissed employees of bonuses across Canada:

Misconception 1:Bonuses are discretionary

Employers often argue that all bonuses are discretionary. Therefore, when your employer terminates you, they may exercise that discretion in the negative.

While superficially persuasive, this argument holds no water legally. Employers must exercise this type of discretion in a fair and reasonable manner. It is neither fair nor reasonable for your employer to withhold your bonus on account of their own decision to terminate you without cause.

Misconception 2:Bonuses are not guaranteed

In fact, bonuses are rarely guaranteed, which is what typically differentiates them from salary. Whether or not a bonus is “guaranteed” is a red herring as far as a dismissed employee is concerned; the court will award damages for a lost bonus where the bonus was a consistent and integral component of the compensation. If your employment contract refers to a bonus, your bonus likely meets this threshold.

Misconception 3: Bonuses are based on performance

Again, most bonuses are based on performance. Of course, when your employer terminates your employment, you are deprived of the ability to perform your job functions – let alone perform them well. If you have been dismissed without cause, your claim is technically not for the bonus itself but for the damages resulting from the loss of employment, which can include the loss of a bonus. It can be helpful to frame the question like this: what payments and benefits would I have received if I had been given reasonable advance notice of my termination?

Misconception 5: Bonuses are for “actively employed” employees only

Once again, your claim is not for the bonus itself, but for the damages resulting from the loss of employment, including lost bonuses. If you have been wrongfully dismissed, that means your employer decided for you to no longer be “actively employed” without giving you the proper notice. Courts will not often allow employers to profit off their own unlawful actions.

Misconception 6: Bonuses are only paid once a year/no entitlement until paid

Employers will often claim that bonuses are paid out only once a year, and if your employment or notice period ends before the payout date, you are not entitled to any bonus. The Ontario Court of Appeal recently clarified this issue, in a win for employees. To repeat – your claim is not for the bonus itself, but for the damages resulting from the loss of employment. A court may find that even though your notice period only extends part-way through a bonus year, you are nevertheless entitled to a proportional share of your bonus that has been or would have been earned.

For example, assume an employee is entitled to a $20,000 bonus on December 31 of each year. Assume if the employee is terminated, he is entitled to 7 months of notice (or pay in lieu). If the employee is terminated on November 30, 2022, he will presumptively be entitled to the full $20,000 for 2022, plus 6 months’ worth of bonus ($10,000) for 2023.

Now that you know some common bonus misconceptions that employers use to take advantage of recently terminated employees, you can better protect yourself. We hope you never have to use this new knowledge but are prepared to fight for what you deserve. Don’t forget that the Toronto employment lawyers at Share Lawyers are in your corner and we can help. Share is There.

If you have been terminated, laid-off, or severed from your employment contact anywhere in Canada, our experienced team of employment law lawyers in Toronto can help. We offer free consultations and there are no fees unless we win your case. Find out if you have an Employment Case.

Denied your long term disability claim?

Contact Share Lawyers today and put our experience to work for you. Our 35+ years of experience can help you win your case against Canada Life, Desjardins, Manulife, RBC Insurance, Sun Life, and other insurance companies. We offer free consultations and there are no fees unless you win your case. Join us on Facebook and become a Top Fan for a chance to win each month.


A note from our long term disability lawyers

Taking a medical leave from work is not an easy decision to make. Concerns about providing for yourself and your family and keeping your job may cause you to want to push through your pain, but this won’t make your problems go away. Stopping work is often the smartest decision for your long term health and well-being, and your disability benefits are there to provide you with financial support until you can return to work.

If you have made the tough decision to stop working and apply for your short term disability or long term disability benefits, you may feel overwhelmed by the process and have questions that your employer and your insurance company are not able or willing to answer. Share is There to see you through and answer your questions.

Our Disability law firm knows what you have been going through

We understand that things have not been easy for you over the last little while. Your health has been suffering, you are unable to work, and now your insurance company, who was supposed to be there in your time of need, has decided they will not pay your disability benefits or respect your disability claim. These benefits exist to provide you with the financial support you need so that you can focus on your health and rebuilding your life. It is unfortunate that your insurance company has not lived up to its promise. If your disability claim has been denied, we will fight to get you the benefits you are entitled to. Our disability lawyers have helped thousands of Canadians get their long term disability benefits over the past 35 years, and we can help you too.

Our experienced disability lawyers can fight back on your behalf

Share Lawyers believes that every client who is dealing with a disability claim deserves superior personal service. To achieve that goal, we have developed our team of experienced, compassionate, and caring long term disability lawyers, law clerks, and administrative staff to meet all of your needs. Our team of experienced long term disability, life insurance, employment, and critical illness insurance lawyers have made successful claims against many insurance companies, third-party administrators and employers.

If you are unable to work, your disability benefits should be there to provide you with the financial support you need. While your insurance company may be focused on finding ways to avoid paying your claim, our focus is on what is in your best interest. When Share Lawyers gets involved, you have an entire team of lawyers that are there to support you and to fight for what is yours.

Our disability claim lawyers fight for your disability insurance claim by relying on our many years of experience to apply the best strategic planning and approach in each case, using the latest technology available. Experience matters, and with Share Lawyers, you are in the best hands with 35 years of success on your side.

In this video, we explain the role of a long term disability lawyer and how we can support you when you have been denied your long term disability benefits.

Related Articles

We’re here to support you during this difficult time

How can we help?