In a good news decision for employers, the Court of Appeal for Ontario in Kielb v National Money Mart Company, 2017 ONCA 356, denied an employee’s claim for payment of a non-discretionary bonus on the basis that it was expressly excluded by the relevant contract language.
The bonus plan clause at issue expressly stated that the bonus was only earned and payable on the payout date, and that if the employee was terminated without cause (as occurred in this case), that the employee waived his claim to any bonus that would ordinarily be paid after the expiration of the statutory notice period.
The Court of Appeal upheld the trial judge’s decision and noted that the parties did not purport to contract out of the Employment Standards Act, but rather in “clear and unambiguous language” had confirmed that the employee’s statutory entitlements included bonus payments that would have been earned and paid during the statutory notice period. As the bonus clause did not contravene the Employment Standards Act, it was open to the parties to agree on how and when the bonus would otherwise be payable, and there was no basis to interfere with the trial judge’s finding that there was no bonus entitlement in this case.
This decision highlights the importance of having clear and unambiguous language in employment agreements and bonus policies with respect to entitlements on termination. Employers would be well advised to review their bonus policies to avoid incurring any unexpected liabilities at the end of the employment relationship.