What Happens to My Bonus When My Employment is Terminated?

With large layoffs hitting various sectors of the economy, it’s important for employees to know what the rules are for payouts of bonuses and incentive payments upon termination.

When an employee is terminated without cause, they are entitled to notice of that termination. If the employer instead provides payment in place of that notice, often called a severance package, it must include all the aspects of that the employee’s compensation for the notice period, not just base salary.

Do Severance Packages Include Bonuses, Even If I’m Not Actively Employed?

Bonuses are often integral parts of an employee’s compensation. The courts are clear. Unless the employment contract includes clear and specific language limiting the employee’s right to a bonus during a notice period or as part of payment in lieu of notice, the bonus may not be excluded from the severance package.

Often, employment contracts will state that the employee must be “actively employed” in order to receive a bonus. However, this is not enough to prevent a bonus payment in a severance package. The employee would have been entitled to it had they been given notice of their termination, rather than a severance package. Your entitlement to a bonus payment may also depend on the conditions and time-period for payment of the bonus and can in some cases be pro-rated for the applicable notice period.

How can Whitten & Lublin help?

Navigating the termination of your employment can be difficult, especially if employers tell you that you are not entitled to a bonus as a part of a severance package. Our team of experienced employment lawyers is here to assess your situation, employment contract, and legal entitlements, and to guide you through your options to help you secure the compensation owed to you.

If you have been recently dismissed and are unsure if you have received your proper compensation, don’t hesitate to reach out to us for a consultation. You can easily book a session through our online portal or by giving us a call at (416) 640-2667 today.

Author – Aaron Zaltzman