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Sales Leadership
Must an employer pay out a bonus to a terminating or already terminated employee?
Oct 20, 2014 | The Canadian Professional Sales Association lock

When evaluating termination pay, it is crucial to not only focus on the individual’s salary, but other forms of compensation as well. According to a recent case in Québec, “an employee's pay during the notice of termination period must be comprised of every component of remuneration, including bonuses”*.

What elements of compensation should be considered in the calculation of an employee's pay during the notice of termination period?

Benefits such as insurance, car allowance and pension must be included should be considered in the calculation of an employee's pay*. In the past, courts have been reluctant to include bonuses given nature of such type of compensation. However, two recent decisions by the Court of Appeal of Québec and the Superior Court reveal that “employee incentive programs may, in certain circumstances, form an integral part of employee's remuneration and consequently, former employees may be granted bonuses as a component of a pay in lieu of a notice of termination”*. Additionally, it has also been revealed that “even when an employer exercises discretion in granting such a bonus, if such discretion has consistently been exercised in favour of the employee in the past, the bonus will be considered as an integral part of his remuneration”.

For more information on employer pay-out and compensation, please click here.

* Marie Dupuis, Gowling Lafleur Henderson LLP

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