Williams HR Law LLP

UPDATE ON BONUS ENTITLEMENT DECISION FROM THE ONTARIO COURT OF APPEAL

July 3, 2020

We had previously written a blog post on the Ontario Court of Appeal’s (“ONCA”) 2019 decision in Dawe v Equitable Life Insurance Company of Canada [Dawe], which was largely positive for employers. Recently, leave to appeal to the Supreme Court of Canada on behalf of the employer in that case was dismissed, confirming that the Ontario Court of Appeal’s decision with respect to two key issues for employers remains intact.

The first issue in Dawe was the ONCA’s confirmation that 24 months is generally the upper cap on common law reasonable notice entitlements, barring exceptional circumstances.

The second issue in Dawe that employers should continue to be mindful of relates to communication of unfavourable changes to bonus plans. The ONCA ruled that changes to bonus plans which limit bonus entitlements after termination without cause must not only be clear and unambiguous, but an employer must also bring the unfavourable changes to an employee’s attention to be able to later rely on them.

Given that the ONCA decision continues to apply to bonus plans, we continue to recommend that employers proactively limit risks by requiring employees to sign off on limiting provisions when updating bonus plans to demonstrate clear acknowledgement and acceptance of the new terms.

This blog is provided as an information service and summary of workplace legal issues. This information is not intended as legal advice.

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