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A bonus policy was not sufficiently unambiguous to limit an employee’s entitlement to a bonus during the notice period, even where the contract requires the employee to be “actively employed”

British Columbia

,

Canada

In Koski v. Terago Networkds Inc., 2021 BCSC 117, an employee was dismissed without cause and without notice. The employee was a Customer Success Manager for Terago. Hori J. Found that he was entitled to 13-month reasonable notice (paras 16-21).

The Employee was Entitled to His Bonus During Notice Period

Significantly, the employee’s employment contract included a bonus plan. In the contract, the eligibility for bonus required the employee to be “actively employed” (para 39).

Hori J. noted that there is a two-part test to determine whether an employee is entitled to compensation for a bonus or other benefits during the period of notice. The two-step approach requires the analysis of two questions:

  1. would the employee have been entitled to the bonus or benefit as part of their compensation during the reasonable notice period; and
  2. if so, do the terms of the employment contract or bonus plan unambiguously take away or limit that common law right? (Para 43)

Hori J., relying on the employee’s history of receiving bonuses, found that he would have earned a bonus during the notice period (paras 51-52).

Hori J. Found that the bonus policy had ambiguity. Therefore, the bonus policy does not clearly and unambiguously eliminate or limit the employee’s common law rights to his bonus payments. The employee’s damages included compensation for the bonuses he would have received during his notice period (paras 53 – 61).

April 14, 2022
Koski v. Terago Networkds Inc., 2021 BCSC 117