A termination package may require consideration of more than base salary. In Matthews, the Supreme Court of Canada examined compensation under a long-term incentive plan following constructive dismissal.

The employee participated in a plan that provided a substantial payment if the company was sold. He left after being constructively dismissed, and the company was sold during his reasonable notice period.

The Court held that his damages included the incentive payment.

The analysis asks whether the employee would have received the compensation during the reasonable notice period and, if so, whether the agreement unambiguously limits or removes that common law entitlement.

The plan’s wording did not exclude the employee’s entitlement in the circumstances. A requirement for active or full-time employment was insufficient to resolve the issue against him.

The claim concerned compensation for the employer’s failure to provide proper notice, rather than simply whether the employee remained on the payroll when the sale occurred.

What this could look like in practice

Imagine being dismissed several weeks before an annual bonus payment. The termination letter addresses salary but says nothing about the bonus.

Useful documents would include the bonus plan, award letters, payment history, performance information, and any amendments. Distinguish the period in which a bonus is earned from the date it is paid.

For an employer, identifying all compensation components at the outset can make the termination calculation clearer.

The takeaway

Do not assume that the last working day determines every compensation entitlement. Review the relevant plan and notice period before concluding that bonuses or incentive payments are excluded.

Contact JY Law to discuss your circumstances and how we may assist you.

This information is provided for general educational purposes only and does not constitute legal advice. The example is hypothetical. Your rights depend on the facts and current law. Reading this page or contacting our firm does not, by itself, create a lawyer-client relationship. If you have further questions or require advice about your situation, please contact us.