Are You Owed Your Bonus When You're Let Go in Ontario?
Losing your job before the bonus pays out does not automatically mean you lose the bonus. You may be owed what you would have earned over your notice period.
Key takeaways
- Being let go before the bonus pays out does not automatically mean you lose it.
- You are generally owed the bonus or incentive you would have earned over your reasonable notice period.
- A plan can take it away only with clear and unambiguous language, and many clauses fail that test.
- This applies to commissions, RSUs, and other incentives, not just an annual bonus.
- A lost bonus can add a lot to your severance, so it is worth checking before you sign.
In this article
Employers often tell departing employees that because they were not "actively employed" on the payout date, their bonus is gone. Frequently, that is wrong. In Ontario, your incentive pay is part of your compensation, and the law does not let an employer wipe it out just by timing your exit.
✅Quick answer. Usually yes. When you are dismissed without cause, you are generally entitled to the bonus, commissions, and other incentive pay you would have earned during your reasonable notice period, even if you are gone before the payout date. A plan can only remove that entitlement with clear, unambiguous language, and Ontario courts read these clauses strictly, so many of them do not hold up.
Do you get your bonus if you are fired?
Often, yes. The starting point is that your severance should put you in the position you would have been in had you worked through your notice period. If you would have earned a bonus or other incentive during that time, that value is generally part of what you are owed, regardless of when the cheque would normally have been cut.
The Matthews v. Ocean Nutrition rule
In Matthews v. Ocean Nutrition Canada Ltd. (2020), the Supreme Court of Canada confirmed the approach: ask whether the employee would have earned the bonus or incentive during the reasonable notice period, and then whether the plan language clearly and unambiguously takes that common-law entitlement away. If the answer to the first is yes and the second is no, the employee is owed it.
What about "you must be actively employed" clauses?
These are the clauses employers lean on most, and they frequently fail. A requirement to be "actively employed" on the payout date is often not enough, on its own, to remove your entitlement, because being dismissed without proper notice is exactly the thing the law is compensating you for. To stand up, the language usually has to be very clear that it applies even in the case of a without-cause termination. Many plans are not that clear.
What about commissions, RSUs, and stock options?
The same logic applies to commissions, restricted stock units, stock options, and similar incentives. If you would have earned or vested them during your notice period, they are generally part of your claim unless the plan clearly removes them. These amounts can be substantial, and they are easy to overlook in a quick severance offer.
What does this mean for your severance?
It means the headline salary figure in an offer is often not the whole story. A proper severance valuation includes your lost bonus and incentives over the notice period, which can add up quickly. Before you accept anything, it is worth having the offer and your plan documents reviewed. See whether you should sign that offer, or get a free review.
Frequently asked questions
Do I get my bonus if I am fired before it pays out in Ontario?
Often yes. You are generally entitled to the bonus you would have earned during your reasonable notice period, even if you are gone before the payout date, unless the plan language clearly and unambiguously removes it.
Does an "actively employed" clause stop me from getting my bonus?
Not always. These clauses frequently fail in Ontario. To remove your entitlement, the language usually has to be very clear that it applies even when you are dismissed without cause. Many plans are not that clear.
Are commissions and RSUs included in severance?
They can be. If you would have earned or vested commissions, RSUs, or stock options during your notice period, they are generally part of your claim unless the plan clearly removes them.
How do I know if I am owed my bonus?
It depends on whether you would have earned it during your notice period and what your plan says. Because the language is read strictly, it is worth having the plan and your offer reviewed before you sign.
Carmen Reyes
Legal Writer, Mirza Law
Carmen Reyes is a legal writer at Mirza Law in Toronto. She writes about constructive dismissal, workplace changes, and how Ontario employees can protect themselves when their job changes under them.
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