My Title, Reporting Line and Bonus Target Were Changed After a Reorganisation. Is That Constructive Dismissal for an Executive?

A reorganisation is the cleanest way to dismantle a senior role without anyone using the word termination. The chart lands on a Monday. Your title moves from Vice President to Director, or from Chief Operating Officer to Senior Vice President, Special Projects. You now report to a former peer, or two levels further from the CEO than you did on Friday. Your bonus target drops from 50 per cent of base to 25 per cent, or the plan is 'simplified' so that the metrics you actually control no longer drive your payout. Nobody is fired. Your base salary may not move a dollar.

That design is not an accident. An employer that terminates you without cause owes pay in lieu of reasonable notice on your whole package, including bonus, equity vesting and pension accrual. An employer that reorganises you into a smaller job and waits to see whether you stay or quit pays nothing. Ontario law does not let that work, but the protection is conditional: it depends on you identifying the change, refusing it clearly, and doing so before the condonation clock runs out.

This article is written for the reader with a large package at stake: six figures of base salary, a real bonus target, unvested restricted share units or options, a pension or supplemental plan, and deferred compensation. For you the components are the whole story. The offer on the table and the number a court would award usually differ by the components, not by the salary. If you want the broader framework first, start with constructive dismissal in Ontario and executive severance and notice.

Is changing my title, reporting line and bonus target after a reorganisation constructive dismissal?

Often yes. The question is whether your employer changed a term of your contract without your agreement, and whether the change was substantial enough that a reasonable person in your situation would conclude the essential terms of the job had been altered. At the executive level, title, reporting line and bonus target together usually are the essential terms.

Two features of the test matter enormously in reorganisation cases. First, the standard is objective. Farber v. Royal Trust Co., [1997] 1 SCR 846 asks what a reasonable person in the same situation would have concluded at the time the change was made, not what you felt and not what the employer intended. You do not have to prove your employer was trying to push you out. A sincerely motivated restructuring, driven by genuine cost pressure, can still be a constructive dismissal of you.

Second, the changes are assessed cumulatively. Employers defend these cases by slicing: the title is just nomenclature in the new structure; the reporting line is a flattening exercise affecting everyone; the bonus target is a plan redesign. Taken one at a time, each looks survivable. Taken together, the new role is a level below the one you were hired into, with less authority, less visibility and materially less money. That is the comparison a court makes.

What are the two branches of Potter, and which one fits a reorganisation?

Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10 recognises two routes to the same conclusion. The first is a single unilateral act that breaches an express or implied term of the contract, where the breach is substantial. The second is a course of conduct that, taken as a whole, shows the employer no longer intends to be bound by the contract. Most reorganisation claims run on the first branch; the strong ones run on both.

The first branch has three steps, and you should be able to answer each one about your own facts before you do anything else.

1. 1.Identify the term. What did your contract, offer letter, job description or long standing practice actually promise? Title, reporting relationship, scope of responsibility, headcount, budget and signing authority, bonus target percentage, equity grant tier, and committee or board access are all capable of being terms.
2. 2.Ask whether the employer breached it. If your contract gives the employer an express right to make the change, there may be no breach at all. This is why a broadly drafted clause allowing the employer to vary duties, title or reporting relationships matters so much, and why you need to read your own agreement before you take a position.
3. 3.Ask whether the breach was substantial. This is judged at the time of the change, from the standpoint of a reasonable person in the same situation. Substantial does not mean catastrophic. It means the change went to the essence of what you agreed to do and what you were to be paid for doing it.

The second branch is the one executives underuse. It captures the slow strip: direct reports reassigned one at a time, removal from the executive committee agenda, budget authority quietly reduced, exclusion from the strategic planning cycle, a replacement hired into 'a different role' that looks a great deal like yours, being asked to 'stay available' while the structure is finalised. Each step is individually deniable. The pattern is not.

Potter itself concerned an indefinite administrative suspension with pay, and the employer's inability to justify it. If your reorganisation includes being sent home or parked on special projects with no defined mandate and no end date, that is squarely within Potter territory, and being paid throughout does not answer it. See also suspension without pay and constructive dismissal and when an employer changes your job duties.

Why do title and reporting line carry more weight for an executive than for other employees?

Because at your level they are compensation in all but name. Title and reporting line determine your mandate, the size of the business you can credibly claim to have run, the tier you sit in for bonus and equity, and the roles a recruiter will consider you for. Bardal v. Globe & Mail Ltd., 1960 CanLII 294 (ON SC) calls this the character of the employment, and it is a live factor.

Bardal v. Globe & Mail Ltd., 1960 CanLII 294 (ON SC) directs a court to weigh the character of the employment, the length of service, the age of the employee, and the availability of similar employment having regard to the employee's experience, training and qualifications. Every one of those factors is affected by a demotion. The pool of jobs at Vice President level in a given sector in Ontario is small and slow moving. Drop a level and the search gets longer, not shorter.

Love v. Acuity Investment Management Inc., 2011 ONCA 130 is the clearest appellate statement of this for senior people. A senior vice president with only two and a half years of service received nine months of notice, because the character of the employment and the employee's equity participation made similar employment harder to find, and because short service must not be over weighted. The same reasoning explains why a title and reporting line change is not a trivial matter for you even though it would be for a more junior employee.

Reporting line deserves its own paragraph. Reporting to the CEO rather than to a divisional senior vice president is the difference between being an officer of the business and being a manager inside it. It changes who writes your review, whether you sit in front of the board, whether you are in the succession plan, and whether the market reads your last role as a peer role. Courts understand this. Celestini v. Shoplogix Inc., 2023 ONCA 131 applied the changed substratum doctrine to an executive whose responsibilities had expanded so fundamentally that the original employment contract no longer reflected the job, with the result that the termination provisions in that old contract ceased to apply. The principle cuts both ways: the substance of a senior role, not its label, is what the contract is about.

How big does the bonus target cut have to be before it counts?

There is no percentage in the statute and none in the case law. What matters is the size of the cut measured against your total direct compensation, not against base salary alone, and whether the bonus was a real and expected part of your pay. For an executive whose target is 40 to 60 per cent of base, halving the target is a major pay cut, not a plan refinement.

As a working rule of thumb used in practice, and not a rule of law, reductions in the order of 10 per cent of total compensation are often treated as within an employer's normal latitude, while reductions approaching or exceeding 20 to 25 per cent are much more likely to be found substantial. Do the arithmetic on your own numbers before you form a view. A target cut from 50 per cent to 25 per cent on a $260,000 base removes $65,000 a year, which is about 17 per cent of a $390,000 total cash package on its own, before you count a reduced equity tier or a lost pension contribution on the smaller bonus.

Three further points are usually decisive on the bonus question.

• 'Discretionary' does not mean unreal. Where a bonus has been paid every year, is budgeted, is driven by stated metrics and forms a large share of pay, it is compensation. In Lin v. Ontario Teachers' Pension Plan, 2016 ONCA 619, the short term and long term incentive plans made up roughly 60 per cent of the executive's pay and were treated accordingly. See discretionary bonuses and the notice period.
• A plan amendment you never agreed to may never have become part of your contract. Lin v. Ontario Teachers' Pension Plan, 2016 ONCA 619 held that forfeiture amendments the employees refused to sign never became part of the contract. If your employer circulated a redesigned plan and you never signed it, say so and keep the evidence. See bonus plan amendments you never signed.
• A contract change imposed for nothing is usually unenforceable. A variation of your contract generally requires fresh consideration, and continued employment alone is generally not enough. If you were handed a smaller target and told to sign, ask what you received in exchange. See new employment contracts and fresh consideration and when an employer changes your commission or bonus plan.

The employer's best answer is usually the plan's own amendment clause, which typically reserves the right to amend or terminate the plan at any time. Whether that clause lets your employer cut your personal target without your agreement depends on its exact words and on whether your bonus entitlement lives in the contract or only in the plan. Read both documents side by side.

What are my three options when the employer imposes the change?

Wronko v. Western Inventory Service Ltd., 2008 ONCA 327 sets out three. You can accept the change. You can reject it, treat the contract as at an end, and sue for constructive dismissal. Or you can reject it clearly, keep working, and insist on your original terms. The third option is the one most executives should consider first, because it preserves the claim without forcing an immediate resignation.

That last risk is the employer's clean counter move, and it is worth understanding because most employers do not take it. Giving an executive working notice equal to a genuine reasonable notice period means fifteen to twenty four months of telling someone their current job ends on a fixed date. Employers avoid that conversation, which is why so many reorganisations are simply imposed and left to see who complains.

Note what option one looks like in practice. It is not a signature. It is six months of doing the smaller job competently while you weigh your choices. That is the single most common way a strong executive claim is lost.

How long do I have before I am taken to have accepted the change?

There is no fixed deadline, but the clock starts when the change is clearly communicated to you, not when you first feel its financial effect. For statutory purposes the ESA fixes the standard: s. 56(1)(b) and s. 63(1)(b) each require that the employee 'resigns from his or her employment in response to that within a reasonable period'. At common law, continuing to work without objection can amount to condonation.

• What starts the clock. A clear, communicated, unilateral change. A rumour, a draft chart or a statement that the structure is under review does not start it. A meeting in which you are told your new title, new manager and new target does.
• What stops it running against you. A prompt written objection. Email your manager and HR, state that you do not accept the change to your title, reporting line and bonus target, that you are continuing to work under protest and without prejudice to your rights, and that you are requesting the plan documents. Keep it calm and professional. You are not resigning, and you should not say anything that reads as a resignation.
• A reasonable period is fact specific. Requesting documents, taking legal advice, and negotiating with your employer are all consistent with not having accepted. Months of unbroken silence are not.
• A without prejudice trial period can work. It is common to agree in writing to work in the new structure for a defined period, with the employer's written acknowledgement that doing so is not acceptance and does not prejudice your position. Get that acknowledgement before the period starts, not after.
• Do not confuse condonation with the limitation period. Ontario's basic limitation period for a civil claim is two years from the day the claim was discovered, but the condonation clock is far shorter in practice. Relying on the two year period is a mistake. See limitation periods for wrongful dismissal claims and condonation in Ontario employment law.

One caution about the other direction. A resignation must be clear and unequivocal, as Kieran v. Ingram Micro Inc., 2004 CanLII 4852 (ON CA) confirms, but an angry email sent the afternoon the chart lands hands your employer the argument that you simply quit over a business decision. If you are going to end the relationship, do it in a letter that identifies the changes, states that you are treating them as a repudiation of your contract, and says you are resigning in response to them. See forced resignation and rescinding a heat of the moment resignation.

If I resign, will a court say I should have stayed and mitigated?

It might, and you need to think about this before you resign, not after. Evans v. Teamsters Local Union No. 31, 2008 SCC 20 holds that a dismissed employee can be required to mitigate by returning to work for the same employer where a reasonable person would accept the offer. The key factors are the salary, whether the work is substantially different or demeaning, and whether the relationship has become hostile.

Evans cuts both ways for a reorganised executive, and usually in your favour. The very features that make the change substantial (loss of title, loss of a direct line to the CEO, a halved target, a public demotion in front of people you used to lead) are the same features that make it unreasonable to expect you to stay. Where the atmosphere is one of embarrassment or humiliation, or where the employer has behaved acrimoniously, Evans does not require you to remain.

The mirror case is a modest change with unchanged pay and a civil atmosphere. There, refusing to stay can reduce your damages substantially. This is another reason option three under Wronko v. Western Inventory Service Ltd., 2008 ONCA 327 is often the strongest opening position: staying under written protest answers the Evans question in advance while you get advice. Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402 also supports the argument that earnings from a substantially lesser position may not be deducted from damages, which matters if you remain in a materially inferior role. See accepting a demotion and mitigation and the duty to mitigate.

There is also a statutory version of this problem, and it is the one your employer's counsel will raise. O. Reg. 288/01, s. 2(1) prescribes the employees who are not entitled to notice of termination or termination pay under Part XV of the ESA. Paragraph 5 is the relevant one: 'An employee whose employment is terminated after refusing an offer of reasonable alternative employment with the employer.' Every word does work. The offer must be of employment, it must be alternative, and it must be reasonable. A genuine demotion carrying a materially smaller package is not reasonable alternative employment, and the exemption does not apply.

Here is why none of the other prescribed categories in s. 2(1) helps an employer in a reorganisation case.

• Paragraph 1, definite term or specific task. You are an indefinite term executive, so it does not apply. In any event s. 2(2) disapplies it where the employment terminates before the expiry of the term, where the term expires more than 12 months after employment commenced, or where employment continues for three months or more after expiry.
• Paragraph 2, an employee on a temporary lay-off. Only relevant if you have actually been laid off within the meaning of s. 56(2), which is addressed below.
• Paragraph 3, wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned. A reorganisation is not misconduct. This paragraph only matters if your employer later pivots to a cause allegation.
• Paragraph 4, frustration or impossibility. A restructuring is a business choice, not a fortuitous or unforeseeable event. Section 2(3) also disapplies it where the frustration results from the employee's illness or injury, and s. 2(4) deals only with temporary help agency and recruiter licences.
• Paragraph 5, refusing reasonable alternative employment. The live one, discussed above.
• Paragraph 6, refusing alternative employment made available through a seniority system. There is no seniority system at executive level.
• Paragraph 7, failing to return from a temporary lay-off within a reasonable time after a request. Only engaged if you were laid off and refused recall.
• Paragraph 8, termination during or as a result of a strike or lock-out. Not applicable.
• Paragraph 9, a construction employee. Not applicable.
• Paragraph 10. Revoked.
• Paragraph 11, reaching the employer's established retirement age, and only if the termination would not contravene the Human Rights Code. Not applicable to a restructuring, and a reorganisation used to move out older executives raises the opposite problem.
• Paragraph 12, shipbuilding. Requires all three of (i) an employer engaged in building, altering or repairing a ship or vessel over ten gross tons designed for or used in commercial navigation, (ii) a legitimate supplementary unemployment benefit plan applying to the employee, and (iii) the employee's or the agent's agreement to the exemption. Not applicable.

Does the Employment Standards Act recognise constructive dismissal, and what does it pay?

Yes, in two places, and both require you to actually resign. Section 56(1)(b) says an employer terminates employment if 'the employer constructively dismisses the employee and the employee resigns from his or her employment in response to that within a reasonable period'. Section 63(1)(b) says the same thing for severance pay. If you stay, neither statutory route opens.

Walking s. 56 in full matters here, because employers sometimes park a reorganised executive at home and the lay-off limbs become relevant. Under s. 56(1) there are three triggers: (a) the employer dismisses the employee or otherwise refuses or is unable to continue employing them, which does not describe you if you are still on payroll; (b) constructive dismissal followed by resignation within a reasonable period, which is your route; and (c) a lay-off longer than a temporary lay-off, which only applies if you have actually been sent home.

Section 56(2) defines a temporary lay-off in four limbs. Limb (a) is a lay-off of not more than 13 weeks in any period of 20 consecutive weeks. Limb (b) covers more than 13 weeks in 20 but less than 35 weeks in 52, provided one of six conditions is met: (i) the employee continues to receive substantial payments; (ii) the employer continues benefit or pension plan contributions; (iii) the employee receives supplementary unemployment benefits; (iv) the employee is employed elsewhere and would qualify for those benefits if that were not so; (v) the employer recalls within a time approved by the Director; or (vi) for a non union employee, the employer recalls within a time set out in an agreement between employer and employee. Limb (c) applies only to employees represented by a trade union, so it does not apply to most executives. Limb (d) covers a non union employee laid off 35 or more weeks in 52 but less than 52 weeks in 78, and requires both (i) recall within a time set in an employer and employee agreement and (ii) an approval for an extended lay-off from the Director under s. 66.1(6).

The mechanics in s. 56(3) to (3.8) are what usually defeat the lay-off analysis for a paid executive. Section 56(3) defines an 'excluded week' as a week during which, for one or more days, the employee is not able to work, is not available for work, is subject to a disciplinary suspension, or is not provided with work because of a strike or lock-out. Section 56(3.1) says an employee with a regular work week is laid off for a week only if (a) they earn less than one half of what they would earn at their regular rate in a regular work week, and (b) the week is not an excluded week. So if you are being paid in full while parked on special projects, you are not laid off, and your claim runs on s. 56(1)(b) instead. Section 56(3.2) confirms excluded weeks still count toward the 20, 52 and 78 week periods. Sections 56(3.3) and (3.4) apply the same one half earnings test to an employee without a regular work week over a 20 week window; ss. (3.5) and (3.6) do so over a 52 week window; ss. (3.7) and (3.8) do so over a 78 week window. Section 56(4) provides that a lay-off without a specified recall date is not a termination unless it exceeds a temporary lay-off, and s. 56(5) deems the employment terminated on the first day of the lay-off where it does. See temporary layoff and constructive dismissal.

Severance pay runs on a parallel track. Section 63(1) lists five severance triggers: (a) dismissal or refusal or inability to continue employing; (b) constructive dismissal followed by resignation in response within a reasonable period; (c) a lay-off of 35 or more weeks in 52, or beyond an expired extended lay-off approval; (d) a lay-off because of a permanent discontinuance of all of the employer's business at an establishment; and (e) the case where the employer gives notice under s. 57 or s. 58, the employee gives at least two weeks' written notice of resignation, and that resignation takes effect during the statutory notice period, with s. 63(3) deeming the severance date to be the day the employer's notice would have taken effect. Sections 63(2) to (2.4) mirror the lay-off mechanics in s. 56 but use a one quarter earnings threshold rather than one half.

Whether severance pay is owed at all is governed by s. 64. Subsection (1) requires five years or more of employment plus either (a) a severance occurring because of a permanent discontinuance of all or part of the employer's business at an establishment where the employee is one of 50 or more employees severed within a six month period as a result, or (b) an employer payroll of $2.5 million or more. Most executives work for employers that clear limb (b) comfortably. Subsection (2) defines payroll two ways: (a) total wages earned by all employees in the four weeks ending with the last completed pay period before the severance, multiplied by 13; or (b) total wages in the employer's last or second last fiscal year. Subsection (3) excludes prescribed employees, and that prescribed list sits in a regulation provision that should be checked separately. Subsection (4) deems a location to be an establishment where all three of (a) a permanent discontinuance of all or part of the business at the location, (b) the location being part of an establishment of two or more locations, and (c) 50 or more employees severed within six months as a result are present. Severance pay is calculated in weeks by reference to completed and partial years of service, to a statutory maximum of 26 weeks.

Finally, s. 5 governs what can be bargained away. Section 5(1) provides that, subject to subsection (2), 'no employer or agent of an employer and no employee or agent of an employee shall contract out of or waive an employment standard and any such contracting out or waiver is void'. Section 5(2) provides that where a provision in an employment contract or another Act directly relating to the same subject matter gives a greater benefit, that provision applies and the employment standard does not. Two consequences follow for you. No plan document, no new offer letter and no release can reduce your ESA notice or severance entitlement below the statutory floor. But a contractual severance schedule that gives you more than the ESA is enforceable on its own terms, so read your executive agreement before you assume the common law is your best route.

Be realistic about the size of the statutory floor. Eight weeks of notice and up to 26 weeks of severance pay is a fraction of what an executive notice period is worth. The ESA is the number your employer cannot go below; the common law is the number that actually matters. See termination pay versus severance pay.

What must my employer keep paying during the statutory notice period?

Everything, and this is the most underused provision in an executive's file. Section 60(1)(a) says that during a notice period under s. 57 the employer 'shall not reduce the employee's wage rate or alter any other term or condition of employment'. That single clause is now reshaping how equity plans are read, because a clause that stops your vesting on the termination date alters a term of employment during the statutory notice period.

Section 57 sets the notice scale by period of employment: (a) at least one week if less than one year; (b) at least two weeks if one year or more and fewer than three; (c) at least three weeks if three years or more and fewer than four; (d) at least four weeks if four years or more and fewer than five; (e) at least five weeks if five years or more and fewer than six; (f) at least six weeks if six years or more and fewer than seven; (g) at least seven weeks if seven years or more and fewer than eight; and (h) at least eight weeks if eight years or more. Eight weeks is the ceiling, which is why almost every executive lands on limb (h).

Section 60 then governs that period in three limbs. Under s. 60(1)(a) the employer shall not reduce the wage rate or alter any other term or condition of employment. Under s. 60(1)(b) it shall in each week pay the wages the employee is entitled to receive, which in no case shall be less than regular wages for a regular work week. Under s. 60(1)(c) it shall continue to make whatever benefit plan contributions would be required to maintain the employee's benefits under the plan until the end of the notice period. Section 60(2) provides the averaging rule for an employee without a regular work week or paid otherwise than by time, using the average regular wages over the preceding 12 weeks worked. Section 60(3) deems an employer's failure to contribute to a benefit plan to be unpaid wages for the purpose of s. 103, which gives you an enforcement route. Section 60(4) preserves any entitlement you have under the benefit plan itself.

Section 61 lets the employer pay in lieu instead. Under s. 61(1)(a) it must pay a lump sum equal to the amount the employee would have been entitled to receive under s. 60 had notice been given, and under s. 61(1)(b) it must continue benefit plan contributions to maintain the benefits the employee would have had during that notice period. Section 61(1.1) applies the 12 week averaging rule where there is no regular work week. Section 61(2) deals with mass termination notices under s. 58 and does not apply to an individual executive exit.

This is the foundation of Wigdor v. Facebook Canada Ltd., 2026 ONCA 572, a recent decision released in August 2026, in which the Court of Appeal held that RSUs worth about US$4.7 million that would have vested during a 10 month notice period were recoverable, and that clauses ending vesting on termination are void because ESA s. 60(1)(a), read into s. 61(1)(a), forbids altering any term or condition of employment during the statutory notice period. The court also held that a counsel negotiated agreement attracts no lesser standard of clarity, and distinguished Mikelsteins v. Morrison Hershfield Limited, 2021 ONCA 155 on the basis that those were shares the employee had bought with his own money under a shareholders' agreement. Because Wigdor v. Facebook Canada Ltd., 2026 ONCA 572 is recent, it should not be treated as settled beyond doubt, but for an executive holding unvested equity it is the most important development in years. See the ESA and equity compensation in the statutory notice period and RSUs vesting during the notice period.

There is a second use for s. 60(1)(a) that reorganised executives miss. If your employer imposes a reduced bonus target or a smaller role on you while you are serving out a statutory notice period, that is itself an alteration of a term or condition of employment contrary to the Act.

How much is the difference actually worth on a large package?

On a senior package, the distance between a typical opening offer and a realistic claim is usually in the hundreds of thousands, and most of it sits in bonus, equity and pension rather than base salary. Here is a worked illustration using round figures, chosen to make the arithmetic visible rather than to predict any particular case.

Assume a Vice President, age 52, nine years of service, previously reporting to the CEO. Base salary $260,000. Annual bonus target 50 per cent, so $130,000. Annual RSU grant of $150,000 vesting over three years, so roughly $150,000 vesting each year in steady state. Employer pension contribution of 8 per cent of base plus bonus, so $31,200. Car allowance $12,000. Benefits valued at replacement cost of $9,000. The employer offers six months. Appellate outcomes for comparable profiles include 15 months in Lin v. Ontario Teachers' Pension Plan, 2016 ONCA 619 (head of global funds, age 41, eight years) and 17 months in Singer v. Nordstrong Equipment Limited, 2018 ONCA 364 (divisional president, age 51, eleven years), so 15 months is a realistic comparator for the illustration.

The gap between the offer and the claim is $444,150, and only $195,000 of it is base salary. The remaining $249,150 is bonus, equity, pension, car allowance and benefits. That is why the components, not the salary, are the negotiation.

Now run the same numbers as if you had accepted the reorganisation quietly and been terminated a year later. Your target is 25 per cent, so $65,000 rather than $130,000. Your equity tier has dropped with your grade, say to $90,000 a year. The pension contribution falls with the bonus, to $26,000. Annual value drops from $592,200 to $462,000, and the same 15 month claim is worth about $577,500 instead of $740,250. Accepting the change in silence cost roughly $162,750 of notice period damages, on top of the pay you lost while you were still working there. That is the price of doing nothing for six months.

For the same person, the ESA floor is eight weeks of notice under s. 57(h) plus nine weeks of severance pay under s. 64, or 17 weeks, which at a base salary of $5,000 per week is roughly $85,000. Benefits must continue through the eight week statutory notice period under s. 60(1)(c), and on the reasoning in Wigdor v. Facebook Canada Ltd., 2026 ONCA 572, vesting cannot be stopped during it.

Two more calibration points. Lowndes v. Summit Ford Sales Ltd., 2006 CanLII 14 (ON CA) confirms that only exceptional circumstances support a base notice period above 24 months, and reduced a 28 year general manager aged 59 from 30 months to 24 because he was not a senior executive in the sense the case law recognises. Dawe v. The Equitable Life Insurance Company of Canada, 2019 ONCA 512 is the case on 24 months for an older long service executive, and Currie v. Nylene Canada Inc., 2022 ONCA 209 and Milwid v. IBM Canada Ltd., 2023 ONCA 702 are the appellate decisions to read on when circumstances are exceptional enough to go beyond the usual ceiling. If you were recruited away from a secure role shortly before the reorganisation, Egan v. Alcatel Canada Inc., 2006 CanLII 108 (ON CA) is important: inducement lengthens notice, and a director level employee with 21 months of service received nine months. See short service severance and inducement and the 24 month cap for executives.

What does my bonus and equity plan wording actually do on termination?

Less than it appears to. Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26 sets a two part test. First, would you have been entitled to the bonus or equity as part of your compensation during the reasonable notice period? Second, does the plan wording unambiguously remove or limit that common law right? Most standard wording fails the second step.

Three additional points round out the picture. O'Reilly v. IMAX Corporation, 2019 ONCA 991 is another appellate example of a senior executive recovering equity and deferred compensation that would have vested during the notice period. Battiston v. Microsoft Canada Inc., 2021 ONCA 727 is a caution rather than a comfort: the Court of Appeal reversed the trial decision reported at 2020 ONSC 4286, so a trial level win about notice of plan terms does not always survive appeal. And Egan v. Alcatel Canada Inc., 2006 CanLII 108 (ON CA) matters if you are ill or become ill: an employer that cancels disability coverage before the notice period ends must pay the disability benefits that would have been payable, grossed up for tax, although not on top of salary for the same months.

See also valuing equity vesting during the notice period, RSUs and stock options after termination, LTIP grants on a without cause dismissal and SERPs and deferred compensation.

Is the termination clause in my old contract even enforceable?

Check this before you calculate anything. If your executive agreement caps severance at a fixed figure, that cap only matters if the termination provisions are valid. Machtinger v. HOJ Industries Ltd., [1992] 1 SCR 986 holds that where a termination clause is invalid, the common law presumption of reasonable notice revives, and for an executive that is the whole ballgame.

• One bad limb kills the scheme. Waksdale v. Swegon North America Inc., 2020 ONCA 391 holds that a single offside limb voids the termination provisions as a whole, even if the employer relies on a different limb. Leave to appeal to the Supreme Court of Canada was dismissed.
• Your sophistication does not save it. Rahman v. Cannon Design Architecture Inc., 2022 ONCA 451 confirms that an executive's sophistication and independent legal advice do not rescue a termination clause that offends the ESA. It also held that a 'no notice for just cause' clause is void and takes the whole termination scheme with it, and that a parent company that directs, pays and pools the executive can be a common employer, which matters if your grants come from a US or UK parent.
• A 'greater of' formula can still be void. In Andros v. Colliers Macaulay Nicolls Inc., 2019 ONCA 679, a clause offering the greater of the ESA minimum or two months was void because its alternatives dropped severance pay and benefits.
• Sole discretion wording is contested. In Dufault v. Ignace (Township), 2024 ONSC 1029 at paras 19 to 22, the Superior Court reasoned that a clause allowing an employer to terminate 'at any time' in its 'sole discretion' misstated the Act. That is a Superior Court decision and the point should not be treated as settled appellate law, but it is worth raising if your clause is worded that way.
• A changed substratum argument may take the clause out entirely. Celestini v. Shoplogix Inc., 2023 ONCA 131 applied the doctrine where an executive's responsibilities had expanded so fundamentally that the original contract no longer reflected the role.

See is my termination clause enforceable, signs your termination clause is unenforceable and executive severance cap clauses.

What exactly should I look for in my own documents?

Look for nine things, in this order. Each one changes the number, and several of them are drafted to operate against you the moment you resign rather than the moment you are dismissed. That asymmetry is the single most dangerous feature of an executive compensation file in a constructive dismissal scenario.

• Change of control language. Single trigger clauses accelerate vesting on a transaction alone. Double trigger clauses require both a transaction and a qualifying termination. If your reorganisation followed an acquisition, find out which you have and whether a constructive dismissal counts as the second trigger.
• 'Good leaver' and 'bad leaver' definitions. This is the most dangerous definition in your file. Many plans treat any resignation as a bad leaver event, which forfeits unvested awards and sometimes claws back vested ones. If you resign in response to a constructive dismissal, you need your resignation letter to characterise it as a dismissal, not a voluntary departure. See good leaver and bad leaver definitions.
• Clawback and forfeiture for competition. Check whether amounts already paid can be recovered, and whether joining a competitor triggers forfeiture of vested awards. See clawbacks of bonus and equity already paid.
• Restrictive covenants. Elsley v. J.G. Collins Insurance Agencies Ltd., [1978] 2 SCR 916 and Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6 confirm that courts do not rewrite an overbroad restrictive covenant to make it enforceable. If you signed an assignment of intellectual property mid employment, Techform Products Ltd. v. Wolda, 2001 CanLII 8604 (ON CA) is the case on when that is binding. See are non competes enforceable.
• The release. A release is the mechanism that turns a negotiable claim into a closed file. ESA s. 5(1) makes a waiver of an employment standard void, so a release cannot take your statutory minimums, but it will extinguish everything above the floor, including bonus, vesting and pension accrual over the notice period, and often your LTD claim as well. Uber Technologies Inc. v. Heller, 2020 SCC 16 and Swampillai v. Royal & Sun Alliance Insurance Company of Canada, 2018 ONSC 4023, aff'd 2019 ONCA 201 show that releases can sometimes be set aside for unconscionability, but those arguments are harder for a sophisticated executive. See should I sign the severance release and releases of long term disability claims.

What if I work for a bank or an airline, or I am in a union?

Then some of the analysis above changes at the foundation. If your employer is federally regulated, the Employment Standards Act, 2000 does not apply to you at all, and the Canada Labour Code does instead. That covers banks, airlines, railways, interprovincial trucking, telecommunications and broadcasting, which is where a large share of Ontario executives work.

Wilson v. Atomic Energy of Canada Ltd., 2016 SCC 29 holds that the Canada Labour Code's unjust dismissal scheme displaces dismissal on notice for employees who can use it. Managers are generally outside that complaint route, so a federally regulated executive is usually back to a civil action for constructive dismissal and reasonable notice, without the ESA notice, severance and notice period protections described above. See federally regulated employee rights.

If you are covered by a collective agreement, Weber v. Ontario Hydro, [1995] 2 SCR 929 gives the labour arbitrator exclusive jurisdiction over disputes arising from that agreement, and the ESA complaint route is closed to employees represented by a union. This is uncommon at executive level, but it matters if you moved into management from a bargaining unit role and the question is which regime governs the period in dispute. See unionized employees and dismissal.

If the reorganisation followed a maternity or parental leave, a disability accommodation request, a medical leave, or is tied to your age, the Human Rights Code is engaged, but s. 46.1(2) of the Code does not permit a civil action founded solely on an infringement of the Code. Code damages have to ride inside another cause of action, which in practice means your constructive dismissal claim. See human rights damages in employment and demoted or restructured after parental leave.

Finally, if the process has made you unwell. You cannot generally sue your employer for a work caused psychological injury: WSIA 1997 s. 28(1) provides that a worker of a Schedule 1 employer is not entitled to commence an action against that employer in respect of the worker's injury or disease, and s. 13(4) makes chronic or traumatic mental stress compensable, which brings it inside that bar. The narrow survivor is s. 13(5): stress caused by the employer's decisions about the employment, including decisions to discipline, terminate, or change the work or working conditions, is excluded from benefits and so is not barred in the same way. A reorganisation is exactly that kind of decision, so the mental distress it causes generally belongs in your dismissal claim, where Honda Canada Inc. v. Keays, 2008 SCC 39, Wallace v. United Grain Growers Ltd., [1997] 3 SCR 701 and Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419 govern, rather than in a personal injury action. Note also that Merrifield v. Canada (Attorney General), 2019 ONCA 205 held there is no independent tort of harassment in Ontario, so 'suing for harassment' as a standalone claim is not available. See suing an employer for workplace PTSD and bad faith dismissal damages.

What should I do now?

Move quickly on documents and slowly on decisions. The two things that lose executive constructive dismissal claims are waiting too long to object and resigning in a way that triggers a bad leaver definition. Everything below is designed to avoid both, in order.

1. 1.Download and store, on a personal device, every compensation document you have access to. Access is often cut the day you raise this.
2. 2.Write down the exact date, time, attendees and words used when the reorganisation was communicated to you. Dates drive the condonation analysis.
3. 3.Send a short, calm written objection to your manager and HR stating that you do not accept the changes to your title, reporting line and bonus target, that you are working under protest and without prejudice, and that you are requesting the plan documents and the new job description.
4. 4.Ask in writing for the new role's grade, bonus target percentage, equity grant tier and reporting relationship, in writing. Employers often decline to put a demotion in writing, and that refusal is itself evidence.
5. 5.Read your termination clause and every grant agreement before you take a position on whether the package on offer is fair.
6. 6.Calculate your own number: base, bonus at the old target, equity vesting over a realistic notice period, pension, car allowance and benefits. Compare it with what is being offered.
7. 7.Check your next vesting dates. If a material tranche vests in the next few months, that changes the timing strategy entirely.
8. 8.Do not resign, do not sign the new plan, and do not sign any release until you have advice. Signing is irreversible; waiting a further two weeks generally is not.
9. 9.Get advice from an employment lawyer who works on executive packages, and do it while you are still employed. That is when your leverage is highest and your options are all still open. You can start with a severance package review.
10. 10.If you decide to resign, have the resignation letter drafted so that it identifies the changes, characterises them as a repudiation of your contract, and states that you are resigning in response, within a reasonable period, under ESA s. 56(1)(b) and s. 63(1)(b).

The documents to gather, in order of how often they decide the outcome:

• Your original offer letter and employment agreement, plus every subsequent agreement, promotion letter and amendment.
• Every annual compensation letter for the last five years, showing base, target, actual bonus paid and equity granted.
• The bonus or STIP plan document for each year, including any amended version you were sent and whether you signed it.
• Every equity grant agreement and the governing LTIP or omnibus plan, with the vesting schedules and the current unvested balance from your plan administrator portal.
• Any shareholders' agreement, if you purchased shares with your own money.
• Your pension statements, DC contribution records and SERP documentation.
• The benefits booklet and the LTD policy, with the coverage end date on termination.
• The old and new organisational charts, your old and new job descriptions, and any internal announcement of the reorganisation.
• Your last three performance reviews and any succession planning or talent review documents you have.
• Every email and message about the reorganisation, including the ones where you raised concerns.
• Any non compete, non solicit, confidentiality or intellectual property assignment you have signed.

The questions to ask, split between your employer and your lawyer:

• To your employer: what is the grade, bonus target percentage and equity tier of the new role, in writing?
• To your employer: who does the new role report to, and who reports into it?
• To your employer: is my existing bonus target guaranteed for the current plan year, and will the current year be paid at the old target?
• To your employer: does the reorganisation affect my vesting schedule, my grant tier, or any change of control protection?
• To your employer: are you treating this as a change to my terms of employment, and if so, what consideration is being offered for it?
• To your lawyer: is my termination clause valid, and if not, what is my reasonable notice range?
• To your lawyer: are these changes, taken together, substantial enough to found a constructive dismissal claim on my facts?
• To your lawyer: what does Evans mean for me if I resign, and should I instead stay under written protest?
• To your lawyer: which of my unvested awards would vest during a realistic notice period, and what are they worth?
• To your lawyer: does my plan's good leaver definition treat a resignation in response to constructive dismissal as a voluntary quit, and how do we avoid that outcome?
• To your lawyer: how long do I have before condonation becomes a real risk on these facts?

About the Author

Daniel Carter

Legal Writer, Mirza Law

Daniel Carter is a legal writer at Mirza Law in Toronto. He writes about layoffs, employment contracts, and the steps to take before you sign anything from your employer.

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