Can My Employer Claw Back a Bonus or Equity It Already Paid Me After It Terminates Me?

The letter is polite. Without cause, effective immediately, six months of base salary, please sign by Friday. Paragraph nine is the one you keep rereading: the Company reserves the right to recover any incentive compensation paid in the 24 months preceding the termination date, and the executive agrees to repay such amounts on demand. Between the March bonus and the RSU tranche that vested and settled last spring, paragraph nine is pointed at several hundred thousand dollars that is already in your account, some of it already spent, all of it already taxed.

Here is what usually happens next, and it is worth knowing before you spend a weekend in a panic. Employers very rarely sue a departing executive to recover a paid bonus. What they do instead is use the clause as a net against the severance number: the offer gets smaller, or the offer comes with a repayment acknowledgement attached, or a negotiator says the company will agree not to pursue the clawback if you accept the package as presented. That is a trade, and you cannot price a trade without knowing whether the thing being traded away was ever enforceable.

So the question is not whether the clause exists. It is whether it does anything. Two pieces of law answer that: the Employment Standards Act, 2000, which sets an absolute floor that no contract can dip below, and the common law of reasonable notice, which decides what your whole package was worth over the period you should have been given.

Can my employer actually take back a bonus or equity it has already paid me?

Sometimes, but rarely on the strength of a general clawback clause. If the payment was wages, ESA s. 13(1) says an employer shall not withhold wages payable to an employee, make a deduction from an employee's wages or cause the employee to return his or her wages to the employer unless authorized to do so under that section. Those are three separate prohibited acts, and a clawback is the third one.

An employer that wants your money back has only three routes. It can ask you to authorize the repayment in writing, which is why the acknowledgement is in the envelope. It can try to set the claimed amount off against what it owes you, which is a deduction and runs straight into s. 13. Or it can sue you in civil court on the contract, which costs it money, takes years, puts its own drafting in front of a judge, and hands you a counterclaim for the full value of your notice period.

Before you go further, separate your package into three buckets, because they are governed differently and conflating them is the most common mistake senior managers make in the first week.

• Paid and settled. Cash that hit your account; shares that vested, settled and are now yours; options you exercised. This is the bucket a clawback clause is aimed at, and it is the bucket where ESA s. 13 does the most work.
• Vested but not yet paid or settled. An earned bonus for a completed year where the payout date has not arrived; units that vested but settle on a later date. Here the employer is usually withholding rather than clawing back, which is the first prohibited act in s. 13(1) rather than the third.
• Unvested. Future tranches. Nothing is being clawed back; the argument is about whether they would have vested during your notice period. That is a different analysis, covered in RSUs vesting during the notice period and what happens to LTIP grants on a without cause dismissal.

What is the difference between a misconduct clawback and a termination clawback?

A misconduct clawback is conditioned on something you allegedly did: fraud, a restatement of financial results, a breach of a restrictive covenant, conduct the board considers detrimental. A termination clawback is conditioned on nothing more than your employment ending, often within a stated window after a payout. The first makes the employer prove a case. The second makes the employer rely on its own decision to dismiss you, which is a much weaker place to stand.

The misconduct route also has a statutory ceiling that surprises employers. Your ESA notice and severance entitlements disappear only if you fall inside one of the prescribed exemptions in O Reg 288/01, s. 2(1), and for a dismissed senior manager there is exactly one candidate: paragraph 3, an employee who has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer. Every other paragraph is off the table on its own terms. Paragraph 1 covers an employee hired on the basis that employment ends on the expiry of a definite term or completion of a specific task, and s. 2(2) further disapplies it where the employment ends early, where the term runs past 12 months, or where work continues three months beyond the term. Paragraphs 2 and 7 concern temporary layoff. Paragraph 4 concerns frustration by a fortuitous event, and s. 2(3) excludes illness or injury from it while s. 2(4) excludes a revoked temporary help agency licence. Paragraphs 5 and 6 require a refusal of reasonable or seniority-based alternative employment. Paragraph 8 requires a strike or lock-out. Paragraph 9 covers construction employees, paragraph 11 retirement at an established age, and paragraph 12 shipbuilding employees with a supplementary unemployment benefit plan. Paragraph 10 is revoked. More on the gap between the two standards in with cause versus without cause.

That matters for clawbacks in a specific way. Wilful misconduct is a deliberately higher bar than common law just cause, and it is the only misconduct standard that touches your statutory money. So an employer asserting a misconduct clawback is often asserting something it could not prove to the standard required to take away even your minimum entitlements, let alone to recover cash it has already paid you.

Is my bonus wages under the ESA, and why does that decide everything?

Because s. 13 protects wages and nothing else. ESA s. 1 defines wages as, in limb (a), monetary remuneration payable by an employer to an employee under the terms of an employment contract, oral or written, express or implied; in limb (b), any payment required to be made by an employer to an employee under the Act; and in limb (c), any allowances for room or board under an employment contract or prescribed allowances. Limb (b) is why your statutory termination pay and severance pay are wages too.

Then come the exclusions, and limb (e) is the one your employer will reach for. It removes from wages any sums paid as gifts or bonuses that are dependent on the discretion of the employer and that are not related to hours, production or efficiency. Read the conjunction. The exclusion needs both conditions, so a bonus the plan calls discretionary but which is calculated off revenue, EBITDA, funds under management, a scorecard or individual objectives is related to production or efficiency and therefore remains wages. A plan that describes an amount as discretionary has not, by saying so, removed it from the Act.

The other exclusions matter less but you should know where they sit. Limb (d) takes out tips and other gratuities. Limb (f) takes out expenses and travelling allowances, which is why a disputed expense advance is not the same argument as a disputed bonus. Limb (g) takes out employer contributions to a benefit plan and payments you are entitled to from a benefit plan, subject to ss. 60(3) and 62(2), which is why your pension and insured benefits are analysed as damages rather than as wages. Note also the separate definition of regular wages, which excludes termination pay and severance pay: that narrower term governs things like the weekly payment obligation, not the s. 13 protection.

Two definitional details in s. 1 are worth more to you than they look. Employee includes a person who was an employee, and employer includes a person who was an employer. Section 13 therefore does not expire on your last day; it binds the company in respect of a former employee's wages. The remaining subsections of s. 1 do not bear on any of this: s. 1(2) and s. 1(2.1) concern temporary help agency assignments and trial-period training, and neither describes a senior manager's incentive pay.

What does ESA s. 13 actually require before my employer can make me give money back?

It requires one of two authorizations, and then it takes several of them away again. Section 13(1) states the prohibition: an employer shall not withhold wages payable to an employee, make a deduction from an employee's wages or cause the employee to return his or her wages to the employer unless authorized to do so under this section. Everything after that subsection is the list of permissions, and every permission has an exception.

• Section 13(2): a statute or a court order. An employer may withhold, deduct or require a return if a statute of Ontario or Canada or a court order authorizes it. This is income tax withholding, statutory payroll deductions, a garnishment, a support order. A plan document, a board-approved recoupment policy and a clause in your employment agreement are none of these. A contract is not a statute, and a policy is not a court order, so s. 13(2) does not assist a clawback.
• Section 13(3): your written authorization. An employer may withhold, deduct or require a return with the employee's written authorization. This is the only door a clawback clause can realistically come through, and it is why a repayment acknowledgement is put in front of you at the worst possible moment.
• Section 13(4): the remittance failure exception. Subsections (2) and (3) do not apply if the statute, order or written authorization requires the employer to remit the withheld or deducted wages to a third person and the employer fails to do so. This one rarely bites on a clawback, because the company is keeping the money rather than remitting it onward. It does bite where a deduction was taken for onward payment to a pension administrator, insurer or benefit provider and never arrived.
• Section 13(5)(a): no specific amount and no formula. Subsection (3) does not apply if the employee's authorization does not refer to a specific amount or provide a formula from which a specific amount may be calculated. This is the limb that defeats most executive clawbacks. A clause permitting the committee to recover all or any portion of any incentive compensation as it determines appropriate names no amount and supplies no formula. Neither does a clause that is silent on whether the repayable figure is gross or net of the tax already withheld at source.
• Section 13(5)(b): three forbidden reasons. Subsection (3) also does not apply where the wages were withheld, deducted or required to be returned because of faulty work, which is how a clawback pegged to a performance failure or a restated result can be characterized; or because the employer had a cash shortage, lost property or had property stolen and a person other than the employee had access to the cash or property, which covers the overwhelming majority of loss-based recoupment against a manager whose team also had access; or under any prescribed conditions.
• Section 13(5)(c): wages subject to an order. Subsection (3) does not apply where the wages required to be returned were the subject of an order under the Act. If an employment standards officer has already ordered the wages paid, they cannot be clawed back by consent.
• Section 13(6): the dine and dash provision. For greater certainty, the cash shortage and lost property circumstances include a customer leaving a restaurant, gas station or other establishment without paying. It confirms how broadly the s. 13(5)(b)(ii) exception is meant to read, and it has no direct application to an executive incentive plan.

Put those together and the structure is clear. Unless a clawback clause identifies a specific dollar amount or supplies a formula that produces one, a signature on it does not give the employer what s. 13(3) requires, and s. 13(1) then prohibits the repayment outright. Section 5(1) closes the loop: no employer and no employee shall contract out of or waive an employment standard, and any such contracting out or waiver is void. Section 5(2) is the only exception, and it runs the other way, applying a contractual provision only where it gives the employee a greater benefit than the standard. A clawback gives you less, not more, so s. 5(2) cannot rescue it. See also deductions from your pay and repaying a signing bonus or training costs, where repayment schedules are often drafted with the amount and formula that a general clawback lacks.

Can a clawback or a forfeiture reach into my statutory notice period?

No. This is the hardest floor in the whole analysis. Section 60(1)(a) says that during a notice period the employer shall not reduce the employee's wage rate or alter any other term or condition of employment. A clawback that strips away incentive compensation, or a vesting cut-off that stops awards accruing, alters a term or condition of your employment. Inside the statutory notice period, it cannot lawfully do that.

Walk the whole provision, because each limb carries something. Section 60(1)(b) requires the employer in each week to pay the wages the employee is entitled to receive, which in no case shall be less than regular wages for a regular work week. Section 60(1)(c) requires the employer to continue making whatever benefit plan contributions would be required to maintain your benefits until the end of the notice period. Section 60(2) deals with an employee who has no regular work week or is paid on a basis other than time, and directs an average of regular wages over the 12 weeks in which the employee worked immediately before notice was given, which is the limb that matters if a large share of your pay is variable. Section 60(3) deems a failure to make benefit plan contributions to be unpaid wages, and s. 60(4) preserves whatever entitlement you have under the plan itself, so the statutory remedy does not replace your insurance claim.

Most executives are not given working notice, so s. 61 is the operative route. Section 61(1)(a) permits termination without notice where the employer pays termination pay in a lump sum equal to the amount the employee would have been entitled to receive under s. 60 had notice been given, and s. 61(1)(b) requires the employer to continue benefit plan contributions for that period. Section 61(1.1) applies the 12 week averaging in s. 60(2) to the period immediately preceding the termination date where there is no regular work week or the employee is paid on a basis other than time. Section 61(2) is a mass termination posting requirement and applies only where the employer would otherwise have been required to give group notice of termination, so it is usually irrelevant to a single executive exit.

The consequence is the one that changes negotiations. Because s. 61(1)(a) measures the lump sum by what s. 60 would have produced, the s. 60(1)(a) prohibition travels into a pay in lieu case. Wigdor v. Facebook Canada Ltd., 2026 ONCA 572, a recent decision from August 2026, applied exactly that reasoning to hold that clauses ending vesting on termination are void for the statutory notice period. It should not be treated as settled beyond doubt, but the statutory logic is there on the face of ss. 60 and 61. Contrast Kieran v. Ingram Micro Inc., 2004 CanLII 4852 (ON CA), where option wording that unambiguously ended the options when services ceased was enforced on its terms; the statutory argument was not made in that case. More at the ESA and equity compensation in the statutory notice period.

What must a clawback clause say to have any chance of being enforced?

It has to do two separate jobs and most clauses do neither. It must satisfy s. 13(3) by giving a written authorization that refers to a specific amount or a formula producing one, which s. 13(5)(a) demands. And it must be clear enough at common law to remove a right you would otherwise have, which is the unambiguous-wording question the courts ask about incentive compensation.

• A stated amount or a working formula. Not up to the full amount, not such portion as the committee determines. A schedule (100 per cent if you leave within 6 months of payment, 50 per cent within 12) at least has a formula.
• Gross or net. You received the bonus net of withholdings. A clause that does not say which figure is repayable arguably fails to provide a formula from which a specific amount may be calculated at all.
• A defined and lawful trigger. Termination for cause, as the plan defines cause, is narrower and more defensible than cessation of employment for any reason. Watch for a plan definition of cause that is looser than the ESA standard of wilful misconduct.
• Express survival. Does the clause say it survives the end of employment, and for how long. A clause that operates only while you are a participant in the plan may have nothing to operate on.
• A decision-maker and a review mechanism. Sole and unfettered discretion in a committee, with no notice, no reasons and no appeal, is the wording most vulnerable to both s. 13(5)(a) and the unambiguity requirement.
• Scope. Does it reach vested and settled awards, or only unvested ones. Many clawbacks are drafted as forfeiture of unvested awards and are then misdescribed in a termination letter as a right to recover money already paid.

One strategic consequence of that last row. If the clawback is drafted into the same termination scheme as an offside cause clause, attacking the clause can collapse the whole scheme and revive common law notice, which is the foundation laid in Machtinger v. HOJ Industries Ltd., [1992] 1 SCR 986. Read your agreement as one instrument, not as a set of independent paragraphs. More at is my termination clause enforceable.

What if the clawback was added to the plan after I was hired and I never signed it?

Then there is a serious argument it was never part of your contract. In Lin v. Ontario Teachers' Pension Plan, 2016 ONCA 619 forfeiture amendments that the employees refused to sign never became part of the contract. An employer cannot improve its own position by circulating a document; a term has to be agreed, and agreement to a term that takes something away from you generally needs fresh consideration.

Wronko v. Western Inventory Service Ltd., 2008 ONCA 327 sets out the three responses available when an employer unilaterally changes a fundamental term: accept it, reject it and treat the change as a repudiation amounting to dismissal, or make clear that you do not accept it and continue working, leaving the employer to terminate you on proper notice if it insists. The third option is the one most executives take without realizing they have taken it, and the written record of the objection is what makes it worth anything later. See a bonus plan amendment you never signed and being asked to sign a new employment contract.

Now the warning, because it cuts the other way. Section 1(3) of the ESA deems a reference to an agreement between an employer and an employee to be a reference to an agreement in writing, and s. 1(3.1) confirms that the writing requirement is satisfied if the agreement is in electronic form. Section 1(4) adds that nothing in s. 1(3) requires an employment contract that is not a collective agreement to be in writing at all. Translated: the click-through acceptance in your equity portal is capable of being written authorization for the purposes of s. 13(3), and the emails attaching the plan matter. In Battiston v. Microsoft Canada Inc., 2021 ONCA 727 the Court of Appeal reversed the trial decision at 2020 ONSC 4286 and held the executive bound by stock award terms he said he had not read. Not having read the plan is not a defence you should plan around.

How much is the notice period actually worth across my whole package?

Far more than the salary line, which is why the clawback conversation and the notice conversation have to be run together. Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26 sets the two-part test: would you have received the compensation as part of your package during the reasonable notice period, and does the plan wording unambiguously take that entitlement away. Singer v. Nordstrong Equipment Limited, 2018 ONCA 364 confirms that bonus damages run over the whole notice period.

Take a worked illustration with round numbers. A vice president, age 52, nine years of service, is dismissed without cause on September 30, 2026. Base salary $300,000. Target bonus 50 per cent of base, so $150,000, earned over the calendar year and paid each March. Annual RSU grants with tranches of $150,000 vesting November 15, 2026, $200,000 vesting March 1, 2027, $250,000 vesting November 15, 2027 and $300,000 vesting November 15, 2028. Defined contribution pension at 10 per cent of base. Benefits with a replacement cost of $1,800 a month. Car allowance of $1,000 a month. The employer offers six months. Counsel argues fifteen, on the Bardal v. Globe & Mail Ltd., 1960 CanLII 294 (ON SC) factors of age, length of service, character of employment and availability of similar employment.

Nine additional months of notice is worth $635,200 here, and only $225,000 of that is salary. The November 2028 tranche of $300,000 sits outside both periods, but it is not automatically gone either: in Bain v. UBS Securities Canada Inc., 2018 ONCA 190 the deferred portion of a bonus earned during the notice period was recoverable even though it would have vested after the notice period ended. Now add the clawback. Suppose the employer asserts that the $150,000 bonus paid in March 2026 for the 2025 year and the $200,000 tranche that vested in March 2026 are both repayable under a clause covering payments made within 12 months of termination. The employer's opening position becomes $369,300. Yours is $1,354,500 with no clawback at all. The spread is $985,200, and the clawback clause accounts for a third of it.

Two guardrails on the notice side. The top of the range is real but not unlimited: Lowndes v. Summit Ford Sales Ltd., 2006 CanLII 14 (ON CA) holds that only exceptional circumstances support a base notice period above 24 months, and reduced a 28 year general manager from 30 months to 24 because he was not a senior executive in the sense the case law recognises, while Dawe v. The Equitable Life Insurance Company of Canada, 2019 ONCA 512 shows where an older long service executive lands. And short service is not the ceiling people assume: in Love v. Acuity Investment Management Inc., 2011 ONCA 130 a senior vice president with 2.5 years received 9 months, because the character of the employment and equity participation make comparable work harder to find. Your duty to mitigate still applies, and under Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402 earnings from a substantially lesser job may not be deducted; see also valuing equity vesting during the notice period.

Can my employer hold my final pay or severance until I agree to the clawback?

No. Section 11(5) sets the deadline: if an employee's employment ends, the employer shall pay any wages to which the employee is entitled not later than the later of seven days after the employment ends and the day that would have been the employee's next pay day. Holding wages past that date in order to extract a signature is the first prohibited act in s. 13(1), withholding wages payable to an employee.

The rest of s. 11 fills in the mechanics. Section 11(1) requires the employer to establish a recurring pay period and pay day and to pay all wages earned in each period, other than accruing vacation pay, no later than that pay day. Section 11(2) lists the permitted methods: cash, a cheque payable only to the employee, direct deposit in accordance with s. 11(4), or another prescribed method. Section 11(3) requires cash or a cheque to be given at the workplace or another place agreeable to you. Section 11(4) permits direct deposit only where the account is selected by the employee and in the employee's name, no person other than the employee or an authorized person has access to it, and the account meets any prescribed criteria. Set-off against a disputed clawback appears nowhere in that list.

Your statutory severance pay is in the same protected category, and most executives at this level qualify. Section 64(1) requires severance pay where the employee was employed for five years or more and either (a) the severance occurred because of a permanent discontinuance of all or part of the business at an establishment and the employee is one of 50 or more whose employment was severed within a six month period as a result, or (b) the employer has a payroll of $2.5 million or more. Limb (b) is the usual route and the threshold is low for a company paying six figure salaries. Section 64(2) gives two ways to prove it: total wages of all employees in the four weeks ending with the last day of the last completed pay period before the severance, multiplied by 13; or total wages in the last or second last fiscal year. Section 64(3) excludes prescribed employees, and a dismissed senior manager is not one. Section 64(4) deems a single location to be an establishment where there is a permanent discontinuance at that location, the location is part of a multi-location establishment, and 50 or more employees are severed within six months as a result; it expands limb (a) and is not needed if limb (b) is met. More at withholding final pay and termination pay versus severance pay.

What exactly should I look for in my own plan documents before I sign anything?

Read in this order: the employment agreement, then the plan, then the individual grant agreements, then every amendment, then the release. They rank in that order because a later document can change an earlier one only if you agreed to it. Here is what each item means for you, in the words your documents will actually use.

• The definition of Termination Date or Date of Termination. If it means your last day of active employment without regard to any notice or payment in lieu, the plan has quietly converted every generous-sounding clause into an active employment clause, and that is the wording that failed in Paquette v. TeraGo Networks Inc., 2016 ONCA 618.
• The vesting schedule, with actual dates. Write out every tranche, its value and its vesting date, then mark where your statutory notice period ends and where a reasonable notice period would end. That single page is your negotiation.
• Good leaver and bad leaver definitions. Check whether a without cause dismissal is named at all. Very often it is not, and you land in a residual bucket written for resignations. More at good leaver and bad leaver after a without cause termination.
• The change of control provisions. Single trigger or double trigger, what window applies after a transaction, and whether the acquirer assumed the plan. A deal in progress can be worth more to you than the notice argument.
• The cause definition in the plan, as distinct from the one in your employment agreement. Two different definitions of cause in two documents is a drafting problem for the employer, not for you.
• The clawback itself. Amount or formula, gross or net, trigger, survival period, who decides, and whether it reaches settled awards or only unvested ones.
• The exercise window for options. Ninety days after the termination date is common and can be the whole dispute where the shares are in the money.
• Restrictive covenants and the forfeiture hook. Many clawbacks fire on breach of a non-solicit. Courts do not rewrite overbroad covenants to save them, as Shafron v. KRG Insurance Brokers (Western) Inc., 2009 SCC 6 confirms, and the restraint must be reasonable on the Elsley v. J.G. Collins Insurance Agencies Ltd., [1978] 2 SCR 916 approach. See is a non-solicitation agreement enforceable.
• The release. Check whether it releases the incentive plans, any claim to unvested awards, and any disability or insurance claim. A release can be set aside where the bargain was improvident and there was an inequality of bargaining power, on the unconscionability analysis in Uber Technologies Inc. v. Heller, 2020 SCC 16, and a release covering a live disability claim was set aside in Swampillai v. Royal & Sun Alliance Insurance Company of Canada, 2018 ONSC 4023, aff'd 2019 ONCA 201. See should I sign the severance release.

Does any of this change if I am unionized or federally regulated?

Yes, fundamentally, and these are the two facts to establish before anything else. If you are federally regulated, the Employment Standards Act, 2000 does not apply to you at all, so every section discussed above is the wrong statute and the Canada Labour Code governs instead. If your terms come from a collective agreement, the courts have no jurisdiction over the dispute.

Federal regulation catches a lot of senior managers: banks and federally incorporated trust companies, telecommunications and broadcasting, airlines, railways, interprovincial trucking and pipelines, ports and shipping, and most Crown corporations. The deduction rules, the notice rules and the forfeiture analysis all come from the Code rather than the ESA. Note also that the Code's unjust dismissal regime, which Wilson v. Atomic Energy of Canada Ltd., 2016 SCC 29 held displaces dismissal on notice alone, excludes managers, so a senior manager in the federal sector is usually back to a civil wrongful dismissal claim. Start at federally regulated employee rights and unjust dismissal under the Canada Labour Code.

If you are in a bargaining unit, Weber v. Ontario Hydro, [1995] 2 SCR 929 gives labour arbitration exclusive jurisdiction over disputes arising from the collective agreement, which includes an incentive plan incorporated into it, and the ESA's own complaint provisions are closed to you where the collective agreement applies. Your route is a grievance through your union, and the timelines are short. See a unionized employee who has been fired.

What should I do in the next two weeks?

Preserve the documents, do not sign anything, and get the clause assessed before it is priced into an offer you accept. The order below matters: once you have signed a release or a repayment acknowledgement, the analysis above becomes a much harder argument about setting aside a signed document rather than a straightforward one about whether the clause ever worked.

1. 1.Today, before any access is cut off, download the plan, every grant agreement, every amendment, every acceptance confirmation and your full vesting and transaction history from the equity portal, and email them to a personal address.
2. 2.Do not sign the repayment acknowledgement, the release, or anything described as a routine form. Section 13(3) turns on your written authorization, so your signature is the only thing the employer is missing.
3. 3.Write down, in one page, every component of your package with its annual value: base, target and actual bonus for the last three years, each unvested tranche with its value and vesting date, pension contributions, benefits, allowances, and anything deferred.
4. 4.Mark two dates on that page: the end of your statutory notice period and the end of a realistic reasonable notice period. Count the tranches that fall inside each.
5. 5.Ask the employer in writing, without argument, for the plan documents it relies on, the calculation of the amount it says is repayable, and whether that amount is gross or net of withholdings. The answer is often the end of the clawback.
6. 6.Confirm your last day of employment, not your last day in the office, and diarize the s. 11(5) deadline: the later of seven days after employment ends and your next regular pay day.
7. 7.Keep every document about your job search. Mitigation will be argued, and in an executive search it takes months.
8. 8.Get a severance package review before the stated deadline. A deadline on an offer is a negotiating position, not a limitation period; see does a severance offer expire and the two year limitation period.

What documents should I gather, and what questions should I ask?

Bring the paper, not the summary. A clawback assessment is almost entirely a document exercise, and an executive who arrives with the full set of plan documents usually gets an answer in one meeting rather than three.

• The documents. Offer letter and every subsequent employment agreement or promotion letter. Every incentive plan document: annual bonus plan, short term incentive plan, long term incentive plan, RSU, DSU, PSU and option plans, and any shareholders' agreement. Every individual grant or award agreement. Every amendment and every acceptance or acknowledgement screen. Your vesting, settlement and transaction history. Bonus letters and payout calculations for the last three years. Pay statements for the last 12 weeks, which is the period s. 60(2) and s. 61(1.1) use for averaging. Pension statements. The benefits booklet and the long term disability policy. The termination letter, the offer, the proposed release and the repayment acknowledgement. Your current organization chart and any document recording how you were recruited.
• The questions about the clawback. Does it state an amount or a formula. Is the figure gross or net. What exactly triggers it, and has that trigger occurred. Does it survive termination, and for how long. Does it reach settled awards or only unvested ones. Was it in the plan when I was hired, or added later, and did I ever accept it.
• The questions about the rest of the package. What is my statutory minimum under ss. 61 and 64, and what is a realistic reasonable notice period. Which tranches vest inside each of those periods. Is my termination clause enforceable at all, or does an offside cause provision collapse the scheme. Does my plan language meet the unambiguity standard, or is it an active employment clause by another name. What is the pension accrual and the benefits replacement cost over the notice period.
• The questions about strategy. Is there a cause allegation, explicit or implied, and what does it cost the employer if it fails. Is a transaction or change of control pending. Do I have a non-solicit I need to plan around. Is a Ministry of Labour claim or a civil action the better route, bearing in mind you generally cannot pursue both for the same wages.

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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