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There’s nothing more exhilarating than seeing a well-earned commission or bonus deposited along with your paycheque. But this kind of compensation can be confusing and can end up causing problems between employees and employers.
One common problem centres around the terms of the bonus, including how and when someone is entitled to that extra payment. “One thing I see missing from a lot of employment agreements is the steps that the employee needs to take to earn the bonus,” says Ian Hurley, an employment lawyer and Partner at Toronto-based law firm Lecker & Associates
The best time to sort out the nitty-gritty of bonus compensation details is right at the beginning when you sign your employment contract. “Setting those parameters at the outset of the relationship is really important,” he notes.
Make sure you understand, before you sign on the dotted line, whether your bonus is based on company performance, employee performance, some combination thereof, or if it’s entirely discretionary. If you didn’t do this when you were hired, however, there are still options.
Dealing with bonus disputes
If you find that paycheque missing the bonus you were expecting, your first step is to speak with your employer. “Oftentimes, an employer will take the position that the commissions are not earned. So maybe it comes down to a dispute about the facts,” explains Hurley.
If you’re still unable to resolve the dispute, your next step is to go to the Ministry of Labour where you’ll file an Employment Standards claim for unpaid commissions. It’s a relatively straightforward process that’s also free.
The advantage of filing a claim with the Ministry of Labour, rather than submitting a traditional court claim, is the protection it offers from employer retaliation, such as intimidation or dismissal. Should an employer terminate the employee who filed a claim, the Ministry can order that employee be reinstated at their job with full back pay.
Severance package payouts
Bonuses or commissions can come into question when an employee is dismissed from their job, as well. Luckily, the courts have created a two-part test to determine whether a bonus should be included in the severance, says Maria Esmatyar, who is also an employment lawyer and Partner at Lecker & Associates. That involves looking at whether there’s language or a specific term in the employment agreement, or a bonus plan that would limit or deny that payout. If that term does exist, it needs to be written in very precise language.
“There are many cases where an employer will attempt to deny that bonus unless the employee is actively employed,” notes Esmatyar. “The courts have consistently stated that active employment on its own will not be enough. In fact, the terms need to be unambiguously set out with circumstances as to when the employee would not be in receipt of that bonus over the severance period.”
Keeping your perks
Another element of confusion around dismissals is whether employees have a right to any of the perks that came along with the job – whether that’s a phone, a company car or even something like medical insurance. Any kind of technology provided by the company is ultimately the employer’s property, even if they allow the item for personal use, says Hurley.
In the case of perks that have a wider impact on your life, like a car, there’s often a bit of a grace period. “In most cases, I do see the employer providing some reasonable period where the employee can keep the car and make those transitional arrangements,” he notes.
When it comes to medical benefits, there are actual laws in place to protect employees who are dismissed. “Under the Employment Standards Act in Ontario, the employer must continue benefits for the statutory notice period, which is one week for every year of service, to a maximum of eight,” explains Esmatyar.
As well, an employee has 30 days from the date of termination to convert their employment benefits into an individual plan. This is important to take advantage of because the new insurer can’t require a medical evaluation – something which might increase a person’s premiums if they have higher drug costs or a medical condition that requires additional levels of care.
Sadly, one perk many employees have enjoyed over the past two years – working from home – may be coming to an end in some companies. Asking staff who return to the office is within an employer’s rights, says Esmatyar.
“I’m seeing a lot of cases where people are calling in and asking what they should do because they don’t want to return to the office,” she notes. “If the employer wants you back, you have to go back.”
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