In Smith v. Evertz Microsystems Ltd., 2026 ONSC 2166, the Ontario Superior Court dismissed a former employee's claim for an annual bonus after finding that a longstanding verbal bonus policy required employees to be actively employed at the time the bonus was paid.
The decision is a useful reminder for employers that bonus entitlement depends not only on whether an employee worked during the relevant performance period, but also on the terms governing eligibility for payment. It is also a rare example of an employer successfully relying on a verbal policy to deny a bonus entitlement.
Background
Roderick Smith worked for Evertz Microsystems Ltd. for more than 16 years. Throughout his employment, he received annual bonuses that formed a significant part of his overall compensation, in some years exceeding 50 percent of his remuneration.
After completing the employer's 2020 to 2021 fiscal year, Mr. Smith resigned before bonuses were calculated and distributed. Evertz declined to pay him a bonus for that fiscal year, relying on what it described as a longstanding verbal policy requiring employees to be actively employed at the time of payout.
Mr. Smith argued that he had earned the bonus by working the entire fiscal year and that no written policy imposed an active employment requirement. The employer maintained that bonus eligibility had always been subject to two conditions: employees had to be employed when bonuses were paid, and all bonus awards were discretionary and...
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