Bonus Withheld or Not Paid? Your Legal Options as an Employee

A bonus can make up a significant part of your income. When an employer withholds a bonus, delays payment, or says you’re “not eligible,” it can come as a shock — especially if bonuses were paid regularly in the past.

In Canada, employers can’t simply refuse to pay a bonus just because they choose to. Whether bonus pay is legally owed depends on how it was structured, how it was paid in practice, and what your contract actually says.

This guide explains when employers can withhold a bonus, when they can’t, and what employees can do if a bonus isn’t paid.

Can an Employer Refuse to Pay a Bonus?

Sometimes — but not automatically.

An employer may be able to refuse payment if:

• The bonus was genuinely discretionary
• You did not meet clearly stated conditions
• The bonus plan clearly allows non-payment

However, employers often overreach. A bonus may still be owed if it:

• Was paid consistently year after year
• Was tied to performance, targets, or sales
• Formed a meaningful part of your total compensation

Common Reasons Employers Withhold Bonuses

Employees are often told a bonus wasn’t paid because:

• “The bonus is discretionary”
• “You weren’t actively employed on the payout date”
• “The company didn’t perform well”
• “Management decided not to pay bonuses this year”
• “You resigned or were terminated before bonus day”

What If the Bonus Was Already Earned?

A key distinction is whether the bonus was earned before it was withheld.

A bonus may already be earned if:

• You met the performance targets
• Sales were completed
• The bonus period ende
• The bonus can be calculated using a formula

Can I Sue My Employer for Not Paying My Bonus?

Yes — in many cases.

Employees may have legal options if:

• A guaranteed bonus was not paid
• A discretionary bonus was paid regularly and then withheld
• A bonus was excluded from severance
• An employer relied on vague or unfair contract language

Bonus claims can be brought as part of:

• A wrongful dismissal claim
• A severance dispute
• A claim for unpaid compensation

How Employment Contracts Affect Bonus Claims

Your employment contract and any bonus plan matter — but they are not always decisive.

Courts look closely at:

• Whether the contract clearly limits bonus entitlement
• Whether “active employment” clauses are unambiguous
• Whether the bonus plan was followed in practice

Bonus Withheld After Resignation

Resigning does not automatically mean you lose your bonus.

You may still be entitled if:

• The bonus was earned before your last day
• The plan does not clearly require active employment at payout
• The employer terminated you shortly after resignation

Timing matters, but resignation alone is rarely the full answer.

Bonus Withheld After Termination

If you were terminated without cause, a withheld bonus may be part of a severance dispute.

In many cases, severance pay must reflect:

• Salary you would have earned
• Bonuses you would have earned during the notice period

Employers often exclude bonuses by default — even when they’re legally owed.

Evidence That Can Help Prove a Bonus Is Owed

If a bonus is withheld, useful evidence may include:

• Past bonus payment history
• Performance targets or KPIs
• Emails or offer letters referencing bonuses
• Pay stubs and compensation summaries
• Company policies or bonus plans

Bonus disputes are often fact-driven, and documentation matters.

Time Limits for Bonus Claims

In most cases, employees have two years to start a legal claim. Waiting too long can permanently bar recovery — even if the bonus was clearly owed.

What to Do If Your Bonus Is Withheld

If your employer refuses to pay a bonus:

1. Don’t assume the employer is right
2. Don’t rely only on HR explanations
3. Don’t sign anything without advice
4. Get clarity on whether the bonus was legally owed

Key Takeaways for Employees

• Employers can’t withhold bonuses arbitrarily
• “Discretionary” does not always mean “not owed”
• Earned bonuses are difficult to claw back
• Contracts matter, but so does past practice
• Legal advice can clarify your options quickly

When to Speak With an Employment Lawyer

You should consider legal advice if:

• A bonus you expected was not paid
• Your employer suddenly changed bonus practices
• A bonus was excluded from your severance
• The bonus made up a large part of your income