Ontario Courts have repeatedly emphasized that compensation provisions are subject to the same good‑faith obligations that govern all aspects of the employment relationship. Where compensation has been earned and is contractually owed, employers do not have the discretion to delay payment, use it as leverage, or attempt to retrospectively alter entitlements.
That principle was forcefully applied by the Ontario Superior Court of Justice in Kirchmair v. EXP Global Inc., 2025 ONSC 3103, where the Court awarded an employee $150,000 in moral damages following the employer’s prolonged refusal to pay an earned bonus.
The Bonus Arrangement at Issue
The employee participated in a bonus plan that was expressly non‑discretionary. Entitlement was calculated using a fixed mathematical formula with defined payment dates.
There was no suggestion that management discretion played any role in determining the bonus payable, nor was there any dispute that the employee had satisfied all criteria necessary to earn the bonus.
By early 2017, the employee had earned a bonus of approximately $148,000. Despite being contractually owed, the bonus was never paid and remained outstanding as of Trial in 2025.
Employer Conduct Leading to the Finding of Bad Faith
Justice Healey rejected the employer’s position that the failure to pay the bonus was the result of administrative delay or confusion. The evidence showed a deliberate course of conduct by the employer that the Court found to be incompatible with the employer’s duty of good faith to the employee.
In particular, the Court found that the employer:
- Intentionally withheld payment of an earned and owing bonus;
- Had a pattern of paying bonuses months late in prior years;
- Used the unpaid bonus as pressure to force acceptance of a less favourable compensation structure; and,
- Attempted, post‑termination, to rely on alleged conduct to reduce or eliminate an existing bonus obligation.
When viewed cumulatively, this conduct amounted to bad faith treatment of the employee.
Moral Damages Without Medical Evidence
A significant feature of the decision was the Court’s willingness to award moral damages despite the absence of medical evidence establishing psychological injury.
Justice Healey accepted that being deprived of a substantial amount of earned income for nearly eight years could reasonably cause serious mental distress. The Court emphasized that moral damages may flow from the manner in which the employer acts, not solely from termination itself.
In the circumstances, the Court awarded $150,000 in moral damages, reflecting both the length of the delay and the employer’s intentional conduct.
Total Compensation Awarded
The moral damages award formed part of a broader financial judgment against the employer. The employee was also awarded:
- 21 months’ notice pursuant to the terms of the employment contract;
- Payment of the outstanding bonus;
- Vacation pay related to the bonus; and,
- Prejudgment interest spanning nearly eight years.
Before interest and costs, the total award exceeded $695,000.
Key Takeaway for Employers
This decision reinforces a clear and consistent message from Ontario Courts. Employers must not interfere with earned compensation. Withholding pay, delaying payment, or using compensation as leverage may not result in immediate consequences, but those decisions can ultimately lead to substantial liability.
This decision also highlights the importance of employers carefully reviewing compensation plans, payment practices, and bonus structures to ensure compliance with contractual and good‑faith obligations.
The lesson from Kirchmair v. EXP Global Inc. is simple. If compensation is earned and owing, it must be paid. Employers who choose otherwise may avoid payment in the short term, but the courts will ensure they pay for it eventually.
Key Takeaway for Employees
For employees, this decision confirms that the Courts will scrutinize prolonged non‑payment of earned compensation and may award significant damages where bad faith is established even if there is no medical evidence presented to support the employee’s mental distress.
How Minken Employment Lawyers (Est. 1990) Can Help
Our firm regularly advises employers and employees on compensation disputes, bonus entitlement issues, and wrongful dismissal claims. We assist clients in navigating these matters proactively to reduce risk and, where necessary, advocate strongly to protect their rights.
Contact Minken Employment Lawyers (Est. 1990) today for a confidential consultation at 905-477-7011 or contact@minken.com to connect with our team.
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Please note that this article is for informational purposes only and does not constitute legal advice or opinion.
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