Constructive dismissal occurs when an employer fundamentally breaches an essential term of the employment relationship, effectively forcing the employee to leave.
Delayed bonus payments can lead to major liability for employers, writes Sunira Chaudhri. Photo by Adobe Stock
Bonuses are often used to motivate employees, reward performance, and encourage loyalty. But problems arise when employers delay payment or try to attach new conditions after the fact. Courts in Ontario have repeatedly made it clear: if a bonus is contractually owed, it must be paid on time. A recent Ontario Superior Court decision is a costly reminder of that principle. In Kirchmair v. EXP Global Inc., the court awarded an employee nearly $700,000 after finding that the employer's repeated failure to pay bonuses amounted to constructive dismissal.
George Kirchmair sold his company to EXP Global Inc. and stayed on as a senior engineer for roughly seven years. During that time, he generated millions in revenue for the company. His employment agreement contained a clear bonus structure that set out exactly how bonuses would be calculated and when they were to be paid.
Despite this, EXP repeatedly failed to meet its payment obligations. Kirchmair's 2014 annual bonus was paid seven months late, his 2015 bonus was delayed by almost 19 months, and his 2017 bonuses — totalling approximately $149,000 — were never paid at all. When Kirchmair asked about the delays, he received vague responses and little follow-up. Internal company emails later revealed that management was considering replacing his guaranteed bonus structure with a discretionary one that would give the company greater control over payments. In 2017, EXP presented Kirchmair with a new contract that would have converted his guaranteed bonuses into discretionary bonuses payable only if approved by the board. He refused to sign.
The bonuses still were not paid.
After his lawyer demanded payment and the company failed to comply, Kirchmair resigned and sued, arguing that he had been constructively dismissed.
Constructive dismissal occurs when an employer fundamentally breaches an essential term of the employment relationship, effectively forcing the employee to leave. In this case, the court found that timely payment of compensation was a core term of the contract. EXP's repeated delays were not treated as isolated administrative errors but as an ongoing failure to meet basic contractual obligations. The employer argued that Kirchmair had accepted the delays because he continued working despite them. The court disagreed. Repeatedly objecting to late payments while remaining employed does not mean an employee has waived their rights. As the court noted, patience is not consent.
The court was especially critical of the company's underlying motive. Internal communications showed that management had used the unpaid bonuses as leverage to pressure Kirchmair into accepting a less favourable compensation arrangement. The court characterized this as bad faith conduct.
In the end, Kirchmair was awarded unpaid bonuses, vacation pay, 21 months' pay in lieu of notice under his contract, and an additional $150,000 in moral damages. The total award approached $695,000 before interest and legal costs.
For employers, the lesson is straightforward: if an employment agreement says a bonus is payable on a certain date, that obligation must be honoured. Delaying payment — even temporarily — can create significant legal exposure, especially when it becomes a pattern.
For employees, the case is an important reminder that a clearly defined contractual bonus is not a discretionary gift. It is part of compensation, and courts will treat it as wages that must be paid.
Have a workplace problem? Maybe I can help! Email sunira@worklylaw.com and your question may be featured in a future column. The content of this article is general information only and is not legal advice.