The Ontario Superior Court of Justice has reaffirmed that entitlement to bonus damages in wrongful dismissal cases depends first on whether the bonus was an integral part of compensation and, if so, whether the compensation plan language clearly removes common law rights in the event of termination of employment. In Adelman v. IBM Canada Limited, released January 27, 2026, the Court applied that framework in awarding the plaintiff, a 59-year-old executive, 24 months’ notice and significant equity damages, while denying bonus entitlement during the notice period.
For charities and not-for-profits in Ontario, particularly those employing senior leadership with complex compensation structures, the decision is a reminder that courts will scrutinize the wording of discretionary compensation plans. Termination liability exposure can increase materially where plans are ambiguous, or processes are inconsistent or lacking in detail.
Overall, the Court awarded $682,151.18 in damages, including $532,975.68 for common-law reasonable notice (base salary, pension, and benefits over 24 months) and $269,508.27 for cancelled restricted stock units (RSUs) and stock options that would have vested during the notice period. The executive’s base salary at termination was $242,046 per year.
Mr. Jason Adelman (the “Employee”) began working with the predecessor company on August 3, 2004, with that date recognized as his start date following an acquisition by IBM (the “Employer”) and moved into increasingly senior roles, including executive positions. The Employee was terminated without cause in January 2023, when he was 59 years old. His employment contract contained no termination provision. He sued for wrongful dismissal, seeking 24 months’ notice and damages for compensation components he said would have been earned or vested during that period, including bonus and equity awards.
The issues before the Court included: the appropriate reasonable notice period; entitlement to base salary, pension, and benefits during the notice period; whether any bonus was payable during the notice period; whether the Employee was entitled to a bonus for 2022 (his last full year of work); the valuation of cancelled RSUs and stock options scheduled to vest during the notice period; and whether aggravated or punitive damages were warranted.
Applying the common-law reasonable notice factors, the Court awarded 24 months’ reasonable notice, emphasizing the Employee’s age, long service, executive role, and limited prospects for comparable employment despite reasonable mitigation efforts. Based on his annual salary of $242,046, the Court calculated $484,092 in base-salary damages, plus 4% pension contributions of $19,363.68 and benefits valued at $1,230 per month ($29,520), for total notice-period damages of $532,975.68.
On bonus entitlement during notice, the Court applied the established two-part test. First, was the bonus integral to compensation? The evidence showed bonuses were discretionary, varied considerably (including zero awards), and did not form a significant component of total compensation. The Court concluded the bonus was not integral and therefore not payable during the notice period. However, the Court held the Employer’s decision to award a zero bonus for 2022 was not exercised fairly. Even where a bonus is discretionary, discretion must be exercised in a fair and reasonable manner. The documentary record suggested employees who had separated or had a pending separation were treated as “skips.” The Court concluded the Employee was denied a bonus largely because he had left before payout, which was neither fair nor consistent with the Employer’s stated position, and awarded a 2022 bonus based on the average of the prior two years.
Aggravated and punitive damages were not awarded, as the Employer’s conduct did not meet the high threshold for such relief, according to the Court.
For charities and not-for-profits, the decision is a reminder that senior employees can still attract notice periods at or near the 24-month ceiling, and that discretionary bonus decisions must be demonstrably fair, reasonable, and consistently applied. The employment contract and any applicable compensation plan should include clear language as to the extent of any bonus compensation in the event of termination of employment.