Khatib v. GoEasy Ltd.: A Good News, Bad News Case for Employers

Ontario employers looking for guidance on incentive compensation and inducement will find both comfort and caution in Khatib v. GoEasy Ltd., 2026 ONSC 3513.

The Bad News: Bonus and Incentive Plan Language Still Matters

The employee's compensation package included substantial incentive compensation, including bonuses, restricted share units (RSUs), and stock options. Following termination, the employer argued that these entitlements did not continue through the notice period. The Court disagreed.

The decision serves as another reminder that courts will closely examine the wording of bonus plans and other incentive agreements. Where plan language does not clearly and unambiguously remove an employee's entitlement during the reasonable notice period, courts may award damages for compensation the employee would have received had they remained employed.

For employers, this case reinforces a lesson that has appeared repeatedly in recent jurisprudence: a bonus or equity forfeiture provision is only as good as its drafting. Ambiguity tends to favour the employee.

The Good News: Recruiter Contact Is Not Inducement

The more employer-friendly aspect of the decision involved inducement.

The employee argued that he had been induced to leave secure employment and therefore should receive an extended notice period. The Court rejected the argument. Although a recruiter had initially approached the employee, the evidence showed that he actively pursued the opportunity and had a history of moving between employers every few years. Importantly, the Court confirmed that the burden remains on the employee to establish inducement. Being contacted by a recruiter, without more, is not enough.

That is encouraging news for employers. In today's market, recruiters frequently initiate contact with prospective candidates. If recruiter outreach alone were sufficient to establish inducement, the doctrine could apply to almost every senior hire.

Bottom Line

Khatib is a classic good news, bad news case for employers.

The bad news is that courts remain prepared to award significant bonus and equity-related damages where plan language does not clearly remove those entitlements during the notice period. The good news is that inducement remains a fact-specific doctrine, and recruiter contact alone will not automatically increase an employer's liability.

The case is a timely reminder that employers should devote as much attention to their bonus and incentive plans as they do to their employment agreements. When the documents are clear, employers put themselves in the strongest possible position when employment relationships end.