Ontario’s Court of Appeal has recently confirmed that damages for a lost bonus during the notice period are recoverable where the bonus is considered an integral part of a compensation package and there is nothing in the bonus plan that negates entitlement. In Singer v. Nordstrong, the Court granted an employee’s appeal and awarded him $166,945.00 for bonus payments that would have accrued during his reasonable notice period. The Court also awarded the employee $9,458.00 for the cost to replace his benefits over the same period.
The Appellant, Andre Singer, was employed as President and General Manager when he was fired without cause in December 2016. He was 51 years old at the time and had been employed by the company for 11 years. On hearing a summary judgment motion, Diamond J., awarded Mr. Singer 17 months pay in lieu of reasonable notice and the bonus he would have been entitled to for 2016. Despite fixing a notice period of 17 months, Diamond J., found that there would have been no reasonable expectation that Mr. Singer would receive his bonus entitlements for 2017 and 2018, and accordingly did not award them.
The Court disagreed. Citing the decision of Paquette v. TeraGo Networks Inc., 2016 ONCA 618 the Court confirmed that an employee is entitled to damages for loss of his bonus if he met the two part test. First, it was clear that the bonus was an integral portion of the employee’s compensation package as it made up a significant portion of his annual take home pay. Secondly, there was nothing in the available documentation that would limit his right over the notice period. The Court dismissed the respondent’s argument that the company practice was not to pay any bonus to employees after their dismissal. The Court found that the de facto approach of the employer did not remedy the contractual failings of the policy to limit entitlement.
The respondent employer brought an unsuccessful cross appeal, alleging the motion judge erred in awarding a 17 month notice period and awarding the employee’s bonus entitlement for the period of time worked in 2016. The respondent alleged that the motion judge relied too heavily on the character of Mr. Singer’s employment to the exclusion of all others. They submitted that the appropriate range was between 12-15 months notice.
The Court of Appeal found that there was ample evidence that Diamond J., turned his mind to all the relevant factors in calculating a 17 month notice period. The Court stressed that in light of the available jurisprudence and evidence of mitigation attempts tendered on the motion, there was no error in his approach.
There are several important take-aways from this decision for both employers and employees. The first is that the Court will carefully review bonus documentation for the parties’ intention to remove any entitlement after termination. Simply because the employer alleges they would not have paid a bonus during the relevant period does not foreclose entitlement. Bonus policy language should be carefully drafted and reviewed to avoid unexpected exposure. Second, the assessment of reasonable notice remains a fact specific exercise that will be given deference on appeal. While previous decisions are persuasive, each case will be determined on its own unique circumstances. Third, it should be settled law that the cost of replacing benefits are part and parcel of wrongful dismissal damages so long as the proper evidence is tendered.
Singer v. Nordstrong Equipment Limited, 2018 ONCA 364 can be found here.
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