The Ontario Court of Appeal recently confirmed that when an employee was terminated for stealing from his employer, he was still entitled to his annual bonus because it was clearly an integral part of his contract, even if he had breached his fiduciary duty.
Facts of the case
An executive at a development firm misappropriated the employer’s labour, materials and funds to renovate his home. When the employer discovered the wrongdoing, the employer terminated the employee for cause and subsequently sued the executive for damages for conversion, breach of employment contract, unjust enrichment and breach of fiduciary duty. The employee counterclaimed in respect of his bonuses for 2007 and 2008, which the employer did not think it had to pay the employee after what happened.
The parties ultimately submitted the dispute to arbitration.
At arbitration, the employee was found to owe the company a fiduciary duty given that he was an officer of the company and one of the few trusted individuals there. However, the arbitrator found the executive was still entitled to his annual bonus equal to 30 percent of the employer’s profits after overhead because it made up an integral part of his employment contract from the very first day he joined the firm. Hence, the arbitrator awarded the employee $364,661.33 to satisfy his unpaid bonuses for 2007 and 2008.
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