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Digest of the Week | Entitlement to Bonus

Digest of the Week | Entitlement to Bonus

Court of Appeal holds employee was entitled to bonuses during notice period, which had not been considered in amount awarded at trial

Paquette v. TeraGo Networks Inc.
2016 CarswellOnt 12633, 2016 ONCA 618
Ontario Court of Appeal

Labour and employment law --- Employment law — Termination and dismissal — Notice — Considerations affecting length of notice — Multiple factors considered

Employee had worked for defendant employer for 14 years and four months when he was dismissed without cause — Employee was 49 years old at time of his dismissal, and was upper-middle management with specialized skills in computer technology and project management with base annual salary of $125,000 — Employee also received bonuses and benefits — Termination letter offered employee 30 weeks of his base salary, with no consideration of bonus, in lieu of notice — When employee refused employer's severance offer, he was paid $20,032.06 representing eight weeks' salary in satisfaction of his termination notice and severance pay entitlements under Canada Labour Code — Employee commenced action for wrongful dismissal — Employee's motion for summary judgment in wrongful dismissal action was granted — Trial judge found at time of motion employee remained unemployed although he said he had applied for 96 positions since his termination — Trial judge found that having regard to employee's age and skills, his various roles for employer and history of that relationship, length of his employment, availability of comparable or suitable employment, and economic climate in Alberta, appropriate reasonable notice period was 17 months — Trial judge found employee was awarded $157,051.33 for pay in lieu of notice and $6,216.57 for lost benefits — Trial judge found employee was not entitled to payment of bonus because he would not be active employee during notice period and therefore did not qualify — Trial judge found employee made reasonable efforts to mitigate to date of motion — Employee appealed — Appeal allowed — Employee was entitled to bonuses during notice period, which had not been considered in amount awarded at trial — By narrowly focusing analysis on whether active employment term was ambiguous, trial judge applied incorrect principle and decision was reviewable on correctness standard — Entitlement to bonus payments did not depend on whether employee was notionally or actively employed after employment was terminated but on compensation and benefits to which he would have been entitled but for wrongful termination — Trial judge ought to have commenced his analysis from premise that damages were based on complete compensation package including bonuses, and then examined whether bonus plan specifically limited or restricted that right — Term that required active employment when bonus was paid was not sufficient to deprive employee terminated without reasonable notice of claim for compensation for bonus as part of wrongful dismissal damages.


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