CHAUDHRI: Big Supreme Court win for employees owed a bonus
Quitting your job does not always mean you are entitled to nothing.
A Supreme Court decision, argued by my partner Howard Levitt, awarded both salary and bonus to an employee forced to quit his job.
The highest court in the country considered the story of David Matthews, an experienced chemist and senior executive beginning in 1997 with Ocean Nutrition Canada Limited (Ocean). Matthews helped the company’s success in making Omega-3 products.
In 2007, Ocean hired a new Chief Operating Officer (COO). There was some friction between the new COO and Matthews as his role was stripped down after the COO joined including drastically reducing the number of people that reported to him.
Matthews felt this was the beginning of a campaign to push him out of operations and minimize his influence at Ocean.
Later in 2010, Matthews was placed under review by Ocean and the COO informed Ocean’s Board there was no place for Matthews at the company. Naturally, this was upsetting and frustrating to Matthews.
In his employment agreement, Matthews was entitled to a large bonus if Ocean was sold. He suspected a sale would happen and that was part of the reason he stayed with Ocean as long as he did — even after he began to experience issues with the COO and being placed under review by the company.
Eventually however, Matthews found himself in an impossible situation in his workplace and he quit his job.
Thirteen months later, Ocean was sold for $540 million. Normally, this would have triggered a bonus payment under Matthews’ employment agreement. But because he was not actively employed by Ocean, the company’s legal position was that it did not owe him any bonus at all.
Matthews argued at trial that he would have still been working there if Ocean didn’t constructively dismiss him. Matthews alleged Ocean forced him to quit by making his workplace so bad he had no other choice.
On Friday, the Supreme Court of Canada sided with Matthews. While in the lower courts, the trial judge and the Court of Appeal agreed Mr. Matthews was forced to quit and that a reasonable notice period was 15 months. But the lower courts disagreed on whether or not Matthews was entitled to his bonus payment. Matthews appealed to the Supreme Court of Canada.
The Supreme Court decision found Matthews was indeed entitled to his bonus. The Supreme Court Justices were unanimous in finding that a reasonable notice period should be 15 months including the bonus payment because the company was sold during the 15-month notice period and the bonus payment was triggered from Matthew’s employment agreement. There was nothing in Matthews’ contract that said he should not be paid the bonus in this situation.
This is a huge win for all employees that leave a job and are entitled to their bonus payments after they are terminated or even after they are constructively dismissed. The Supreme Court is unequivocal that an employee forced by their employer to quit should get a bonus they would have received during the notice period unless their contract says otherwise.
So, if you are forced to quit or were terminated and you left a bonus payment on the table, it may be extremely worthwhile to pursue it. After all, the Supreme Court is behind you.
On to your questions from this week:
Q. [Regarding your piece on Trump] … I would point out that at no time has President Trump taken the virus without the seriousness that needed to be done. All one has to do is look at what he did, not what he said. But if you are going to condemn the man on what he said, will you also condemn the Liberals for calling him xenophobic when he banned flights from China in late January, then flights from central EU? Lastly, how do you know that the President gave the virus to anyone within his staff? My guess is someone else gave it to the President. Afterall, the President of the United States is tested more often than anyone else in America. Nevertheless, one cannot stop this virus just by will. But we can’t stop living our lives because of it. I find your column is based on fear and nothing more. Stop spreading this fear!
A. My column was not a political attack, and this is not a political issue. Our own conservative provincial and municipal governments have introduced mandatory mask-wearing policies in all indoor public spaces including just recently, many workplaces. Based on recent news from the White House, a good number of staffers have tested positive for the virus. My point was to remind employers that a lax view towards prevention will create liability. My column was not premised on politics. It was, however, on the law.
Q. An employee of ours came to work after having symptoms for two days (without telling anyone) and then he tested positive for COVID on day three. I think this is extremely reckless. Can I terminate him, and do I owe him anything for this recklessness?
A. I assume this employee is now home quarantining. COVID-related leaves are job protected in Ontario. There may be some shared responsibility here by requiring your employee to come to work in the first place. If you terminate this employee, he may sue for wrongful dismissal damages and discrimination if you cite this conduct as the reason. If you intend to terminate anyway, you want to be sure you have been observing every protocol possible to reduce the risk of spread in the workplace including daily screenings of employees before coming to work. This could be playing with fire. Get some legal advice.
Email me at [email protected] with your COVID-19 related workplace questions and your question may be featured in a future column. Till then, stay safe my friends.