Our client had been employed over a few years by a successful family operated business. Notwithstanding that his compensation consisted of a base salary and large potential bonus, he did not receive bonuses on the level that he anticipated.
Our client did not receive anything in writing from the employer that would allow our client to determine the entitlement to a bonus or how bonuses were being calculated by the employer during his employment or after.
Our client was ultimately terminated without cause.
On bringing claim for the unpaid bonuses and wrongful dismissal, the employer brought a motion seeking to have a portion of our client’s claim for unpaid bonuses dismissed as falling outside the two (2) year limitation period.
The employer’s position was that because the claim was brought more than two (2) years after the date on which the bonus payments ought to have been made, the claim was out of time.
While we brought forward a number of factual issues that we believed made the employer’s position untenable (including the lack of clarity as to when the bonuses ought to have been paid, fraudulent concealment etc.), in our analysis of the case we were immediately struck by how these same facts would have supported a claim for constructive dismissal had the employer not ultimately terminated our client.
Any lawyer consulted with an unpaid bonus situation akin to this one (prior to the ultimate termination) would have likely advised the client of the ins and outs of the law of constructive dismissal, with the usual warning that such claims are very difficult to establish.
However, in examining the caselaw on unpaid bonuses it was interesting that almost all of the jurisprudence were in the context of constructive dismissal claims [Ilkay v. Acadia Motors Ltd., (2006), 276 D.L.R. (4th) 762 (N.B.C.A), Piron v. Dominion Masonry Ltd., 2013 BCCA 184 (CanLII), Landry v. 1292024 Ontario Inc., (2006) O.J. No. 1832 (Ont.S.C.J.].
Further, we understood that the limitation period for a constructive dismissal claim runs, not from the independent act(s) of repudiation by the employer, but rather on acceptance of the repudiation by the employee and their departure from the relationship
In light of this, it became immediately apparent that the employer’s intent to apply a two (2) year limitation period from the point that each individual bonus payment was not made would be manifestly unfair if a different result would be available to our client if the claim was one of constructive dismissal (ie. without an overt termination by the employer).
Using this approach we successfully persuaded the motions judge, and ultimately the Divisional Court on appeal, that consistency and fairness required that our client’s claim for bonuses unpaid potentially more than two (2) years prior to the claim should not be found to be outside the limitation period.
While it may very well be that this approach is ultimately not favoured at trial, in the context of a summary judgment motion and motion seeking leave to appeal, we managed to enlist support for what we believed to be the proper approach on these claims.
D. Jared Brown – Lead Counsel