In Fulmar v Nordstrong Equipment ( 2017 ONSC 5529) Justice Diamond had a plaintiff who was terminated on December 12, 2016 and was awarded 10 months notice. His bonus arrangement called for discretionary bonus for based on the calendar year. The judge had no difficulty awarding him a bonus for 2016 as the ESA termination period alone ( 6 weeks ) would have taken him past the year end. However as the Plaintiff was awarded 10 months notice, his deemed end of employment was October 12, 2017, which was 2.5 months short of the bonus year end.
The judge denied the bonus over the notice period as he found that payment over that period was “not in the reasonable expectation of the plaintiff”.
Then in another case by the same judge and the same defendant (Singer v Nordstrong Equipment 2017 ONSC 5906) the judge awarded a 17 month notice period which covered all of the 2016 bonus year and 5 months of the 2017 bonus year. However the Judge decided against the Plaintiff saying as follows:
Issue #3 Is Singer entitled to payment of a 2017 and 2018 bonus?
[40] I have found that Singer is entitled to 17 months’ reasonable notice. Singer further claims entitlement to a bonus that he would have received over that notice period (i.e. for all of 2017 and the first five months of 2018). Singer argues that it is reasonable to forecast that his bonus over the 17 month notice period would have been at least equal to his 2016 bonus.
[41] As per my comments in Fulmer v. Nordstrong Equipment Limited 2017 ONSC 5529 (CanLII), I believe that Singer’s argument is overreaching. The purpose of reasonable notice is to provide a terminated employee with sufficient time to locate comparable employment. Historically, bonuses were earned and calculated at the conclusion of the defendant’s fiscal/calendar year, and no doubt granted on the basis of an employee’s positive efforts and contributions to Nordstrong East’s business.
[42] Subject to successful mitigation efforts, Singer’s employment with the defendant would have ended in or around May 2018. The purpose of the defendant’s incentive plan is to maximize efforts to generate profits. As in Fulmer, I do not find it to be within Singer’s reasonable expectation to be able to earn a bonus for the 2017 and 2018 fiscal years while he searched for alternative comparable employment.
[43] I therefore decline to award Singer any bonus for the 2017 or 2018 fiscal years.
With the greatest of respect I think that this case is wrongly decided.
Why wouldn’t the Plaintiff believe that he would receive his total compensation during the notice period?
What if 90% of his income came from this bonus scheme, which is very common in the financial industry?
It is the Employer who decided to give pay in lieu of notice and not working notice as is required by law. Why should the employer benefit from their own decision to breach the plaintiff’s contract?
The law of damages is very simple, I learnt it in first year contracts.
In a case of breach of contract, the plaintiff is entitled to be put in the same position had the contract not been breached.
The Employer breached the contract by not giving reasonable notice of termination. The Plaintiff is entitled to every penny that he would have earned had he been given the opportunity to work out his notice period, including the bonus.
I am advised that these cases are being appealed.