We’ve spoken about the importance of well-written employment contracts and clear workplace policies, but that’s not because we’re trying to sound like a broken record. Yes, clarity is important to have in the working relationship, but clearly drafted contracts and policies (which can form part of the employment contract) go much, much further.
There are a number of policies that are legally required, such as health and safety policies and harassment policies, just to name a few. Workplaces can also set their own internal policies which are crucial when implementing discipline, or supporting a dismissal for cause. If an employer is going to penalize an employee for their behaviours, it is necessary to show that the employee knew and understood that what they were or were not doing was wrong.
In a 2024 decision from the Ontario Superior Court of Justice, one employer learned the hard way what happens when workplace policies aren’t written or are implemented properly. In this case, although the dismissed employee lost his claim for constructive dismissal, due to the company’s policy and contract failures he walked away with close to $2 million.
The Case
In Boyer v. Callidus Capital Corporation, 2024 ONSC 20, Mr. Boyer had worked as a vice-president of underwriting and portfolio management for Callidus Capital from 2009 until his dismissal in 2016. He was a high level employee, although he had no written employment contract. He also participated in the company’s stock program, as well as a deferred bonus program that Callidus had where they paid bonuses out over a longer period.
Mr. Boyer had originally announced his plans in 2015 that he would retire at the end of 2016, citing his failing health as the reason. He also noted that he was ‘no longer comfortable’ with the direction that Callidus was going, and thus thought that it was the right time to leave. However, his employment with Callidus went south before his planned departure.
In the last months of his employment, Mr. Boyer began to have conflict with his new manager, including over taking his vacation. While he had amassed several months’ accumulated vacation, he was forbidden from taking it. He had also received negative comments during performance reviews, and was witness to an assault that took place at a lawyer’s office.
Mr. Boyer subsequently claimed that his employment was untenable, and that he was constructively dismissed.
The Ruling
The Court ruled that Mr. Boyer had not been constructively dismissed. For a constructive dismissal, Mr. Boyer would have to prove that Callidus had so significantly changed the terms of his employment that it showed they were no longer looking to be bound by an employment relationship. The Court said that while there were unfortunate incidents that took place, none of them met this threshold. Instead, he was deemed to have retired from his employment at Callidus.
This meant that Mr. Boyer was not eligible for any termination or severance pay, and for most employees that may have been the end of their journey. However, Callidus’ failure to properly document and implement terms and policies cost them significantly in other ways.
Vacation Pay
Mr. Boyer had only taken a few weeks’ vacation during his time at Callidus due to his busy schedule, and he had 22 weeks’ vacation amassed. While Callidus claimed that they had a vacation policy which restricted vacation carry-over year to year (i.e. use it or lose it), the Court found no evidence of this policy being implemented, and no evidence that he had been aware of this policy.
Because of that lack of policy, there was nothing to stop Mr. Boyer from carrying forward his vacation, and thus he was owed the total amount upon his departure, which was valued at just over $50,000.
Bonus
Callidus had a bonus scheme where bonuses were a significant part of compensation but were paid over a delayed period to ensure that the employees’ compensation stayed relatively even. Callidus claimed that there was a policy stating that an employee needed to be actively employed to collect their bonuses, however Mr. Boyer claimed that such a policy was never communicated to him.
With no written employment contract and no clearly written policies, the Court found that there was nothing to stop Mr. Boyer from claiming his bonus amounts owed. The Court ruled that he was eligible to collect his outstanding bonus amounts from 2014 and 2015, which totalled just over $500,000 plus interest.
Stock Options
The situation with Mr. Boyer’s stock options was slightly more complicated, since Callidus had gone private, and his options could not be exercised. However, Mr. Boyer testified that he had inquired in 2014 about what would happen to his options on his departure, and he was told by a manager that he could exercise them within 180 days.
While Mr. Boyer’s stock options were no longer available, the Court ruled that given Mr. Boyer’s dissatisfaction with the Company, he would have exercised his options as soon as he was able to do so. As such, he should be awarded the value of what those options would have been. The final valuation came to just over $1.25 million.
The Lesson
In this case, the employer was ordered to write a cheque for close to $2 million dollars, in a situation that could have easily been avoided if there were clear terms and policies in place, and which were clearly communicated to their employee. This case highlights the importance of workplace policies and contractual terms.
We routinely support employers throughout the Cambridge, Kitchener, and Waterloo Regions, and yes, we’ll help draft and implement your contracts and policies as well. The legal costs of implementing things properly are minimal; the legal costs of not doing so can be costly. Contact us today to set up a consultation.