October 15, 2013

Constructive Dismissal May Be Found Where Annual Bonuses are Withheld

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In Piron v Dominion Masonry Ltd., 2013 BCCA 184, the plaintiff, Mr. Piron, had worked for the defendant, Dominion Masonry Ltd. (Dominion), for 19 years before his employment ended in August 2011. Piron started with Dominion as a mason, but quickly became a foreman who supervised the masons working on particular projects. He was at first paid an hourly wage with benefits but in 2005, his wage was supplemented by bonuses paid annually on a per project basis. The payment of bonuses were not included in his written employment contract, but instead were negotiated regularly between the parties.

In 2011, Dominion advised Piron that due to an economic downturn, they would no longer be providing him with bonus payments. Piron claimed this constituted constructive dismissal. Dominion argued that the bonuses paid to Piron were not part of his employment agreement but rather were discretionary bonuses paid on occasion. It submitted that a decision not to provide bonuses due to deteriorating economic conditions did not amount to constructive dismissal.

At trial, the British Columbia Supreme Court (BCSC) found in favour of Piron. It concluded that the negotiating of bonuses relevant to individual projects was an accepted process for the determination of Piron’s remuneration and Piron had a right to expect that this would continue from project to project. Piron was awarded damages in lieu of notice, however the BCSC refused to award damages for unpaid bonuses in the period leading up to the constructive dismissal.

Dominion appealed the decision and Piron cross-appealed on the issue of unpaid bonuses. Harris JA, writing for the unanimous British Columbia Court of Appeal (BCCA) held that the trial judge correctly applied the legal test for constructive dismissal as set out by the Supreme Court of Canada in Farber v Royal Trust Co., [1997] 1 SCR 846, but found that he erred in failing to award damages for the unpaid bonuses given the finding that the employment contract entitled Piron to the payment of a bonus. The BCCA awarded an additional $20,000 in unpaid bonuses.

Click here for a PDF copy of the entire decision.

For more information, please contact Terri Higdon at coxandpalmer.com.


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