



COURT OF APPEAL FOR ONTARIO

CITATION: Andros v. Colliers Macaulay
    Nicolls Inc., 2019 ONCA 679

DATE: 20190830

DOCKET: C65509

Tulloch, Hourigan and Fairburn
    JJ.A.

BETWEEN

Demetri Andros

Plaintiff (Respondent/

Appellant by way of cross-appeal)

and

Colliers Macaulay Nicolls Inc.

Defendant (Appellant/

Respondent by way of cross-appeal)

George Avraam and Jennifer Bernardo,
    for the appellant

Andrew Pinto and Jonas Granofsky, for
    the respondent

Heard: April 26, 2019

On appeal from the order of Justice Bernadette Dietrich of the
    Superior Court of Justice, dated May 9, 2018, with reasons reported at 2018
    ONSC 1256, 46 C.C.E.L. (4th) 207.

Fairburn J.A.:

OVERVIEW

[1]

The respondent worked for the appellant, a large
    commercial real estate company, from September 2001 to August 2004, when he
    left for other employment. He returned to the appellants employ in February
    2009 as a Senior Associate and was quickly promoted to the position of Managing
    Director. The terms of his employment included a base salary and yearly bonus.

[2]

It is not in dispute that the respondents
    employment was terminated without cause on January 19, 2017. Nor is it in
    dispute that upon termination the respondent received what he was entitled to
    under the
Employment Standards Act
,
2000
, S.O. 2000,
    c. 41

(
ESA
), including a lump-sum payment in lieu of notice
    of termination representing eight weeks of salary, coverage for all benefits
    during that notice period, and a lump-sum severance payment representing about
    12 weeks of salary. Despite having received a bonus for each year that he had
    been employed as a Managing Director, the respondent did not receive any
    compensation for the bonus he would have earned for the period of time that he
    worked between the start of the new year and his termination (January 1 to 19,
    2017) or for the period of time that was covered by notice under the
ESA
.

[3]

The respondent brought an action for wrongful
    dismissal. The parties agreed that the matter could be resolved by way of
    summary judgment. The respondent argued that he was owed damages for: (a)
    reasonable notice under the common law; (b) benefits he would have been
    entitled to during that reasonable notice period; and (c) the bonus he would
    have earned as an integral and non-discretionary part of his compensation
    package.

[4]

The respondent argued that the termination
    provision in his employment agreement is unenforceable because it attempts to contract
    out of employment standards in the
ESA
. Given the unenforceability of
    the termination provision, the respondent said that he was entitled to a period
    of notice in accordance with what was reasonable under the common law.

[5]

The termination provision is found within clause
    four of the employment agreement:

4. Term of Employment



The company may terminate the employment of
    the Managing Director by providing the Managing Director
the greater of
the Managing Directors entitlement pursuant to the Ontario
Employment
    Standards Act
or
, at the Companys sole discretion,
either
of
    the following:

a. Two (2) months
    working notice, in which case the Managing Director will continue to perform
    all of his duties and his compensation and benefits will remain unchanged
    during the working notice period.

b. Payment in lieu
    of notice in the amount equivalent of two (2) months Base Salary. [Emphasis
    added.]

Throughout these reasons, I will refer
    to the first part of the termination clause entitlement pursuant to the Ontario
    [
ESA
]  as the first

clause, and to clauses 4(a) and 4(b) by
    those names.

[6]

I read the motion judge as coming to two central
    conclusions in determining that the respondent was owed damages reflecting his base
    salary for a period of eight months, minus twelve weeks he had already been
    compensated.
[1]


[7]

First, the motion judge made a finding that the
    termination clause could reduce the benefits to which [the respondent] could
    be entitled on termination to something less than he would be entitled to under
    the
ESA
. Among other things, she found that upon termination the respondent
    would be entitled to both benefits and severance under the
ESA
.
Yet,
    if clause 4(a) applied, it did not provide for severance and, if clause 4(b)
    applied, it did not provide for benefits. (I would add that clause 4(b) does
    not appear to provide for severance either.) Accordingly, she concluded that
    the
ESA

had been contracted out of and the entire termination
    clause is unenforceable.

[8]

Second, despite having already made the finding
    that the
ESA

had been contracted out of, the motion judge went
    on to make an alternative finding that, at its very best, the termination
    clause was unclear as to whether clauses 4(a) and 4(b) included statutorily-compliant
    severance and benefits. On that alternative basis, the motion judge found that
    the respondent would not have known the nature of his entitlements with
    certainty at the time he signed the employment agreement (in particular, he
    would not have known whether he would be paid severance if clause 4(a) were
    applied, or if he would be paid benefits if clause 4(b) were applied). Accordingly,
    she concluded that the termination clause did not clearly satisfy the
    obligation to pay the respondent his statutory entitlements and, therefore, the
    clause was unenforceable on this basis as well.

[9]

Although damages for lost benefits would
    typically be granted for the duration of the applicable notice period, the
    motion judge found that the respondent had failed to provide evidence of actual
    loss incurred as a consequence of his loss of benefits during the eight-month
    period she imposed. This resulted in a refusal to order damages to be paid for
    lost benefits during that time.

[10]

As for the bonus, the motion judge found as a
    fact that it was an integral and non-discretionary part of the respondents
    compensation package over the almost eight years he had been a Managing
    Director. The motion judge therefore concluded that the respondent was entitled
    to compensation for the bonus he earned while he was still employed and for the
    bonus he would have earned during the eight-month notice period to which she
    found he was entitled at common law.

[11]

The appellant appeals on the basis of two
    alleged errors:

(i)

the motion judge erred by deciding that the
    termination clause was unenforceable; and

(ii)

the motion judge erred by concluding that the respondent
    should receive a
pro rata

share of his bonus for the period he
    worked from January 1 to January 19, 2017 and for the eight-month period of
    reasonable notice under the common law.

[12]

The respondent cross-appeals, contending that
    the motion judge erred by failing to grant him compensation for his loss of
    benefits during the eight-month period of notice.

[13]

For the reasons that follow, I conclude that the
    appeal should be dismissed and the cross-appeal granted.

ANALYSIS

(1)

The Motion Judge Did Not Err in Finding the
    Termination Clause Unenforceable

The Appellants Position

[14]

On the facts of this case, the
ESA

required
    the appellant to provide the following to the respondent:

(i)

eight weeks notice or pay in lieu of notice
    (ss. 57(1)(h), 60(1)(a), 60(1)(b), 61(1)(a));
[2]

(ii)

eight weeks continuation of benefits (ss.
    57(1)(h), 60(1)(c), 61(1)(b)); and

(iii)

eleven weeks severance pay (ss. 63(1), 64(1)(a),
    65(1), 65(2), 65(4)).

[15]

The appellant argues that the termination clause
    provides at least the statutory minimum amount of pay in lieu of notice and
    preserves the statutory entitlements to severance pay and continuation of
    benefits. The appellant contends that, regardless of whether the greater
    entitlement was under the first clause or clauses 4(a) or 4(b), the termination
    clause ensured that the respondent would always receive his minimum statutory
    entitlements under the
ESA
. The appellant characterizes the reference
    to the greater of at the outset of the termination clause as the failsafe
    clause, meaning that even if clauses 4(a) or 4(b) applied, the minimum
    statutory entitlements relating to benefits and severance would be provided
    under those clauses.

[16]

The appellant suggests that the motion judge
    made three extricable errors of law, reviewable on a correctness standard, in her
    interpretation of the termination clause: (a) she failed to interpret the
    clause as a whole; (b) she read ambiguity into clauses 4(a) and 4(b) where
    there was none; and (c) she failed to appreciate that there was no need for a
    specific reference to statutory entitlements in clauses 4(a) and 4(b) for those
    entitlements to apply.

[17]

I will now explain why I do not accept that the
    motion judge committed an extricable error of law in her interpretation of the
    termination clause. In the absence of an extricable error of law, the motion
    judges interpretation of the contract is entitled to deference:
Sattva
    Capital Corp. v. Creston Moly Corp
.
, 2014 SCC 53, [2014] 2 S.C.R.
    633, at paras. 50-55;
Wood v. Fred Deeley Imports Ltd
.
,

2017
    ONCA 158, 134 O.R. (3d) 481, at para. 43;
Hampton Securities Limited v.
    Dean
,

2018 ONCA 901, 51 C.C.E.L. (4th) 244, at para. 5, leave to
    appeal refused, [2019] S.C.C.A. No. 34. Applying that deference, I see no basis
    to intervene.

General Principles: Interpreting
    Termination Clauses

[18]

There is a common law presumption that an
    employees dismissal without cause will only take place on reasonable notice to
    that employee. That presumption is rebutted only if the contract of employment
clearly
specifies some other period of notice, whether expressly or
    impliedly (emphasis added):
Machtinger v. HOJ Industries Ltd.
, [1992]
    1 S.C.R. 986, at p. 998;
Wood
,
at paras. 15, 28. If the common law
    presumption of reasonable notice has not been clearly rebutted, then the employee
    is entitled to pay in lieu of notice for the reasonable period under the common
    law.

[19]

The
ESA
contains employment standards distinct
    from those at common law. An employment standard is defined in s. 1(1) to mean
    a requirement or prohibition under the
ESA

that applies to an
    employer for an employees benefit. Subsection 5(1) of the
ESA

prevents
    employers, employees and their agents from contracting out of or waiving an employment
    standard. The length of notice of termination, the payment of benefits during
    notice periods, and the payment of severance all constitute requirements
    applying to an employer for an employees benefit, and therefore constitute
    employment standards. These employment standards cannot be contracted out of
    unless the contract is for a greater benefit than what the
ESA

provides
    for:
ESA
, s. 5(2).

[20]

It is not possible to simply void the part of a
    termination clause that offends the
ESA
. If a termination clause
    purports to contract out of an employment standard without clearly substituting
    a greater benefit in its place,

the entire termination clause is void:
North
    v. Metaswitch Networks Corporation,

2017 ONCA 790, 417 D.L.R. (4th)
    429, at para. 24;
Hampton Securities Limited
, at para. 7. As Laskin
    J.A. said in
Wood
,
at para. 21: Contracting out of even one of
    the employment standards and not substituting a greater benefit would render
    the termination clause void and thus unenforceable: see also paras. 64, 69. This
    is true even if the employee actually receives his or her statutory
    entitlements after termination. Accordingly, the enforceability of a
    termination clause is determined by the wording of the clause alone, not by an
    employers conduct after termination:
Wood
,

at paras. 43-44.

Did the motion judge fail to interpret the
    termination clause as a whole?

[21]

The appellant says that the motion judge
    contravened a fundamental legal principle of contractual interpretation by failing
    to consider the termination clause as a whole:
Amberber v. IBM Canada Ltd
.
,
    2018 ONCA 571, 424 D.L.R. (4th) 169,

at para. 59. According to the
    appellant, the motion judge improperly considered clauses 4(a) and 4(b) in
    isolation from the first clause when she found that they did not include some
    of the statutory entitlements. The appellant maintains that the first clause,
    which imports
ESA
entitlements by specific reference, also cloaks
    clauses 4(a) and 4(b) in those same statutory entitlements given that the whole
    clause insists on the greater entitlements being imposed.

[22]

I do not agree that the motion judge erred in
    this respect. I do not read her reasons as interpreting clauses 4(a) and 4(b)
    in isolation. To the contrary, the motion judge interpreted the clause as a
    whole. She set the entire clause out early in her reasons, including the first
    part of the clause that refers to the
ESA
.
She also acknowledged
    the first clause on other occasions. Her reasons demonstrate her conclusion
    that she interpreted the word or as separating the first clause from clauses 4(a)
    and 4(b). For instance, as she observed when summarizing the appellants
    position, [u]nder that provision, [the respondent] was entitled to the notice
    specified in the agreement, or notice in accordance with the
ESA
,
whichever
    was greater. She clearly interpreted the termination clause as a whole,
    viewing the first clause as separate and distinct from clauses 4(a) and 4(b).

[23]

I see no error in the motion judges approach to
    the word or as indicative of the disjunctive nature of the contents of the
    termination clause. She was right to conclude that the termination clause has
    two distinct parts. The language of the provision forces a choice between the
    greater of:

(i)

entitlement pursuant to the Ontario [
ESA
]
    (the first clause);
or


(ii)

at the employers sole discretion, either:

a.

two months working notice with compensation and benefits during
    the working notice period (clause 4(a)); or

b.

[p]ayment in lieu of notice in the amount equivalent to two (2)
    months [b]ase [s]alary (clause (4(b)).

[24]

As the respondent points out, the termination
    clause required that a choice be made between which part of the clause
    comprised the greater: the first part of the clause (entitlement pursuant to
    the Ontario [
ESA
]), or entitlement under clauses 4(a) or 4(b). In
    light of the disjunctive nature of the clause, it was open to the motion judge
    to find that the first clause did not cast the
ESA

statutory
    entitlements upon clauses 4(a) and 4(b).

[25]

Given the motion judges finding that the
    termination clause contained two distinct and separate parts, it is
    unsurprising that she went on to consider the meanings of clauses 4(a) and 4(b)
    standing on their own. She did not, as the appellant suggests, fail to
    interpret the termination clause as a whole.

Did the motion judge find ambiguity where
    there was none?

[26]

The appellant maintains that the motion judge
    erred when she found that: [a]t best, the termination provision in [the
    respondents] employment contract is unclear or ambiguous as to whether he
    would have been entitled to severance had clause 4a applied on his termination,
    and employee benefits had clause 4b then applied. This statement, however,
    must be read in its context. The motion judge immediately went on to observe
    that when a termination clause is unclear or can be interpreted in more than
    one way, courts should prefer the interpretation that favours the employee:
Ceccol
    v. Ontario Gymnastics Federation
(2001), 55 O.R. (3d) 614 (C.A.), at
    paras. 45, 49;
Nemeth v. Hatch Ltd
.
, 2018 ONCA 7, 418 D.L.R.
    (4th) 542, at para. 12. Read contextually, I understand the motion judges
    reference to at best to mean that, because clauses 4(a) and 4(b) did not
    clearly include
ESA

entitlements, the best the appellant could
    argue was that there was ambiguity and that the clauses should be interpreted
    to include those entitlements. She rightly rejected that argument.

[27]

Strictly speaking, given her finding that the
ESA

had been contracted out of under clauses 4(a) and 4(b), it was unnecessary
    for the motion judge to consider ambiguity. The termination clause was
    unenforceable given that it contracted out of statutory entitlements without
    substituting a greater benefit:
Wood
, at para. 21. Given that the
    parties addressed the ambiguity point, though, I will also briefly address it.

[28]

The appellant contends that the motion judge
    erred in straining to find ambiguity where there was none. In support of this
    argument, the appellant relies upon
Amberber
, at paras. 54 and 62,
    where this court commented upon a failsafe provision that served to modify the
    other parts of a termination clause, reading them up to comply with the
ESA
.
    The appellant says that this case is analogous to
Amberber
in the sense
    that the first clause modifies the whole termination clause, so that the
ESA

minimum entitlements apply to clauses 4(a) and 4(b).

[29]

I see no analogy to
Amberber
.
The
    failsafe provision in
Amberber

fell at the end of the Termination
    of Employment clause and read as follows:

In the event that the applicable provincial
    employment standard legislation provides you with superior entitlements upon
    termination of employment (statutory entitlements) than provided for in this
    offer of employment, IBM shall provide you with your statutory entitlements in
    substitution for your rights under this offer of employment.

[30]

That is a fundamentally different clause from the
    operative clause in this case. Here, as previously mentioned, the reference in
    the first clause to entitlement pursuant to the Ontario [
ESA
] does
    not cloak the entire termination clause. Rather, it is stranded within the
    first clause, a clause that the motion judge found provided for different
    entitlements than clauses 4(a) and 4(b).

[31]

The parties had contracted that the respondent
    was entitled to the greater of the
ESA

entitlements under the
    first clause
or
the entitlements under 4(a) or 4(b), not the greater of
    the first clause
or
the latter clauses, combined with elements of the
    first clause. Although she was not required to do so, I can see no error in the
    motion judges finding that, even when clauses 4(a) and 4(b) were taken at
    their very best for the appellant, they contained a lack of clarity about
    whether the appellant had to pay statutory severance under clause 4(a) and
    statutory benefits under clause 4(b). I agree with the motion judge that when
    the respondent signed the employment contract, at its very best from the
    appellants perspective, the termination provision was not explicit and the
    respondent would not have known with certainty what his entitlements at the end
    of his employment would be. As Laskin J.A. observed in
Wood
, at para.
    28, 
[e]mployees should know at the beginning of their
    employment what their entitlement will be at the end of their employment.

[32]

I see no error in the view that the
    incorporation of
ESA
entitlements into the first clause does not apply
    or, at the very least, does not clearly apply to clauses 4(a) and 4(b). The
    disjunctive nature of the termination clause and the absence of a reference to
ESA
entitlements in clauses 4(a) and 4(b) (with the exception of benefits in
    clause 4(a)), coupled with the specific reference to
ESA
entitlements
    in the first clause, support that interpretation.

Did the motion judge err by failing to
    acknowledge that clauses 4(a) and 4(b) incorporated ESA entitlements by silence?

[33]

The appellant relies upon
Roden v. Toronto
    Humane Society

(2005), 202 O.A.C. 351 (C.A.), and
Nemeth
in support of the proposition that silence about
ESA

entitlements
    does not entail a contracting out of those entitlements. In other words, the appellant
    says that the motion judge erred by essentially reading in a clause that
    excluded the respondents entitlement to severance pay under clause 4(a) and
    benefits continuation under clause 4(b).

[34]

I agree with the motion judge that
Roden

and
Nemeth

are distinguishable from this case. In both
Roden

and
Nemeth
,

the applicable termination clauses referred explicitly
    to
ESA
entitlements, but only in respect of notice or payment in lieu
    of notice. In
Roden
,

the termination clause set out the
    employers obligation to provide the minimum amount of advance notice or
    payment in lieu thereof as required by the applicable employment standards
    legislation: at para. 55. In
Nemeth
,

the termination clause
    referred to the notice period as amounting to one week per year of service
    with a minimum of four weeks or the notice required by the applicable labour
    legislation: at para. 3.

[35]

In both cases, this court concluded that, the
    silence of the clauses as it relates to statutory entitlements beyond notice
    did not work so as to exclude those entitlements. As Gillese J.A. said in
Roden
,

at para. 59, while the termination clause did not address benefit plan
    contributions during the notice period, it was silent in respect of the
    obligation to provide benefits and did not attempt to limit the employers
    obligation. Similarly, Roberts J.A. said in
Nemeth
,

at para. 15:
    I do not accept that the silence of the termination clause concerning the [employees]
    entitlement to severance pay denotes an intention to contract out of the
ESA
.

[36]

The motion judge specifically considered both
Roden

and
Nemeth

and concluded that they are distinguishable from
    this case. As she noted,
Roden

is distinguishable on the basis
    that the applicable termination clause made specific reference to the
    applicable employment standards, yet no such reference is made in clauses 4(a)
    and 4(b). She concluded that
Nemeth

is distinguishable from
    this case on the basis that the termination clause only attempted to limit the
    amount of notice that the employee would have received on termination, but not
    other statutory entitlements under the
ESA
.
The motion judge
    noted that in the case at bar, unlike
Nemeth
, there is no referential
    incorporation of the
ESA

with respect to clauses 4a and 4b.

[37]

In contrast to both
Roden

and
Nemeth
,
    while the first clause in this case specifically incorporates all entitlements
    to
ESA

statutory minimums in general, including benefits and
    severance, clauses 4(a) and 4(b) apply in the alternative and do not cover that
    same ground. Again, the
ESA

entitlements are stuck within the
    first clause of a disjunctive termination clause.

[38]

While some termination clauses explicitly and
    improperly bar payments that would otherwise be required under the statutory
ESA

scheme (for example,
Hampton Securities Limited v. Dean
,
2018
    ONSC 101, 43 C.C.E.L. (4th) 205, at paras. 103-6, affd

2018 ONCA 901,
    51 C.C.E.L. (4th) 244, at para. 7, leave to appeal refused, [2019] S.C.C.A. No.
    34, at para. 7;
Wood
, at para. 3), there is no specific requirement
    for such language in order to find that the statutory entitlements do not apply.
    The overriding question is whether the termination clause purports to limit the
    minimum statutory obligations:
Nemeth
,

at para. 15. The focus
    of the inquiry is on what the parties actually agreed to. While clauses 4(a)
    and 4(b) may provide an employee with more notice than the first clause, when the
    termination clause is read as a whole, it purports to limit
ESA

entitlements
    other than notice and benefits under clause 4(a) and notice under clause 4(b).

[39]

This view is fortified when the actual content
    of clauses 4(a) and 4(b) are considered. Unlike
Roden

and
Nemeth
,
the fact is that clause 4(a) is not simply silent as to everything but
    notice. Rather, it makes specific reference to compensation and benefits
    being unchanged during the working notice period. Yet clause 4(b) makes no
    reference to benefits. In these circumstances, it cannot be said that the
    clauses merely suffer from silence as to statutory entitlements. Clause 4(a)
    suggests that where the employer wanted statutory entitlements to apply, like
    notice  and
benefits
 (emphasis added), they were specifically
    adverted to within the clause.

[40]

I see no error in the motion judges
    interpretation of the termination clause. I would defer to her conclusion that the
    termination clause is unenforceable because clauses 4(a) and 4(b) purport to
    limit the employers obligations respecting employment standards.

(2)

The Respondent Was Entitled to Compensation for
    the Bonus He Would Have Earned While Working and During the Notice Period

[41]

The motion judge ruled that the respondent was
    entitled to compensation for the bonus he would have earned while he was still
    employed from January 1 to 19, 2017. She also concluded that he was entitled to
    compensation for the bonus he would have earned during the eight-month reasonable
    notice period to which she found he was entitled at common law.

[42]

The motion judge concluded that the bonus was an
    integral part of the respondents compensation. In the last three years of his
    employment, in addition to what was described as his Base Salary under the
    employment agreement (set at $142,500 when the employment agreement was signed),
    the respondent received $79,228.25, $127,933.80 and $49,757.51, respectively,
    in bonus payments.

[43]

In addition, the motion judge found that the
    bonus was non-discretionary in nature. She based that finding, in part, on the
    wording of the clause that outlined the respondents bonus entitlement, which
    was the second part of the employment agreements compensation section, immediately
    following the clause setting out the respondents Base Salary. She also grounded
    that finding in the fact that the respondent had received his bonus during each
    year he had been employed as a Managing Director.

[44]

Having found that the respondents bonus was
    non-discretionary in nature and an integral part of his compensation package,
    the motion judge considered whether there was anything in the employment
    agreement that removed the respondents common law entitlement to damages for his
    lost opportunity to earn his bonus. She turned her mind to whether a clause
    within the employment agreement  that the respondent be an employee in good
    standing with the company at the time bonuses are payable  disentitled him
    from damages.

[45]

The motion judge found that
Paquette v.
    TeraGo Networks Inc
.
,

2016 ONCA 618, 352 O.A.C. 1, applied.
    In
Paquette
, this court found that a clause in an employment agreement
    that said a bonus recipient must be actively employed by TeraGo on the date of
    the bonus payout, did not disentitle those who are within a notice period from
    receiving damages in lieu of the bonuses they would have received during the
    notice period. As van Rensburg J.A. said in
Paquette
,
at para.
    47:

A term that
    requires active employment when the bonus is paid, without more, is not
    sufficient to deprive an employee terminated without reasonable notice of a
    claim for compensation for the bonus he or she would have received during the
    notice period, as part of his or her wrongful dismissal damages.

[46]

The motion judge analogized the good standing
    clause in this case to the actively employed clause in
Paquette
.
Accordingly,
    she ordered that the respondent receive damages in lieu of the bonus he would
    have earned for the 19-day period that he worked in January 2017, as well as
    the bonus he would have earned during the eight-month notice period that
    followed.

[47]

The appellant contends that the motion judge
    erred by failing to appreciate that the
Paquette

principle does
    not apply in this case. Although the actively employed terminology used in
    the
Paquette

clause may well be the same thing as the good
    standing terminology used in the bonus clause in this case, the appellant says
    that the motion judge erred by failing to appreciate that, unlike
Paquette
,
the respondent in this case was no longer in the notice period when the
    bonus for 2017 became payable in February 2018. The appellant contends that
    the expiry of the notice period before the payment of the bonus disentitled him
    to that bonus.

[48]

I do not agree.

[49]

Paquette

sets out a two-part test at paras. 30-31 to determine whether
    damages in lieu of a bonus should be given. The first step is to determine the
    employees common law right. The motion judge concluded that in the circumstances
    of this case, where the bonus was such an integral aspect of the respondents
    compensation, he had a common law entitlement to the bonus he earned or would
    have earned. That finding is not challenged on appeal.

[50]

The second step is to ask whether there is
    something in the bonus plan that removes the employees common law entitlement.
    The appellant argues that the motion judge erred by focusing only upon the
    words good standing. The appellant contends that, although the respondent may
    well have been in good standing during the notice period, that notice period
    ended before when the bonus was payable. Accordingly, because the
    respondents bonus for 2017 was not payable until February 2018 and because the
    parties agreed that the respondent needed to be an employee in good standing
    with the company at the time bonuses are payable, the appellant argues that
    the parties contracted out of the common law entitlement to damages for any
    bonus the respondent earned or would have earned in 2017.

[51]

I would reject this argument.

[52]

Where a bonus is a non-discretionary and integral
    part of the employees compensation package, damages for wrongful dismissal should
    include both the bonus actually earned before being terminated and the bonus
    that would have been earned during the notice period, unless the terms of the
    bonus plan alter or remove that right: see
Paquette
, at paras. 16-18;

Taggart v. Canada Life Assurance Co.
(2006), 50 C.C.P.B. 163 (Ont.
    C.A.), at paras. 12-15;
Manastersky v. Royal Bank of Canada
, 2019 ONCA
    609, at paras. 40-43. Although I agree that one could contract out of the
    requirement to pay a portion of a yearly bonus based upon what a terminated
    employee earned while he was working and would have earned during a notice
    period, that contract would have to be clear on its face. As noted in
Paquette
,
    at para. 31, the question is not whether the contract or plan is ambiguous,
    but whether the wording of the plan unambiguously alters or removes the
    appellants common law rights: see also
Lin v. Ontario Teachers Pension
    Plan Board
,
2016 ONCA 619, 352 O.A.C. 10, at para. 89.

[53]

There is nothing in the wording of the
    employment agreement in this case to suggest that the common law right to
    damages for lost bonus potential in the wake of a termination without cause was
    contracted out of. I see no error in the motion judges finding that the good
    standing clause is tantamount to the actively employed clause in
Paquette
.

[54]

As noted in
Paquette
, at para. 16,
    damages for wrongful dismissal will typically include all of the compensation
    and benefits that the employee would have earned during the notice period: see
    also
Davidson v. Allelix Inc
.
(1991), 7 O.R. (3d) 581
(C.A.),
    at p. 589. Support for this proposition can be found in
Bain v. UBS
    Securities Canada Inc
.
, 2018 ONCA 190, 46 C.C.E.L. (4th) 50, albeit
    in a different context involving a deferred bonus plan. In
Bain
,
this
    court determined that a bonus earned by way of notional shares during a
    notice period could vest after the notice period ended. The appellant employer
    argued that the dismissed employee was only entitled to damages for lost bonus
    in respect of amounts he would have actually received prior to his termination
    and during the notice period. The court determined, at para. 15, that:

[W]hile the notional shares would not have
    vested before the end of the reasonable notice period, there is no question
    that the bonus was earned by Bain during that period.

[55]

Absent a contracting out, allowing for common
    law damages that include compensation in lieu of a
pro rata
share of a
    bonus in circumstances where the bonus is an integral part of the compensation
    package is the only sensible approach. Although the notice period in this case
    ended a few months before the bonus would have come due, one can well imagine a
    scenario in which the notice period could expire on the very eve of the bonus payment
    date. In those circumstances, the appellants position would lead to the
    untenable result that the dismissed employee would get no part of the bonus he
    or she had earned through a combination of his or her labour during that
    calendar year and over the course of the notice period that followed.

[56]

The greater the bonus in relation to the
    employees overall compensation and the shorter the notice period, the greater
    the unfairness of the situation. By way of example, if the appellant is right,
    then an employee who is terminated in early December, but only eligible to a
    couple of weeks of notice, would not be eligible to seek damages for a
pro
    rata

share of his or her bonus for the eleven months of work he or
    she completed and the short notice period that followed. Absent clear language
    in the contract, I do not accept the inherent unfairness that would arise in
    precluding those employees terminated without cause from seeking a
pro rata

share of their bonuses only by virtue of the fact that the notice period ended
    before the bonus payment date, particularly where the bonus payment date is
    entirely in the discretion of the employer.

[57]

Accordingly, the question is not whether the
    bonus would have been received during the notice period, but whether it
    whether it was earned or would have been earned during that period. Damages
    may be sought as compensation for what an employee would have earned had his or
    her contract of employment not be breached. This reasoning is similar to
Taggart

where an active service prerequisite to the accrual of pension benefits did
    not preclude damages for lost pension benefits during the notice period after
    wrongful dismissal. As noted by Sharpe J.A. in
Taggart
, it is
    important to recall the legal nature of the claim. In
Taggart
,
the
    legal nature of the claim was not for the benefits themselves, but for damages
    as compensation for the  benefits the [employee] would have
earned
had
    the [employer] not breached the contract of employment: at para. 16 (emphasis
    added). Equally, the claim here was not for the bonus itself, but for the share
    of the bonus that the respondent would have earned had the appellant not
    breached the contract of employment.

[58]

I do not read the
Paquette

decision
    as turning on the narrow point that the dismissed employee was still within the
    notice period when the bonus came due. The fact is that the dismissed employee
    in
Paquette

only claimed damages in lieu of his bonus for the
    periods of time when it would have come due while the notice period was still
    operative. The reasons in
Paquette

are responsive to that
    position. The decision should not be read, though, as being limited to only
    those cases where the notice period continues to run at the time when the bonus
    would have otherwise come due if the employee had not been terminated without
    cause.

[59]

Both
Lin

and
Singer v.
    Nordstrong Equipment Limited
,
2018 ONCA 364, 47 C.C.E.L. (4th) 218
    lend support to the availability of damages on a
pro rata
basis for lost
    bonus potential.

[60]

In
Lin
, a decision released on the same
    day as
Paquette
,
this court considered a similar issue to what
    is now raised by the appellant. The trial judge had awarded damages for bonuses
    that the employee would have received under two bonus compensation plans
    constituting about 60 percent of his annual compensation. The bonus payments
    were given in April of each year for the performance period ending on
    December 31 of the previous year:
Lin
,
at para. 58. The
    employee was terminated in March 2011 and was ultimately granted a 15-month
    period of reasonable notice. That meant that the notice period extended to June
    2012.

[61]

The trial judge awarded damages for the bonuses that
    the employee would have received under the two different plans in April 2011
    and April 2012. He also granted damages for the bonus the employee would have
    received under one of the plans for the period of time between January 1 and June
    22, 2012. On appeal, this court rejected the employers argument that language
    in the bonus plans about termination disentitled the employee from receiving
    any bonus compensation once he was terminated. It determined that the employee was
    entitled to compensation for lost bonuses under the plans, including the
pro
    rata

share under the one plan for the period from January 1 to June
    22, 2012, because, absent clear language limiting a terminated employees
    common law rights, an employee is entitled to the bonus he or she would have
    earned during the period of reasonable notice, as a component of damages for
    wrongful dismissal:
Lin
,
at para. 89.

[62]

Equally, in
Singer
, this court
    concluded that the appellant employee should receive damages for the lost
    opportunity to earn his bonus during the entire notice period, including a
    period of time that would have exceeded the yearly bonus payout. In setting
    aside the motion judges decision rejecting the employees claim for an amount
    to compensate him for the loss of that bonus, Feldman J.A. concluded that there
    was nothing in the employment contract that removed the employees entitlement
    to a full share of the bonus he would have earned during the notice period.

[63]

Although none of the parties in
Lin

or
Singer

specifically questioned whether damages can be ordered
    on a
pro rata

basis for part of a bonus year, the fact remains
    that this court made that type of order in
Singer

and upheld that
    type of order in
Lin
.

[64]

I see nothing in the employment agreement in
    this case that disentitled the respondent to a
pro rata

share
    of his bonus for the period of time that he actually worked and the period of
    notice granted.

(3)

The Respondent Was Entitled to Compensation for Loss
    of Employment Benefits During the Notice Period

[65]

In light of my conclusion that the motion judge
    did not err in determining that the respondent was entitled to the common law
    notice period, I would accept the appellants reasonable concession that the
    motion judge erred in failing to grant damages for benefits lost during that
    period. The failure to do so is contrary to
Davidson

and
Singer
.
    I accept the parties agreement that ten percent above the respondents base
    salary over the reasonable notice period is the appropriate value to assign to those
    lost benefits.

CONCLUSION

[66]

I would dismiss the appeal and grant the
    cross-appeal.

[67]

I would order that the total amount of the
    judgment be increased by $8,500, which represents ten percent of the
    respondents base salary of $170,000 per annum over the eight-month common law
    notice period, minus the benefits already provided by the appellant under the
ESA
.

[68]

On the agreement of the parties, the appellant
    will pay $25,000 in costs to the respondent inclusive of disbursements and
    taxes.

Released: MF AUG 30 2019

Fairburn J.A.

I agree. M. Tulloch
    J.A.

I agree. C.W. Hourigan
    J.A.





[1]

It appears that the motion judge subtracted the twelve weeks
    of severance pay that the respondent had already been compensated, rather than
    the eight weeks of payment in lieu of notice, from the reasonable period of
    common law notice granted. The parties do not take issue with this approach.



[2]
The respondents combined service to the appellant was more than
    eight years.


