Special thanks to our articling student Rana Aly for contributing to this update.

Key Takeaways

Employers often assume that bonus damages in a wrongful dismissal claim will be calculated by averaging the employee’s last three years of compensation. A recent Ontario Superior Court decision confirms that assumption can be wrong and very expensive depending on the circumstances.

Warren v. Canaccord Genuity Corp. is a reminder that courts will consider the context of a bonus entitlement, and will not mechanically apply a three-year averaging method. Where a terminated employee can point to what comparable employees actually earned during that same window, a court may use those real-world figures instead as a better indicator of what bonus the employee ought to receive. This could have a particular impact for employers in bonus-heavy, market-driven industries.

Background

Craig Warren was a Managing Director in Canaccord’s mining group, terminated without cause in September 2019 after 18 years of service. His compensation was heavily bonus-dependent, fluctuating based on Canaccord’s Canadian Capital Markets Pool and his individual performance. Justice Schabas awarded Mr. Warren 21 months’ notice. The central dispute was how to calculate the bonus component of that award.