In Nader v. University Health Network, 2022 ONCA 856, the Ontario Court of Appeal found that the plaintiff’s employment contract was sufficiently ambiguous that he would also be entitled to his bonus as part of his contractual termination package. 

Background

University Health Network (“UNH”) terminated Mr. Nader without cause. Under his employment agreement he was entitled to 12-months’ severance.  The termination language in the contract was as follows:

“(UHN) may terminate your employment, other than for just cause, at any time upon payment to you of an amount equal to 12-months’ salary, which includes all your entitlement pursuant to the Employment Standards Act. It is expected that if you elect to terminate your employment with UHN, you will provide two months prior written notice, which notice may be waived by UHN at its discretion.”

The trial judge determined that he was not entitled to his discretionary bonus (up to 25%) for the 12 months as he was not eligible to receive it.

The Court of Appeal overturned this part of the decision as they viewed the termination clause to be vague as to what “salary” included. “Salary” was undefined and did not necessarily mean his base salary only. Accordingly, he was entitled to the totality of his compensation, including the bonus. It was further noted that the trial judge overlooked his history of being paid a bonus, with several years of being paid about 25%.

As part of the rationale for overturning the ruling in part, the Court of Appeal highlighted that the trial judge awarded Mr. Nader’s health spending account as part of this package which was not strictly base salary. Analogously, the Court of Appeal viewed his bonus as part of his overall compensation.

Takeaway

Employees who have been terminated and are concerned that their severance package is unfair should reach out to the lawyers at JPak for advice. Conversely, employers should have their employment contracts reviewed by a lawyer to ensure that there is clarity on what an employee’s termination entitlements are.

Contact us at info@jpakemploymentlaw.com or here.