The Importance of Comprehensive Employment Contracts and Workplace Policies – Boyer v. Callidus, 2024 ONSC 0020

The Ontario Superior Court of Justice’s decision in Boyer offers a cautionary tale to employers about the importance of drafting, documenting, and communicating workplace policies and employment contracts.

Mr. Boyer worked for Callidus as a Vice President of underwriting and portfolio management from 2009 to 2016. Notably, Mr. Boyer’s employment agreement was oral.

Around 2014, Callidus introduced a deferred bonus program and stock option plan for certain Callidus employees. Mr. Boyer participated in both. He was also entitled to four weeks’ vacation per year.

In the summer of 2015, Mr. Boyer notified his then manager that he intended on retiring at the end of 2016. However, Mr. Boyer departed in September of 2016 due to events that he perceived constituting a toxic work environment and reduced work responsibilities. Mr. Boyer commenced a claim seeking damages for constructive dismissal, unpaid vacation pay, deferred bonuses, and stock option entitlements.

Constructive Dismissal

The Court dismissed Mr. Boyer’s constructive dismissal claim on the basis that a reasonable person would not have felt that the essential terms of his employment contract were being substantially changed in light of Mr. Boyer’s upcoming retirement. The Court further found that Mr. Boyer’s evidence of a toxic environment was not particularized, or did not directly impact him. Accordingly, the evidence advanced by Mr. Boyer did not amount to a breach of the employment contract.

Outstanding Vacation Pay

The vacation dispute centred on whether Mr. Boyer was entitled to carry forward his unused vacation time to subsequent years. Callidus argued that its policy was that vacation time had to be used during the year it was earned, but no evidence was advanced in support that the policy existed, or that it was communicated to Mr. Boyer. The Court awarded Mr. Boyer $93,076.92, the equivalent of 22 weeks salary, for accumulated and unused vacation time.

Outstanding Deferred Bonuses

Mr. Boyer was paid an annual bonus, a portion of which was deferred. In withholding the deferred bonus, Callidus argued that its bonus deferral policy required the recipient to be an active employee at the time of payout. The Court found that Mr. Boyer’s contract of employment did not include a condition that he would not be paid deferred bonuses after his employment with Callidus ended. The Court further found that if active employment was a condition of receiving the deferred bonus, Callidus did not advance evidence demonstrating Mr. Boyer’s awareness or agreement to this condition. Mr. Boyer was entitled to damages for unpaid and deferred bonus amounts that were awarded to him for 2014 and 2015 in the amount of $525,000 plus 3% quarterly interest on the deferred amounts.

Stock Options

Callidus had a stock option policy in 2014 that was silent on the treatment of an employee’s unvested options in the case of retirement. An amended policy was implemented in May of 2016 stating that any unvested portion of options would expire upon the termination of an employee’s employment. Mr. Boyer’s evidence, which the Court accepted, was that he was previously informed by a manager that his options would vest upon retirement and at no time was he made aware of an amended policy. Accordingly, the Court awarded equivalent damages of $1,251,945.58 representing the value of his stock options had they vested.

Takeaway for Employers

Boyer should be a stark reminder for employers that all employment contracts and policies need to be clearly written and communicated to employees. Callidus could have avoided much of its $1.8M liability by designing, implementing, and communicating comprehensive workplace policies.

Employers should regularly review their policies and their communication practices. Further, when introducing new compensation plans or policies, it is crucial that the employer properly document and communicate the change to its employees.