Ambiguous bonus policy

After more than five years with Twin Deer Parts and Sales Ltd., Bertrand Gauvin’s employment as a heavy-duty mechanic ended on Sept. 26, 1997. Mr. Gauvin resigned from Twin Deer as a result of a remuneration dispute over the calculation of his bonus.

Prior to accepting a position with Twin Deer, Mr. Gauvin had discussions regarding his remuneration should he join the company. At that time Twin Deer acknowledged that it paid its employees a bonus; however, the full details of the bonus structure were not laid out for Mr. Gauvin either in the discussions or in his confirmation of employment letter. That letter merely indicated that his wage rate would be $16 per hour and there was no bonus entitlement until after one month of employment, at which time a review would be held to consider the possibility of a bonus.

On Nov. 12, 1995, Mr. Gauvin was informed that he was entitled to a bonus calculated from that date in the amount of $2 per hour. It was not until February 1996 that the details of the bonus payment scheme were fully communicated to Mr. Gauvin.

In February 1996 Mr. Gauvin received a raise. He received a letter indicating that as of February 23, 1996, his wages were raised to $20 per hour for customer work; $18 per hour for internal work orders and for “redoes.”

One of the disputes that Mr. Gauvin had with Twin Deer was with respect to redoes. It was not in dispute that no bonus was payable on redoes. The dispute was as to the meaning of the term “redo.” Mr. Gauvin understood that if a piece of work previously performed by him was faulty and he was assigned to remedy the fault, this would be a “redo” and he would not be paid a bonus for the work. Twin Deer took the term “redo” to mean any work done to remedy a fault in previous work, regardless of who had performed the previous work.

Mr. Gauvin did not realize how Twin Deer interpreted the term “redo” until he received the second of the two bonus payments. He disputed the calculation of the bonus and was told that he had not earned bonus on a significant number of hours he had worked remedying the work of a former Twin Deer employee.

The Court considered both definitions of the term “redo” offered by the parties and found both to be possible because the term was ambiguous. It is a principle of interpretation of written instruments that where the words of the instrument are ambiguous, the words are to be construed against the party who drafted the instrument.

Based on this principle, the Court rejected Twin Deer’s interpretation of the term “redo” and accepted Mr. Gauvin’s interpretation of the term and his argument that he was owed $1,438.35 for outstanding bonus.

The other contentious issue between Mr. Gauvin and Twin Deer related to payment of bonus that came due after he left. Twin Deer’s position was that an employee had to be in its employ as of the day the bonus became payable. The next date that his bonus would have been payable was Nov. 12, 1997. However, Mr. Gauvin left the employ of Twin Deer on Sept. 26, 1997.

In determining this issue, the Court considered the events surrounding the cessation of his employment. Following his unresolved dispute with Twin Deer over bonus entitlement for redoes, Mr. Gauvin gave two weeks’ verbal notice of resignation which was accepted by a Twin Deer representative. The provisions outlining bonus entitlement stated that “bonus will not be paid should the individual quit prior to an agreement by the company.” In this case, Mr. Gauvin tendered his resignation, it was accepted and he worked during his two-week notice period.

Again, the company policy contained ambiguity that the Court interpreted in Mr. Gauvin’s favour. He had an agreement with Twin Deer about his resignation and therefore he did not quit within the meaning of the policy. He was entitled to bonus owing as at the date of the cessation of his employment.

Mr. Gauvin also brought a claim in defamation against his former employer. He alleged that an officer of Twin Deer left a voice mail message for Mr. Gauvin’s new employer leaving the impression that Mr. Gauvin was a “bad apple.” The evidence supported this allegation. The Court held that this action was defamation.

The only defence offered by Twin Deer is that the statement was true but it did not provide any evidence to support its position. Mr. Gauvin was therefore awarded $5,000 in damages for this defamation.

For more information:

Gauvin v. Twin Deer Parts & Sales Ltd., 269 A.R. 201.

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