Ridout Barron


Employment contract disputes can arise from non-specific language

A recent decision by the Alberta Court of Queen's Bench might give employers several things to consider. Employment contract disputes can be costly and time consuming. In this case, an employee filed a wrongful termination lawsuit against his employer, and an unpaid performance bonus formed a part of the claim.

According to court documents, the man was employed as the sales manager of a store, starting in Jan. 2015. His employment contract included a performance bonus of 2% on increased sales exceeding a specific amount. He received the bonus for the period Jan. 2015 through Feb. 2016. However, the worker's employment was terminated with cause in Oct. 2016. His employer did not pay the performance bonus for the period between February and Oct. 2016, claiming that the man was not entitled to receive the bonus because this period was less than 12 months.

According to the decision of the court, the language in the performance bonus agreement did not clearly state that the employee would only be entitled to the bonus if he worked for a specified period. The court determined that the employee was entitled to the bonus pro-rata for the period that he worked before his dismissal. The court said that contractual provisions for both discretionary and non-discretionary bonuses must clearly show the employer's intention by the use of express language.

In this case, the part of the contract that covered the performance bonus contained no indication that payment would be subject to the employer's discretion. A lawyer who is experienced in dealing with Alberta employment laws might best serve employees who become involved in employment contract disputes. Similarly, it might be sensible for employers in Alberta to utilize the skills of legal counsel when drafting contracts to avoid costly legal proceedings.

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