Employer’s Legal Challenge Overruled in Ontario Wrongful Dismissal Case
In a significant employment law decision, the Ontario Court of Appeal (OCA) has rejected an employer’s attempt to overturn a $1.8 million damages award previously granted to a retired executive. The ruling affirms that employers cannot reargue dismissed claims under the guise of new legal theories, especially where issue estoppel applies.
The case, Boyer v. Callidus Capital Corporation, 2025 ONCA 79, involved claims for unpaid vacation, deferred bonuses, and unvested stock options. The employer had attempted to frame its arguments around allegations of just cause for termination, but the court ruled these efforts were barred due to a prior failed counterclaim.
Overview: What Led to the Legal Dispute?
Employment Background
The employee, Boyer, was employed by the company in a senior role – Vice President of Underwriting and Portfolio Management – at Callidus Capital Corporation from 2009, until his wrongful termination of employment in 2016. Notably, there was no written employment contract; rather, the agreement between the parties was entirely verbal. This absence of formal documentation would become a critical factor in the case’s outcome.
Boyer’s compensation package included a base salary, participation in a deferred bonus structure, and eligibility for stock options. He was also entitled to four weeks of vacation annually.
Employer’s Practices on Compensation
Under the deferred bonus plan, Callidus would retain a percentage of employee bonuses, paying out 50% of the withheld amount in each of the two following years. These deferred amounts accrued interest at a rate of 3% quarterly. Regarding stock options, it was common practice within the company to permit the full vesting of such options upon an employee’s exit.
Events Leading to Dispute
In 2015, Boyer gave advanced notice of his intention to retire by the end of 2016. However, after this announcement, he alleged that he was subjected to mistreatment and a toxic work environment. He claimed his responsibilities were stripped and reassigned to others, and when he requested to use 24 weeks of accrued vacation, his employer refused.
By September 2016, Boyer submitted a formal letter citing constructive dismissal, stating that he was left with no alternative but early retirement due to ongoing abuse and mistreatment. The letter also detailed that Callidus had failed to compensate him for accrued vacation, deferred bonuses, and unvested options upon his departure.
Trial Court’s Findings and Compensation Breakdown
Constructive Dismissal Claim Rejected
The Superior Court of Justice did not accept Boyer’s claim that he had been constructively dismissed. Since he initiated his retirement, he was not awarded damages under that specific claim. A constructive dismissal lawyer would recognize that the threshold for proving a hostile work environment leading to resignation can be high, as this case illustrates.
Vacation Entitlement Upheld
Despite the dismissal claim failing, the court ruled in Boyer’s favour on other counts. There was no documented policy or clear communication that mandated vacation must be used annually without carryover. As a result, the court awarded $93,076 for 22 weeks of unused vacation, recognizing that vacation pay is a core component of an employment contract.
Deferred Bonus Payment Granted
Crucially, the employer did not present evidence that Boyer had agreed to a policy denying bonus payments to employees no longer employed at the payout date. Since Boyer had not seen the written policy, nor was it proven that he had accepted its terms, the court awarded him $525,000 for deferred bonuses from 2014 and 2015. Additionally, interest at 3% per quarter was applied up to the decision date.
Stock Options Awarded
Even though Boyer’s contract was oral, the court accepted his evidence that a senior executive assured him that his stock options would vest upon retirement. This verbal assurance was deemed an enforceable contractual term. Boyer was awarded $1,213,856 based on the difference between the grant price of the options and their market value as of January 2017.
Employer’s Appeal Rejected: Key Legal Findings
Attempt to Re-Litigate Rejected Counterclaim
Earlier in 2023, the OCA had already dismissed a counterclaim from Callidus, which alleged Boyer’s mismanagement of three corporate loans amounted to a breach of fiduciary duty. In this appeal, Callidus tried to reuse the same allegations to argue that Boyer was terminated for just cause. The court found this strategy to be an abuse of process and invoked issue estoppel to bar re-litigation.
According to the Court, all three legal requirements for issue estoppel – same parties, same issues, and a final judgment – were satisfied. Thus, the employer could not revisit these allegations.
This aspect of the case offers a cautionary tale for employers. As noted by several wrongful dismissal lawyers in Toronto, once a court dismisses a counterclaim, the facts can’t simply be reshaped for another legal theory.
Summary Judgment Was Appropriate
Callidus also argued that the judge erred by deciding the matter through summary judgment. However, the OCA emphasized that the record was sufficient for this streamlined process. The claim was of “modest complexity,” and the motion judge had fully considered the evidence and credibility of witnesses.
Legal Implications for Employers and HR Teams
This case presents a number of critical lessons for businesses and HR departments. Employers seeking guidance from an employment contract review lawyer should note the following takeaways:
1. Document Employment Terms
A key factor in this case was the lack of a written employment agreement. The absence of documented terms made it easier for the employee to enforce verbal assurances. Companies should ensure all employment contracts – especially those involving complex compensation structures – are documented and signed.
2. Clearly Communicate and Share Policies
Employers must do more than create policies – they must actively share and explain them to employees. The court refused to enforce policies the employee had never seen or agreed to.
3. Use Caution When Litigating Dismissal Grounds
Callidus’ efforts to relitigate the lower court’s finding that it had just cause for dismissal under a different guise led to procedural sanctions. The legal principle of issue estoppel can block attempts to revisit settled matters. As many constructive dismissal lawyers emphasize, clarity and consistency in legal pleadings are essential.
4. Severance and Equity Compensation Must Be Addressed Properly
Equity compensation, such as stock options and deferred bonuses, can represent significant financial liabilities. Employers should work with a severance package review lawyer to ensure all entitlements are addressed clearly in both employment agreements and termination packages.
Final Thoughts: When to Consult an Employment Lawyer in Toronto
For companies operating in Ontario, this decision serves as a valuable precedent on the enforcement of employment entitlements, particularly where formal contracts are lacking. It also reinforces the dangers of failing to properly structure or communicate bonus and equity plans.
Employees and employers alike are advised to seek the guidance of an experienced employment lawyer in Toronto before entering into or terminating employment relationships, especially those involving significant compensation components. Legal advice can prevent costly litigation and ensure employment agreements withstand judicial scrutiny.
Call Employment Lawyer Toronto Today
For many employers, termination of employment is a difficult and confusing time, especially when it comes to drafting severance packages. Therefore, in a wrongful termination of employment, it is important for employers to consult with an experienced Ontario employment lawyer for a severance package review to understand the impact of wrongful dismissal on pension plans.
If you are an employer or employee needing to speak with an experienced Ontario wrongful dismissal lawyer to discuss your options and next steps on how to deal with workplace issues, call Bune Law, employment law firm in Toronto. You will review and get guidance on your severance package before you agree to sign any termination documents, and help ensure that your severance package is fair and reasonable.