BC Supreme Court tentatively approves certification of class action against employer for unpaid vacation pay

In an interesting development, the BC Supreme Court has recently tentatively approved certification of a class action in British Columbia against an employer.  

The case involves a plaintiff who is a former BMO employee, who applied to bring a class action against BMO on behalf of non-unionized employees. Specifically, his claim is on behalf of other private wealth consultants and mortgage specialists who were paid variable compensation (i.e. commissions and bonuses on top of a base salary). The hearing was solely to determine whether the case could proceed as a class action rather than an individual action.   

The plaintiff alleges that he and other members of the class were not given the vacation and holiday pay mandated under the Canada Labour Code and is claiming damages for breach of contract and breach of duty of good faith.

BMO resisted the application for certification and says that it paid all amounts that were owing. The employment documents suggest that the employment contracts for members of the class incorporated the statutory pay and statutory vacation pay amounts set out in the Canada Labour Code into the employee contracts. However, for some employees at BMO, they were told that their total compensation (including variable compensation) was inclusive of their statutory holiday pay and vacation pay entitlements. In other words, the statutory amounts were not separately identified.    

The plaintiff alleges that BMO was wrong in its calculations and did not actually meet its obligation to pay the required statutory pay and vacation pay.  

BMO argued that the plaintiff could not make a claim in court for a breach of the Canada Labour Code and, instead had to make a claim to the Canada Industrial Relations Board. The court held that the plaintiff had a cause of action for breach of contract because BMO had explicitly contracted with the employees to meet the Canada Labour Code requirements. This was different than in situations where the employee was arguing that statutory provisions were implied into a contract.  

The court also held that the plaintiff had a potential claim for breach of the duty of good faith. 

The court was willing to certify the plaintiff’s claim as a class action. The court granted the plaintiff an opportunity to amend his claim to address the deficiencies identified by the court. 

Takeaways

The court’s ruling is potentially noteworthy for employers in British Columbia for two reasons. 

First, the case is a reminder of the risk for employers who say statutory pay and vacation pay are included in a salary or commission payment amount. It is better practice to separately identify those amounts on top of salary and commission figures. 

Second, employment law class actions have been virtually non-existent for the past several years due to previous court rulings which have suggested that statutory entitlements, such as overtime pay and vacation pay, should be enforced by the Employment Standards Branch or Canada Industrial Relations Board and not by the courts. Depending on how the case unfolds, the court’s ruling may pave the way for class actions in other employment law cases in BC.  

See link to the full decision here.