Manulife tried to use maternity leave to reduce bonus, and lost.

On April 22, 2015, the Supreme Court of British Columbia ordered Manulife  to pay damages of over $140,000 to a recruiter of financial advisors in a wrongful dismissal suit. The decision is noteworthy in that the court refused to allow Manulife to use its employee’s maternity leave as a reason to reduce her bonus payment.

In Sowden v. Manulife Canada Ltd., the court ruled that Manulife owes damages to former employee Janice Sowden after she was dismissed in a “corporate restructuring”. In an earlier decision the court ruled, after a summary trial, that Sowden was entitled to damages, but it was initially unable to quantify those damages due to conflicts in the evidence.

Following a trial on the question of damages, the court found that Sowden — who was dismissed after 20 years with the company — was owed a bigger bonus than Manulife initially paid her, and 20 months worth of notice when she was dismissed, less the salary she subsequently earned in her new job.

In defending its bonus calculation before the court, Manulife relied on a term in the letter setting out her bonus entitlement which stated that “If you take an approved leave of absence your bonus will be prorated accordingly”. The court found that the term could not apply, since Ms. Sowden had “an absolute right to maternity leave under s. 51 of the Employment Standards Act”. It held:

[T]he recruiting portion represented a specific, calculable amount that [Ms. Sowden] had fully earned before her maternity leave. If the parties contemplated prorating of that amount, [Ms. Sowden] would have in effect been penalized for exercising her statutory right to maternity leave. I find the agreement cannot reasonably be read in that way and the recruiting portion of the bonus was not subject to prorating.

The court ruled that, as of the date of dismissal, Sowden was owed an additional $62,550 in bonus for her work the previous year. It also ruled that she was entitled to $320,000 in damages in lieu of the 20-month notice period for which she was entitled.

However, this total must be reduced by the money she earned from her new employer and the statutory statutory severance pay she received, the court decision notes. As well, Manulife made an interim payment in September 2014, thereby reducing the final judgment to $143,111.52.