Schumacher v. Toronto Dominion Bank (1997)
147 D.L.R. (4th) 128 (Ont. Gen.Div.)

This was a landmark decision which broke important legal ground for employees whose compensation is variable and largely dependent on so-called discretionary bonuses. It was the largest judgment for wrongful dismissal that had ever been awarded in Canada at the time, and the trial judge's decision marked important breakthroughs in several areas of the law relating to wrongful dismissal. The trial judge's decision was unanimously upheld by the Ontario Court of Appeal, and the bank's attempt to obtain leave to appeal to the Supreme Court of Canada was rejected by that Court. The case also established and clarified important principles having to do with an employees entitlement to deferred compensation on termination in the face of clauses in the compensation plans which would appear to suggest that unvested deferred amounts are forfeited.

The plaintiff, an investment banker and a Senior Vice President of the defendant bank with global responsibility for its trading activities had a large portion of his investment banking responsibilities assigned to another when the defendant unilaterally decided to hire another highly experienced employee to take over some of the plaintiff's portfolios. He was not alerted to the bank's intentions, and learned of the hiring and of the loss of important areas of responsibility as a result of a leak within the bank. The plaintiff was concerned about lost opportunities for job growth and the potential impact of the loss of some of his responsibilities on his compensation, the lion's share of which was paid as a bonus which was dependent to some extent upon the revenues for which he was responsible. The defendant took the position the changes to the plaintiff's job were not material, and that in any event the plaintiff had resigned when he failed to return to work on the specific date requested. The plaintiff sued and alleged a constructive dismissal. He was successful.

The Court held the changes made to the plaintiff's employment were material in nature and constituted a constructive dismissal. The court held that it was an implied term of the plaintiff's employment agreement that he be consulted before fundamental changes were made to his employment, and also that the plaintiff be involved in the hiring of significant employees, especially where it would have a fundamental effect on his own employment. Further, the plaintiff made no clear statement of intention to resign, and he was not required to take the positive step of communicating he did not intend to resign. Damages were awarded to the plaintiff for a thirteen month period in the amount of $2,166,491.47 before accounting for mitigation earnings, plus legal costs.

Schumacher v. Toronto Dominion Bank (1997)
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