Canada: Maternity Leave Was No Reason To Reduce Bonus

Employment agreement interpreted in light of statutory right to maternity leave

The recent decision of the B.C. Supreme Court in Sowden v. Manulife Canada Ltd. is noteworthy for its interpretation of a written agreement regarding bonus payments, and the court's reluctance to allow an employer to use an employee's maternity leave as a reason to reduce her bonus payment.

Janice Sowden was a regional marketing director for Manulife Canada Ltd. ("Manulife"). Her remuneration was made up of a base salary plus a variable bonus, calculated partly on her success in recruiting new financial advisors to work for Manulife. In essence, the more valuable the assets brought to Manulife by Ms. Sowden's recruits, the higher her bonus. Ms. Sowden had worked for Manulife for 20 years when she was dismissed in a corporate reorganization. In an earlier decision, the court had determined that Ms. Sowden was owed damages for wrongful dismissal based on a notice period of 20 months. This case concerned the calculation of those damages, especially her bonus for the 2012 year.

Ms. Sowden's recruiting target for 2012 was set at $125 million, and confirmed in a letter to her in March, 2012. When the target was set, Manulife knew that Ms. Sowden would be going on maternity leave later in the year, but did not adjust the target to take this into account. Manulife also advised Ms. Sowden that her bonus was capped at 135% of base salary.

Ms. Sowden exceeded the target four months early, landing a deal bringing in several new recruits and portfolios worth hundreds of millions of dollars. It was the most significant recruitment of her career and probably the largest ever for Manulife. In the period leading up to the deal, her supervisor made several statements to the effect that if she exceeded the recruiting target, she would be awarded appropriately and the bonus cap would not apply. To seal the deal, Ms. Sowden worked extremely long hours, right up until the day before she gave birth.

Contrary to Ms. Sowden's expectations, when Manulife paid Ms. Snowden her bonus in early 2013, it applied several deductions to the amount paid. Despite assurances to the contrary, Manulife applied the 135% bonus cap. In addition, it prorated the bonus to reflect the four months of maternity leave she took in 2012. Ms. Sowden returned to work in March 2013. She was notified in late May that her employment would be terminated nine days later.

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. [emphasis added]

Regarding the statements made to Ms. Sowden by her supervisor, the court reasoned that employment contracts differ from others in that they govern long-term, changing relationships: "[t]he terms of the contract may vary over time and may be implied by the court, based on conduct and the history of the relationship". Although the March letter set out certain terms of Ms. Sowden's employment, in the court's view, it did not constitute the entire contract, and it was possible to alter those terms through later discussions. Ms. Sowden's supervisor had "led [her] to believe", at several different points in time, that she could expect a bonus over and above what the March letter provided, if she landed the big deal. The agreement set out in the March letter had been varied by these statements so that the cap did not apply to the recruitment portion of the bonus derived from that deal.

Manulife had paid the plaintiff a bonus of $81,000 in 2013. After recalculation to reflect Manulife's various errors, the court determined that the bonus should have been $62,500 higher. Manulife also owed Ms. Sowden $320,000 in damages in lieu of notice. After deductions for certain payments it had already made, Manulife was found to owe Ms. Sowden $143,111.52.

Case law on the employment contract implications flowing from statutory maternity/parental leave is not common and can be inconsistent, so it interesting to see a decision in which the issue is painted in terms of "reasonableness". Leaves under the Employment Standards Act create clearly-defined statutory rights, but it is important to remember that these rights can affect the interpretation of an employment contract.

Employers would also be wise to take note of the court's conclusion that the employment agreement was modified by the supervisor's verbal statements. The interpretation of a contract is always carried out in light of the surrounding circumstances such as, in this case, the unusual scope of the recruiting effort. The court found it unlikely that Ms. Sowden would have worked as hard as she did until the last day of her pregnancy if she had not been led to believe that she would receive an additional bonus. The fact that her supervisor may have been purposely vague did not prevent the court from finding that the contract had been varied.

To view original article, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.