An Ontario court has certified a class-action lawsuit against Medcan Health Management Inc., giving the green light to approximately 700 current and former employees who claim they did not receive vacation and statutory holiday pay on bonuses and commissions.
Three former Medcan employees allege that for years they did not receive the additional payments on commissions, which made up the bulk of their remuneration.
Under the provincial Employment Standards Act, an employer owes employees vacation and public holiday pay on all income, including base salaries, commissions or bonuses. For example, a car salesperson who earns a $1,000 commission for the sale of a car is entitled to an additional 4 per cent in compensation, or $40, in vacation pay. And an employee who has worked for more than five years is entitled to 6 per cent in vacation pay.
“Most employees don’t know that they are entitled to vacation pay on all earnings, including bonuses. And there is a lot of non-compliance out there – many employers don’t bother granting that additional 4 or 6 per cent,” said Andrew Monkhouse, a lawyer for the plaintiffs and managing partner at Toronto-based labour and employment firm Monkhouse Law.
Medcan is a private health care provider with clinics in Toronto and Oakville, Ont. It offers chiropractic services, physiotherapy and plastic surgery but also gives patients quick on-site access to specialists (cardiologists, dermatologists, etc). The clinics each employ more than 400 people.
In June, an Ontario Superior Court justice dismissed a motion put forward by the plaintiffs – Nicole Curtis, Amr Galal and Katrina Buhlman – to certify their case as a class action, arguing that it was not the preferable way to demand compensation. But last month, on appeal, a panel of judges overturned that judgment, paving the way for Ms. Curtis, Mr. Galal and Ms. Buhlman, along with 743 other former and current Medcan employees, to participate in a class action.
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“When vacation pay becomes a real issue is when people have high levels of variable compensation. Millions of Canadian workers are paid on straight commissions, meaning they might get their commissions for sales and no vacation pay or holiday pay above that. This case says employees can fight that,” Mr. Monkhouse said.
Court documents state that many of Medcan’s employees earn variable compensation, not just a base salary. In June, 2019, an employee who was paid a salary plus bonuses and commissions told the company that it had failed to provide him vacation pay on the latter two. The clinic, according to documents, looked into the allegation and found that, for more than 15 years, it had been calculating vacation and public holiday pay solely on the base salaries of employees.
In March, 2020, Medcan tried to remedy the mistake by giving current and former employees back pay for the previous two years – spanning December, 2017, and December, 2019. Both Mr. Galal and Ms. Buhlman received the remedial payments for those two years but not for previous years. This is the basis of the class action – employees say they are owed vacation and public holiday pay dating back to 2003.
In a statement to The Globe and Mail, Medcan spokesperson Bronwen Evans said the company is not disputing that it made a “technical error” regarding the payment of vacation and holiday pay on commissions and bonuses.
“The class action was commenced only after Medcan had discovered and rectified the problem and made the back payment. As a result, the issues in dispute, being extremely narrow and individualistic in nature, are whether Medcan is required to pay anything beyond the two-year payments already made,” Ms. Evans added.
Over the next few months, Mr. Monkhouse and his team will reach out to hundreds of former and current employees of Medcan who may be eligible to participate in the class action.
There is some precedent for a case of this nature. In 2018, as part of a judgment on whether a former investment banker at UBS Canada was entitled to his bonus in the year that he was fired, an Ontario court ruled that the banker was entitled to vacation pay commensurate with his bonus – a sum of $87,472. UBS had argued that he should only have received $5,700 of vacation pay, based solely on his salary.