Poor records, unclear KPIs cost employer in dispute
The Employment Standards Tribunal in British Columbia recently dealt with a case that highlights important aspects of employment law including overtime pay, performance bonuses, and record-keeping obligations for employers.
The case centred around a data scientist's claims against her former employer, a social media services business for realtors. The worker alleged that she regularly worked overtime hours without compensation, was entitled to a performance bonus that was never paid, and was owed statutory holiday pay and vacation pay.
She argued that her employer failed to establish clear performance indicators for her bonus and didn't maintain accurate records of her work hours. The employer, on the other hand, disputed these claims.
Background of the dispute
The worker started her employment on June 29, 2020, and it ended on April 30, 2021. She earned an annual salary with the opportunity for an annual performance bonus based on quarterly key performance indicators (KPIs).
The dispute arose when the worker filed a complaint with the Director of Employment Standards, alleging that the employer had failed to pay her overtime wages, statutory holiday pay, vacation pay, and a performance bonus.
After an investigation, a delegate of the Director determined that the employer had breached several sections of the Employment Standards Act (ESA) and owed the worker $14,822 in wages plus interest. The Director also imposed five $500 administrative penalties for the contraventions.
Overtime claims and record-keeping obligations
The worker claimed she regularly worked overtime hours, typically starting at 9:00 a.m. and finishing at 6:00 p.m., with occasional longer days. The employer disputed this, arguing that because the worker mostly worked from home, they couldn't know her exact hours.
The tribunal found the employer's response insufficient, stating:
"An employer is responsible for an employee's actions while they are performing work for the employer. Pursuant to section 28 of the Act, an employer has the obligation to create and maintain records of employees' hours of work. [The employer] failed to do so. Having failed to take any steps to track [the worker's] hours of work while she was employed, [the employer] cannot now argue that she is not owed wages simply because it is unable to verify her hours of work."
Performance bonus and unclear communication
The employment contract provided for a bonus based on quarterly KPIs, but the worker contended that no KPIs were ever established for her role. The employer failed to provide evidence of any KPIs when requested by the investigating delegate.
The adjudicating delegate determined that an employer couldn't argue an employee had failed to meet KPIs without first establishing and clearly communicating those KPIs to the employee.
Finding no evidence that the employer had done so, the delegate concluded that the worker was entitled to the contracted performance bonus of $3,000, plus vacation pay on that amount.
‘Natural justice’ and evidence considerations
The employer argued that the investigating delegate failed to observe the principles of natural justice by not disclosing certain claims before witness interviews.
However, the tribunal found no basis for this argument, noting that the employer had ample opportunity to respond to the investigation report, which outlined all of the worker's claims.
The tribunal also noted that the employer's witnesses conceded they had no information about the worker's hours of work, weakening the employer's position.
Calculation of entitlements and penalties
The tribunal upheld the adjudicating delegate's calculations of the worker's entitlements, including overtime pay, statutory holiday pay, vacation pay, and the performance bonus. The decision also affirmed the imposition of administrative penalties for each contravention of the Employment Standards Act.
The tribunal emphasised the employer's responsibility in controlling employee work hours:
"I agree with the Adjudicating delegate's conclusion that [the employer] had the obligation to control [the worker's] hours of work and failed to do so. I also agree with the Adjudicating delegate that there was no evidence that [the employer] investigated any of [the worker's] claims for overtime work if [the employer] disbelieved her reporting."
Regarding the performance bonus, the tribunal said:
"Although the Adjudicating delegate did not expressly state as much, I infer that she construed the terms of the contract against [the employer], who drafted the contract, in finding [the worker] was entitled to the bonus."
Finally, on the matter of administrative penalties, the tribunal said:
"As I am not persuaded that the Adjudicating delegate's finding that [the employer] contravened each of the five provisions of the ESA to be in error, I find no reason to either cancel or 'mitigate' the penalty amounts."
These rulings highlight the importance of clear communication, proper record-keeping, and compliance with employment standards legislation for all employers.
