Case involves vacation pay for roughly 30,000 employees over 8-year period
This story originally appeared in HRD Canada.
The Bank of Montreal has secured a partial victory at the British Columbia Court of Appeal in a class-action lawsuit alleging the bank systematically underpaid employees their vacation and holiday entitlements.
In a decision released Oct. 31, the three-judge panel upheld certification of the breach of contract claim but struck down the breach of good faith component of the case brought by former BMO employee Paul Cheetham on behalf of Private Wealth Consultants and Mortgage Specialists across Canada.
The lawsuit centres on how BMO calculated statutory pay for employees who received variable compensation – including commissions and bonuses – in addition to base salaries. Cheetham alleged BMO violated the Canada Labour Code by including vacation and holiday pay within variable compensation rather than paying it separately and additionally, as required by federal labour standards.
The case covers roughly 30,000 federally regulated BMO employees working in private wealth consultant (PWC) and mortgage specialist (MS) roles between Jan. 1, 2010, and Dec. 31, 2018. Cheetham, who worked as a PWC in British Columbia until his resignation in July 2017, earned an annual base salary of about $45,000 plus variable compensation that in some years exceeded $200,000.
‘Inconsistent provisions’ at TD
Justice MacNaughton, writing for the unanimous panel, found the pleadings supported certification of the breach of contract claim. The court determined BMO’s compensation plans contractually promised to pay statutory entitlements in accordance with the Canada Labour Code while simultaneously including those payments within variable compensation, creating what the lower court judge characterized as “inconsistent provisions” requiring interpretation at trial.
However, the appeal court ruled the good faith claim lacked sufficient factual foundation. The pleading that BMO “ought to have known” its calculations were incorrect amounted to negligence rather than bad faith, MacNaughton wrote.
"To amount to bad faith, an employer’s conduct must be more than sloppy or careless. There must be some level of intent, malice or blatant disregard for the employee."
The court noted a Canada Labour Code referee had previously approved BMO’s calculation methods in an unrelated 2015 case, meaning “BMO would have no reason to know they were incorrect as alleged.”
Class action preferable procedure
The court also rejected BMO’s arguments that the certification judge erred in reformulating common issues, finding a class action the preferable procedure, or allowing the class period to begin before 2014 despite limited payroll records from that time.
The appeal court said that BMO’s missing pre-2014 payroll records could be addressed at the common issues trial rather than forming grounds for immediate intervention.
See Bank of Montreal v. Cheetham, 2025 BCCA 374
