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ARTICLE · 22 MAY 2015

Performance Bonuses: Employer Discretion Alive And Well

McMillan LLP
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Many employers are under the misapprehension that they do not have flexibility with respect to how they compensate their employees.

CanadaEmployment and HR
McMillan LLP
McMillan LLP
Paul Boshyk
Paul Boshyk
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Many employers are under the misapprehension that they do not have flexibility with respect to how they compensate their employees. The recent arbitration decision in RockTenn Company of Canada Inc.1 provides some comfort to employers looking to change their bonus plan criteria or targets.

Background

RockTenn is a multinational company with 18 plants in Canada. At its PrePrint location in Mississauga, Ontario, there are approximately 100 employees, with 80 of them being unionized employees represented by Unifor.

The Mississauga collective agreement between RockTenn and Unifor contains a "Letter of Understanding re Annual Bonus" ("LOU") which provides as follows:

The Company shall continue the current Bonus Plan, paid out annually as per the current practice.

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