The British Columbia Court of Appeal has allowed a class action lawsuit against Bank of Montreal to proceed on claims the bank systematically underpaid employees vacation and holiday pay, but struck down allegations the bank acted in bad faith.
The ruling means thousands of Private Wealth Consultants and Mortgage Specialists can pursue claims that the bank breached their employment contracts by including statutory vacation and holiday pay within variable compensation rather than paying these amounts separately and additionally.
The court found the employees had adequately pleaded a breach of contract claim, but failed to establish grounds for a claim of breach of the duty of good faith.
“The pleaded cause of action cannot be characterized as a free-standing claim with respect to a breach of the CLC — it alleges a breach of an express contractual term (the calculation of Statutory Pay within variable compensation),” the court wrote.
The case centers on how the bank calculated statutory entitlements under the Canada Labour Code for employees who earned significant portions of their income through commissions, bonuses and other incentive awards in addition to base salary.
The representative plaintiff was a Private Wealth Consultant who resigned in July 2017 after earning an annual base salary of about $45,000 plus variable compensation that in some years exceeded $200,000. The proposed class includes employees who worked between January 2010 and December 2018.
The employees alleged the bank’s compensation plans explicitly incorporated Canada Labour Code requirements while simultaneously permitting statutory pay to be subsumed within total compensation. According to the pleadings, the bank’s policy for Private Wealth Consultants stated that “your total cash compensation consisting of Base pay, Commission and BHPB Year-end Performance Bonus includes the statutory holiday pay, overtime pay and vacation pay to which you may be entitled for that period.”
For Mortgage Specialists, the policy “regularly stated that Vacation Pay and Holiday Pay are ‘included in the payout for base pay and the variable incentives,'” according to the court’s summary of the pleadings.
The bank argued it could not have breached its employment contracts by doing exactly what the contracts permitted. But the court disagreed.
“The contracts in this case did more than include Statutory Pay as part of variable compensation — they did so while also promising that such pay would be paid in accordance with the CLC,” the court wrote.
The certification judge had found the contracts contained “seemingly contradictory contractual provisions” or “ambiguities” requiring interpretation at trial. The appeals court said this was appropriate, noting “a potential miscalculation of an amount payable under contract is an issue to be decided at trial.”
However, the court reversed certification of the bad faith claim. The employees had alleged the bank “knew or ought to have known that the calculations were incorrect, and therefore was not acting in good faith when it made those assertions.”
The court found this allegation inadequate. “The pleading that BMO ‘ought to have known’ that its Statutory Pay calculations were incorrect is an allegation of negligence, not of bad faith,” the court 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 also noted that a Canada Labour Code referee had previously approved the calculations at issue, meaning “BMO would have no reason to know they were incorrect as alleged.”
The bank had argued the class action should not be certified because differences in individual employment contracts would require case-by-case analysis. The court rejected this, finding the certification judge properly identified common issues that could be resolved on a class-wide basis while recognizing some answers might vary between Private Wealth Consultants and Mortgage Specialists.
The case will now proceed to a common issues trial to determine whether Canada Labour Code requirements formed part of the employment contracts and whether the bank’s methodology breached those commitments.
See more coverage in our sister publication HR Law Canada at https://hrlawcanada.com/2025/11/b-c-court-upholds-class-action-over-bank-of-montreal-statutory-pay-but-strikes-bad-faith-claim/
