Inlet Law’s founding lawyer, Martin Sheard, found himself on the winning side of a recent Supreme Court of Canada decision that was handed down this October.
After a lengthy trial, our highest Court found in favour of the Plaintiff, and for wrongfully terminated employees everywhere, for reasons as follows:
The Plaintiff, Matthews, was employed as a senior executive at Ocean Nutrition Canada (“Ocean”) for fourteen years, wherein he earned a salary and benefits. One such benefit was Ocean’s long-term incentive plan (“LTIP”), which would payout qualified employees as a result of certain events, including the sale of the company.
In 2007, Ocean hired a new CEO, who marginalized the Plaintiff and limited his responsibilities and duties at Ocean for several years, leading to the Plaintiff’s eventual constructive dismissal.
In 2011, the Plaintiff found a new role with another company. 13 months following the Plaintiff’s dismissal, Ocean was sold (the “Sale”). Ocean took the position that, since the Plaintiff was not employed at the time of the Sale, he was not entitled to receive a LTIP payment.
The Plaintiff filed an application alleging that he was constructively dismissed, and was entitled to damages, including the LTIP payment.
The Trial Judge found that the Plaintiff had been constructively dismissed, was entitled to a notice period of 15 months, and, most contentiously, was entitled to the LTIP payment, as the Plaintiff would have been a full time employee when Ocean was sold, had the constructive dismissal not taken place.
The Appellate Court agreed that the Plaintiff had been constructively dismissed and was entitled to a 15-month notice period, but found that he was not entitled to damages from the lost LTIP payment.
The Supreme Court of Canada allowed the appeal, set aside the Appeal judgement, and restored the Trial judgement.
At para 55, in their decision, the Court stated as follows:
Courts should accordingly ask two questions when determining whether the appropriate quantum of damages for breach of the implied term to provide reasonable notice includes bonus payments and certain other benefits. Would the employee have been entitled to the bonus or benefit as part of their compensation during the reasonable notice period? If so, do the terms of the employment contract or bonus plan unambiguously take away or limit that common law right?
It was determined that had the Plaintiff been given proper notice, he would have been employed full time throughout the duration of the notice period. For the purposes of calculating damages for wrongful dismissal, the contract is not seen as terminated until the expiry of the notice period. Accordingly, the Plaintiff should be awarded damages inclusive of the LTIP payment.
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