Labour & Employment Law Blog

The Supreme Court of Canada Reaffirms and Clarifies Foundational Principles of Employment Law and Discusses the Right to Bonus when Terminated

The Supreme Court of Canada Reaffirms and Clarifies Foundational Principles of Employment Law and Discusses the Right to Bonus when Terminated

The Supreme Court of Canada has recently released the decision of Matthews v. Ocean Nutrition Canada Limited, 2020 SCC 26.  This decision dealt with whether or not a dismissed employee is entitled to bonuses and other payments as compensation if they had been continued to be employed during the notice period.

The plaintiff, David Matthews (“Mr. Matthews”), was an experienced chemist who worked for the defendant, Ocean Nutrition Canada Limited (“Ocean”), in a senior management role.  Beginning in or around 2007, Mr. Matthews began to experience repeated incidents of dishonesty at the hands of a new superior.  Mr. Matthews also had his role reduced at Ocean and became more and more ostracized within the company.  The superior would lie directly to Mr. Matthews in an effort to minimize his responsibility.

Eventually, this all culminated in Mr. Matthews leaving Ocean.  However, some months after Mr. Matthews’ departure from Ocean, Ocean was sold.  This is significant because Mr. Matthews was part of Ocean’s long-term incentive plan (“LTIP”) which contractually was to provide Mr. Matthews payment upon the sale of Ocean.  The purpose of the LTIP was to provide a reward to senior employees and to be an incentive to those employees to contribute to Ocean’s achievements.  However, Ocean refused to provide any payment to Mr. Matthews under the LTIP because Mr.  Matthews was not “actively employed” at the time of the sale of Ocean.

Therefore, Mr. Matthews sued Ocean alleging he was constructively dismissed by Ocean and that Ocean acted in a manner that was “oppressive” and “unfairly prejudicial” to Mr. Matthews’ interests.  He also alleged that he was dismissed by Ocean in a way that amounted to bad faith and was a breach of Ocean’s duty of good faith toward Mr. Matthews.

This case was first heard by Nova Scotia’s Superior Court.  The trial judge concluded that Mr. Matthews was constructively dismissed by Ocean and owed notice.  The trial judge also concluded that Mr. Matthews was entitled to the LTIP.  However, Nova Scotia’s Court of Appeal disagreed.  They did agree with the trial judge that Mr. Matthews was constructively dismissed by Ocean.  However, they disagreed that Mr. Matthews was entitled to the LTIP as he was not “actively employed” at the time of the sale of Ocean.

The Supreme Court of Canada disagreed with Nova Scotia’s Court of Appeal.  The Supreme Court held that Mr. Matthews was entitled to the LTIP as part of the common law damages for notice.  The court set out that the first question is whether Mr. Matthews would have been entitled to the LTIP payment as part of his compensation during the reasonable notice period. Since this date of sale or the “realization event” took place within the reasonable notice period, then Mr. Matthews is prima facie entitled to the damages for the LTIP payment as part of his common law notice damages.

The Supreme Court then set out a second step, which was to determine whether the LTIP contract itself has language that would unambiguously limit or remove Mr. Matthews’ common law rights.  Therefore, the Supreme Court looked directly at the wording of various provisions contained within the LTIP contract and concluded that it did not unambiguously limit or remove Mr. Matthews’ common law rights. The Supreme Court agreed with the trial judge and held that Mr. Matthews was entitled to receive damages equal to what he would have received pursuant to the LTIP.

The Supreme Court also spoke to good faith and set out that a claim of a breach of the duty of good faith is a separate claim from the failing to provide reasonable notice.

Our Thoughts

The decision of the highest court in the country is instructive on several fronts. Firstly, if employees are entitled to bonus as part of the compensation only clear language will allow the employer to escape the obligation to pay it. Even language that may at first appear “air-tight” may be deemed to be insufficient to avoid payment.
The decision likewise reminds that employers (and employees) have an obligation to be honest in the course of the employment relationship.

Finally, courts will take into account not only the actual moment of the employee’s dismissal when assessing whether the employee was treated fairly but various events and incidents leading to the actual point of termination.

The above article is for general information purposes only, does not constitute legal advice or create a solicitor-client relationship. Because each case is unique and factually driven, if you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere. We represent clients in the Greater Toronto Area including Toronto, North York, Markham, Vaughan, Thornhill, Newmarket, Aurora, Brampton, Mississauga, Barrie, Ajax, Whitby, Pickering and Oshawa.

Legal Receptionist

Zeilikman Law is an employment law firm located in Vaughan, Ontario. We are looking to hire a legal receptionist to join our firm. Preference will be given to candidates who have experience working as a receptionist at another law firm.

Location: Vaughan, Ontario.

Start Date: Immediately.

Hours: Monday to Friday, 9 am to 5 pm. Full time. In-person only. This is not a remote work position.

Wages: 35,000 to 40,000 per year.

Duties and Responsibilities:

  • Manage our firm’s multi-line telephone system to receive incoming calls.  Screen incoming telephone call inquiries to determine the nature of the telephone call and provide standard information related to our legal services.  Take and deliver messages and route incoming telephone calls to the appropriate staff person.
  • Answer general inquiries coming from the firm’s social media and website email.
  • Welcome in-person visitors upon arrival.  Direct visitors to the appropriate staff person and / or office or boardroom.
  • Organize in-person visitor schedule to prevent overlap and multiple bookings.
  • Receive, sort, and distribute daily mail and deliveries.
  • Arrange for couriers.
  • Keep front reception, kitchenette area and boardroom tidy.
  • Perform various clerical duties such as filing, photocopying, and faxing on an as-needed basis.
  • Process client or other payments.
  • May be asked to run minor errands outside of office such as attending post office to arrange a courier or pick up mail.
  • May be asked to assist other law clerks or lawyers of the firm as required and as appropriate.
  • Any other basic administrative duties or tasks as deemed appropriate.

Required Skills:

  • Basic knowledge of general office procedures including filing, faxing, and printing and copying.
  • Basic word processing computer skills.
  • Proficient in receptionist and telephone practices, etiquette, and decorum.
  • Professional attitude and appearance.
  • Excellent organizational skills.
  • Positive customer service attitude is a must.
  • Must be able to maintain confidential and sensitive information.

Education and Experience:

  • Highschool diploma or equivalent.
  • 1 – 2 years’ experience in an office setting with an emphasis in accounting, reception or clerical work is required.   We would prefer experience in a law firm environment.

Applications for this position should be sent via email to jennifer@zeilikmanlaw.com. All applications should include a cover letter, resume and at least two references. Only successful candidates will be contacted.