{"id":1632,"date":"2020-10-26T15:28:58","date_gmt":"2020-10-26T19:28:58","guid":{"rendered":"https:\/\/www.zeilikmanlaw.com\/the-supreme-court-of-canada-reaffirms-and-clarifies-foundational-principles-of-employment-law-and-discusses-the-right-to-bonus-when-terminated\/"},"modified":"2021-07-01T19:14:29","modified_gmt":"2021-07-01T23:14:29","slug":"the-supreme-court-of-canadas-matthews-decision-reaffirms-and-clarifies-foundational-principles-of-employment-law-and-discusses-the-right-to-bonus-when-terminated","status":"publish","type":"post","link":"https:\/\/www.zeilikmanlaw.com\/the-supreme-court-of-canadas-matthews-decision-reaffirms-and-clarifies-foundational-principles-of-employment-law-and-discusses-the-right-to-bonus-when-terminated\/","title":{"rendered":"The Supreme Court of Canada Reaffirms and Clarifies Foundational Principles of Employment Law and Discusses the Right to Bonus when Terminated"},"content":{"rendered":"

The Supreme Court of Canada has recently released the decision of\u00a0Matthews v. Ocean Nutrition Canada Limited<\/em>, 2020 SCC 26.\u00a0 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.<\/p>\n

The plaintiff, David Matthews (\u201cMr. Matthews\u201d), was an experienced chemist who worked for the defendant, Ocean Nutrition Canada Limited (\u201cOcean\u201d), in a senior management role.\u00a0 Beginning in or around 2007, Mr. Matthews began to experience repeated incidents of dishonesty at the hands of a new superior.\u00a0 Mr. Matthews also had his role reduced at Ocean and became more and more ostracized within the company.\u00a0 The superior would lie directly to Mr. Matthews in an effort to minimize his responsibility.<\/p>\n

Eventually, this all culminated in Mr. Matthews leaving Ocean.\u00a0 However, some months after Mr. Matthews\u2019 departure from Ocean, Ocean was sold.\u00a0 This is significant because Mr. Matthews was part of Ocean\u2019s long-term incentive plan (\u201cLTIP\u201d) which contractually was to provide Mr. Matthews payment upon the sale of Ocean.\u00a0 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\u2019s achievements.\u00a0 However, Ocean refused to provide any payment to Mr. Matthews under the LTIP because Mr.\u00a0 Matthews was not \u201cactively employed\u201d at the time of the sale of Ocean.<\/p>\n

Therefore, Mr. Matthews sued Ocean alleging he was constructively dismissed by Ocean and that Ocean acted in a manner that was \u201coppressive\u201d and \u201cunfairly prejudicial\u201d to Mr. Matthews\u2019 interests.\u00a0 He also alleged that he was dismissed by Ocean in a way that amounted to bad faith and was a breach of Ocean\u2019s duty of good faith toward Mr. Matthews.<\/p>\n

This case was first heard by Nova Scotia\u2019s Superior Court.\u00a0 The trial judge concluded that Mr. Matthews was constructively dismissed by Ocean and owed notice.\u00a0 The trial judge also concluded that Mr. Matthews was entitled to the LTIP.\u00a0 However, Nova Scotia\u2019s Court of Appeal disagreed.\u00a0 They did agree with the trial judge that Mr. Matthews was constructively dismissed by Ocean.\u00a0 However, they disagreed that Mr. Matthews was entitled to the LTIP as he was not \u201cactively employed\u201d at the time of the sale of Ocean.<\/p>\n

The Supreme Court of Canada disagreed with Nova Scotia\u2019s Court of Appeal.\u00a0 The Supreme Court held that Mr. Matthews was entitled to the LTIP as part of the common law damages for notice.\u00a0 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 \u201crealization event\u201d took place within the reasonable notice period, then Mr. Matthews is\u00a0prima facie<\/em>\u00a0entitled to the damages for the LTIP payment as part of his common law notice damages.<\/p>\n

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\u2019 common law rights.\u00a0 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\u2019 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.<\/p>\n

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.<\/p>\n

Our Thoughts<\/strong><\/p>\n

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 \u201cair-tight\u201d may be deemed to be insufficient to avoid payment.
\nThe decision likewise reminds that employers (and employees) have an obligation to be honest in the course of the employment relationship.<\/p>\n

Finally, courts will take into account not only the actual moment of the employee\u2019s dismissal when assessing whether the employee was treated fairly but various events and incidents leading to the actual point of termination.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Supreme Court of Canada has recently released the decision of\u00a0Matthews v. Ocean Nutrition Canada Limited, 2020 SCC 26.\u00a0 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 (\u201cMr. […]<\/p>\n","protected":false},"author":3,"featured_media":1927,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33],"tags":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/www.zeilikmanlaw.com\/wp-content\/uploads\/2021\/06\/The-Supreme-Court-of-Canada-Reaffirms-and-Clarifies-Foundational-Principles-of-Employment-Law-and-Discusses-the-Right-to-Bonus-when-Terminated-iStock-1220260109.jpg","_links":{"self":[{"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/posts\/1632"}],"collection":[{"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/comments?post=1632"}],"version-history":[{"count":0,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/posts\/1632\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/media\/1927"}],"wp:attachment":[{"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/media?parent=1632"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/categories?post=1632"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.zeilikmanlaw.com\/wp-json\/wp\/v2\/tags?post=1632"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}