Supreme Court rules employees entitled to bonuses during reasonable notice periods even after losing their jobs
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Matthews had worked for Ocean since 1997 and was entitled to an LTIP which would pay him and other senior managers a bonus when a “realization event,” such as the sale of the company, occurred.
The purpose of the program, Matthews argued, was to reward employees for their loyalty and retention. Matthews stayed with the company even after a new chief operating officer was appointed in 2007 and that person began “a campaign to push Matthews out of operations and minimize his influence.” The COO ostracized Matthews and then lied about his efforts to do so, the ruling said.
Three years later, Matthews’ situation in the company worsened when a new chief executive officer was appointed. But still, Matthews chose to stay with Ocean, as he suspected the company was going to be sold in the near future.
In June 2011, Matthews was constructively dismissed and 13 months later, Ocean was sold for $540 million to Koninklijke DSM N.V., a Dutch nutritional and health company.
According to Levitt, the ruling will likely force a strong majority of Canadian employers to revisit the language in their contacts surrounding bonuses and when they are withheld because of a job loss. Employees will have to be made aware of the contract changes and will be prompted to sign off on them, Levitt said. If they don’t, they may lose their jobs, in which case they will receive the bonuses they were entitled to anyway.
“I’d say virtually no existing plan is presently enforceable, which means employers are going to have to go back to the drawing board,” Levitt said.
Financial Post
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