Constructively Dismissed Employee Entitled To Over $1 Million For Incentive Plan Payment

Have you reviewed the wording of your long-term incentive or other bonus or benefit plans for employees recently? If not, this is something employers will want to consider after the release of the Supreme Court of Canada's decision in Matthews v. Ocean Nutrition Canada Ltd.,  2020 SCC 26 ("Matthews").

In its decision, the Court ruled Matthews was entitled to compensation for a long-term incentive plan ("LTIP") benefit he would have earned had he not been constructively dismissed without notice. The Court determined that, had Matthews been given reasonable notice of termination (the trial judge determined 15 months was the reasonable notice period), he would have been a full-time employee when the sale of the company, which was a "realization event" under the LTIP, occurred. As a result, the Court ordered Ocean Nutrition to pay Matthews over $1 million in damages for loss of the LTIP payment (plus interest and costs).