Incentive Plans In Alberta Can Still Limit Entitlements To "Actively Employed" Employees

The recent Queen's Bench decision Styles v. AIMC was widely discussed given that it found an employee was entitled to LTIP awards vesting after termination despite clear contractual language requiring the employee to be "actively employed" on the LTIP payout date. The Trial Judge found that dismissing an employee without allowing his LTIP grants to vest was "bad faith" in contractual relations (as an unprecedented extension of the principles established by the Supreme Court of Canada in Bhasin v Hrynew).

The Alberta Court of Appeal decisively overturned this decision and the reasoning behind it stating:

[65] The discussion about "a common law duty of reasonable exercise of discretionary contractual powers" turned out to be an unfortunate distraction. The trial judge found at para. 115 that there was no bad faith in the respondent's termination, and he produced no evidence it was related to his bonuses. The terms of the Long Term Incentive Plan are clear, and do