SCC Puts Employers On Notice Regarding Long-Term Incentive Plans

In its decision released on October 13, 2020, the Supreme Court of Canada in Matthews v. Ocean Nutrition Canada Limited, 2020 SCC 26, confirmed that the test for limiting language in a long-term incentive plan (LTIP) is very high and language simply referring to termination without cause as a cessation event will not suffice to dispose of an employee's common law right to recovery under the LTIP through their reasonable notice period. The Supreme Court of Canada's decision provides some much-needed clarity to the divided case law, albeit to the detriment of employers.  

Background

The plaintiff, David Matthews, worked for Ocean Nutrition Canada Limited (Ocean Nutrition) and its predecessor companies from January 1997 to June 2011.  In June 2011, he resigned and sued Ocean Nutrition for constructive dismissal, seeking damages for breach of his employment contract including the loss of an LTIP (the Plan).