Canadian Employment Law Today

September 25, 2019

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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Canadian HR Reporter, 2019 • Kieran v. Ingram Micro Inc.: is case in- volved a stock options plan, which stated that shares would be repurchased by the company at the lower of their market value or the original purchase price, if the participant's employment "is terminated for any reason other than death, disabil - ity … or retirement … prior to the time when all Shares have become Unrestricted Shares…" e plan further provided that that the termination of employment for any reason "shall occur on the date Par - ticipant ceases to perform services for [the Company] or any Affiliate without regard to whether Participant continues thereaf- ter to receive any compensatory payments therefrom or is paid salary thereby in lieu of notice of termination." ese terms were upheld, having specifically addressed en - titlement in the event of termination with- out just cause or notice. Some notable cases where the employer was unsuccessful are: • Carroll v. ATCO Electric Ltd (cited above): An executive bonus plan stated that, if a participant's "employment is terminated for any reason, whether with or without cause, prior to the bonus payout, the par - ticipant will not be entitled to any bonus payment…" Crucially, the plan did not stipulate whether the termination of em- ployment takes effect on the date notice of termination is given, the actual last day of employment, or the date on which the no- tice period concludes. e court found the plan did not specifically eliminate entitle- ment over the notice period and awarded damages for the bonus. • Grainger v. Pentagon Farm Centre Ltd.: e relevant bonus clause entitled employees to an "annual performance bonus" of "2 per cent on increased growth over the first five millions [sic] dollars in total sales." e company argued that the reference to "an - nual performance" should be interpreted to entail that an employee must success- fully work an entire year before becoming entitled to the bonus. e court disagreed and awarded damages, despite the fact that the employee did not work through the en - tire plan year. • Lin v. Ontario Teachers' Pension Plan: A short-term incentive plan stated: "In the case where … the Participant's employ - ment is terminated by [the company] prior to the payout of a bonus … no bonus shall be earned by or payable to the Participant." e wording did not unambiguously alter or remove the respondent's common law right to damages. It did not specifically ad - dress entitlement to payments that would have been earned over the notice period. Company bonus policies have received some rough treatment from courts in recent years. However, employers can learn from the defeats and successes of others. e un - certainty engendered by Paquette is slowly di- minishing as new cases fill out the legal land- scape, permitting employers to review their policies with the benefit of these precedents. For more information see: • Dawe v. e Equitable Life Insurance Com- pany of Canada, 2019 ONCA 512 (Ont. C.A.). • Paquette v. TeraGo Networks Inc, 2016 ONCA 618 (Ont. C.A.). • Carroll v. ATCO Electric Ltd, 2017 ABQB 267 (Alta. Q.B.). • Kieran v. Ingram Micro Inc., 2004 CanLII 4852 (Ont. C.A.). • Grainger v. Pentagon Farm Centre Ltd., 2019 ABQB 445 (Alta. Q.B.). • Lin v. Ontario Teachers' Pension Plan, 2016 ONCA 619 (Ont. C.A.). September 25, 2019 | Canadian Employment Law Today ABOUT THE AUTHOR Matthew Tomm Matthew Tomm is a sole practitioner in Calgary. He advises employers and employees in all aspects of employment and human rights law. Matthew can be reached at (430) 264-4855 or CREDIT: JUMMIE/iSTOCK

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