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Damages In A Wrongful Dismissal Claim

Stuart Rudner here with another video update on the law of employment.

In this case, I want to talk about the case of Ocean Nutrition Canada v. Matthews, which comes out of Nova Scotia, and this deals with the types of damages an employee is entitled to in a wrongful dismissal claim. Now, at Rudner Law we work with employers and employees, and when we’re talking about terminations without cause, we always explain that by default the law provides an individual is entitled to all the compensation, all of the benefits, that they would have received during the notice period, as if they had worked in that period. So for example, if the notice period is 12 months, it’s wrong for an employer to say that they will simply continue salary, for example, for 12 months, if that individual will also receive bonus payments, commission payments, car allowance, medical and dental benefits, etc., that’s the starting point.

Now, that default can be changed by contract, or policy which is clearly worded, and remove some of those rights. So for example, it’s not uncommon to see a bonus policy which says that the bonus will only be paid if the employee is actively employed at the time of payout. If it’s written properly, if the employee was aware of it, or ought to have been aware of it, that type of thing will be enforceable, however in many cases it’s not done properly, and the employee’s entitled to far more than the employer initially offers. In the Matthews case there was a constructive dismissal claim, I’m not going to bother with the facts of that, the bottom line is that a court agreed that Mr. Mathews had been constructively dismissed. The court found that he was entitled to a notice period of 15 months and awarded him salary, other compensation benefits, including payments pursuant to a long term incentive plan, or LTIP program, that existed in the company. That was the basis upon which the company appealed, the company said that the plan very clearly had wording which said it was of no force in effect if the employee ceased to be employed, didn’t matter what the reason, didn’t matter if they were terminated, if they resigned etc., but no matter what the reason was the company said even if this individual was entitled to 15 months of compensation, they should not get payments pursuant to the LTIP. That went to the Court of Appeal in Nova Scotia and the Court of Appeal agreed, finding that there may have been wrongful dismissal, or in this case a constructive dismissal, but the individual is not entitled to LTIP payments during the 15 month notice period.

It’s a lesson for employees: check your policies, check your contracts very carefully to make sure that you have not inadvertently withdrawn from a certain plan or payment that you will not be entitled to. And for employers, make sure that your contracts and your policies are extremely clear, if this is your intention, to say that the individual will not be entitled to those benefits after they’re no longer actively employed. If you are unsure in any way, then by all means contact your employment lawyer and make sure you understand your rights and your obligations before pursuing any action or signing off any documents that might limit your rights. Thanks for tuning in, have a great day.

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Stuart and others on the team at Rudner Law are frequent contributors to the following sites: 

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Legal Matters Employment Law Canada

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