In what’s being described as a landmark ruling for employment law, the Supreme Court of Canada ruled that employees are still entitled to bonuses paid during their reasonable notice periods after they have lost their jobs.
The Supreme Court made the ruling on Friday in a dispute involving a Nova Scotia scientist and Ocean Nutritional Canada Ltd., a supplements company that primarily produces Omega-3 or cod liver oil. The applicant, David Matthews, was constructively terminated from his job in senior management and was, as a result, not paid a $1.06 million bonus linked to a long-term incentive program (LTIP) payout that was triggered by the sale of the company 13 months later.
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In a ruling delivered by Justice Nicholas Kasirer, the Supreme Court ruled that Matthews wasn’t given reasonable notice — a period of 15 months, in his case due to his elevated role — of his employment termination and a contract isn’t considered terminated until that period is up. Had he been given that time, he would have still been employed when the company was sold and he would have collected the bonus, the ruling said.