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WRONGFUL DISMISSAL DAMAGES

Monday, February 10, 2020 @ 9:15 AM  


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Appeal by the employer from a decision finding that the employee’s stock options and restricted share units continued to vest during the reasonable notice period and that the employee was entitled to damages for the loss of the opportunity to exercise them. Cross-appeal by the employee claiming the motion judge erred in calculating his damages for the loss of the options and restricted share units by concluding that he would have sold the shares five months after their vesting dates. The employee was dismissed without cause after 22 years of service. His compensation package included a base salary, commissions, group benefits and participation in both a Long-Term Incentive Plan which included both restricted share units and stock options, and a Stock Option Plan. The motion judge found that these awards were an integral part of the employee’s employment. The motion judge concluded that the damages for the loss of the awards should be calculated based on what would have probably happened had the employee remained employed until the end of the notice period. He noted that the employee exercised his options in the past and that he therefore would likely have done so in this case, had his employment not been terminated. He calculated damages on the basis that the employee would have sold the shares that vested during the reasonable notice period five months after their vesting date.

HELD: Appeal and cross-appeal dismissed. The motion judge applied the correct legal principles and arrived at the correct conclusion in finding that the reference to “terminates for any reason” in the plans could not be presumed to refer to termination without cause and that the phrase “cancelled immediately without consideration” was not a clear, express provision that removed the common law right of an employee, terminated without cause, to claim damages in respect of lost unvested restricted share units. The motion judge did not make a palpable and overriding error in his assessment of the evidence concerning damages. He looked at the evidence concerning the employee’s sales during the reasonable notice period which was an appropriate approach to take.

O'Reilly v. IMAX Corp., [2019] O.J. No. 6369, Ontario Court of Appeal, G.R. Strathy C.J.O., D.H. Doherty and R.J. Sharpe JJ.A., December 17, 2019. Digest No. TLD-February102020003