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WRONGFUL DISMISSAL - Dismissal without cause

Friday, February 03, 2017 @ 2:58 PM  

Appeal by Alberta Investment Management Corporation (AIMCo) from the award to Styles in his wrongful dismissal claim. There was no dispute that Styles was dismissed from his position with AIMCo as an investment manager in 2013 without cause. He received compensation for his dismissal without cause as per the terms of his employment contract. The dispute concerned Styles’ entitlement to bonuses under AIMCo’s Long Term Incentive Plan. The objectives of the Plan were to motivate and reward key employees. No bonuses were payable under the Plan until four years after employment commenced, as it was only at time that the bonus formula could be applied. The Plan contained a statement that only active AIMCo employees were entitled to payment under the Plan. As Styles worked for AIMCo for less than four years, and was no longer an active employee, AIMCo took the position that no compensation pursuant to the Plan was payable to Styles following his dismissal. The Court accepted that AIMCo did not dismiss Styles in order to avoid paying compensation to him according to the Plan. However, the Court found the wording of the Plan inherently contradictory, noting that it made no sense that the Plan was intended to attract top talent, while providing for AIMCo’s right to terminate employment without notice and its entitlement to deny claims to compensation under the Plan in such a circumstance. Since it was AIMCo that created the circumstance under which Style was unable to receive his Plan entitlements, the Court awarded Styles the benefits he would have received under the Plan, prorated based on the actual duration of his employment.

HELD: Appeal allowed. Styles’ action against AIMCo was dismissed. The terms of the Plan made it clear that continued employment on the vesting date was a condition precedent to entitlement. There was no discretion exercised on the part of AIMCo in denying Styles compensation under the Plan, given that his employment terminated prior to four years of service. The judge erred in finding AIMCo obligated to consider Styles’ contractual expectations in choosing to dismiss him without cause. AIMCo was entitled to dismiss Styles without cause as long as pay in lieu of notice was provided. Styles was not entitled to Plan compensation simply because AIMCo did not provide a reason for its decision to dismiss him. The Court was obliged to apply the wording of the parties’ agreements, not to provide a remedy that it considered fair. The Court could not grant Styles relief from forfeiture as the circumstances giving rise to a potential breach of AIMCo’s obligation to pay out Plan benefits never arose, given that Styles’ employment lasted under four years. The terms of the Plan were not unconscionable. The Employment Standards Code did not apply.

Styles v Alberta Investment Management Corp., [2017] A.J. No. 1, Alberta Court of Appeal, R.L. Berger, F.F. Slatter and B.K. O'Ferrall JJ.A., January 4, 2017. Digest No. 3636-007