Plaintiff Gets Bonus Over Notice Period Even Though Employer Cancelled Bonus Plan Months After Dismissal :

In Manastersky v RBC ( 2018 ONSC 966 Monahan J. ) had a 58 year old  Managing Director with over 12 years service. One half of the Plaintiff’s  compensation was a Carried Interest Plan ( CIP). The plan contained a provision which allowed RBC to terminate the plan in June 2014, which they did. The CIP also contained a provision which allowed immediate vesting of all outstanding CIP amounts upon termination without cause.

The Plaintiff was terminated without cause in February 2014 and paid out his CIP entitlement up to the date of termination.

In awarding the Plaintiff 18 months notice, the Judge awarded the lost CIP for the entire notice period, even though that period was almost a year longer than the time in which the CIP had been cancelled. He based the quantum on a historical average of past payouts.

The judge did so for 2 reasons:

1) The provision that allowed RBC to terminate the CIP in June of 2014 was not clear language that detracted from his common law entitlement to reasonable notice.

2) Had he not been terminated in February  and was still employed in June when the CIP was cancelled, if RBC not  replaced the lost CIP with an alternative plan, that would have been a constructive dismissal .

I certainly agree with point #2 but point #1 is somewhat troubling. If the purpose of the doctrine of reasonable notice is to put the Plaintiff into the same economic position that he would have if  had been permitted to work out his notice period, then he , along with everybody else who received the CIP and had it cancelled, would have taken a economic hit. Why should he do better because he was let go?

The flip side is what if halfway during the notice period the compensation went up because the Employer did very well. Should the Plaintiff’s damages not reflect this uptick or should he be limited to his historical earnings?

In Chann v RBC ( 2004 ONSC 66310) the Court looked at what actually happened over the notice period in determining what his bonus would have been had the Plaintiff been allowed to work out the notice period. As overall bonuses were down 15% over the relevant period, the Judge used the same factor is calculating the  damages over the notice period.