In Khatib v GoEasy Ltd ( 2026 ONSC 3513) Justice Mathen made a number of interesting rulings on the issue of the entitlement to compensation for RSU’s and Stock Options ( SO) that vested after the termination date .

The relevant clause in the agreements was as follows:

4.1 Unless otherwise determined by the Company at any time and except as otherwise provided in a Participant’s written employment agreement with the Company, a Subsidiary or a Designated Affiliated Entity, on a Participant’s Termination Date, any RSUs credited to the Participant’s RSU Account which are not Vested RSUs shall terminate and be forfeited. In the event of termination of the employment of a Participant by an Employer for cause, all RSUs credited to the Participant’s Account shall terminate and be forfeited, whether or not such RSUs are Vested RSUs.

…

4.3 Neither designation of an employee as a Participant nor the grant of any Units to any Participant entitles any Participant to the grant, or any additional grant, as the case may be, of any Unit under the Plan. Neither the Plan nor any action taken thereunder shall interfere with the right of the Employer of a Participant to terminate a Participant’s employment at any time. Neither any period of notice, if any, nor any payment in lieu thereof, upon termination of employment, wrongful or otherwise, shall be considered as extending the period of employment for the purposes of the Plan. No cash or other compensation shall at any time be paid in respect of any Units that are forfeited or terminated hereunder, as damages or otherwise.

4.4 Participation in the Plan shall be entirely voluntary and any decision not to participate shall not affect the Participant’s employment with the Employer

There were very substantial monies tied to both RSU’s and SO that vested after the Plaintiff’s date of termination.

The Judge determined that the reasonable notice period was 8 months.

The first issue was whether the Plaintiff was entitled to compensation for those RSU’s and SO that vested within the 8 month notice period.

The Judge found that because the term ” Termination Date ” was not defined in the agreement. As such she ruled as follows

:[115]      Accordingly, I am persuaded that the lack of a definition for “Termination Date” in the grant documents creates an ambiguity over whether a termination date includes a period of notice. That ambiguity redounds to Mr. Khatib’s benefit: Paquette, at paras. 41, 46.

The Plaintiff was therefore entitled to the value of all of the RSU’s and SO that vested in the notice period, valued as of their  respective vesting dates.

The Judge then dealt with the issue of those RSU’s and SO which  vested after the 8 month notice period.

Having noted that there was no enforceable language allowing for the forfeiture of unvested RSU’s and SO, the Judge rejected the employers’ argument that it was implicit in these agreements that it only applied to employees who were either employed  or deemed to be employed when the vesting occurred . Rather the Judge said that absent language limiting the employee’s entitlement, he should be entitled to the  pro rata value of the RSU and SO. 

The second reason that the Judge awarded this pro rata share was because: “at least some employees were permitted to retain the pro-rated value of unvested stock units when they left the company. ”

However it seems that the employees who did receive pro rata value had an express provision in their employment contracts, a provision which this Plaintiff did not have.

This is how the Judge explained how to do the prorata calculation:

Assume the  vesting period is 3 years from date of the grant.

Assume the grant date is January 1,  2024.

The vesting date is therefore January 1, 2027

Assume that his termination date is April 30, 2025.

Therefore the end  of the reasonable notice period is December 31, 2025

The prorata share would be 66% as he was deemed to have been employed for 2/3 of the vesting  period

My Comments:

This is the first time that I am  aware of where an employee recovered compensation that would have only been received after the notice period .

In the leading case of Prozak et al v Bell Telephone co of Canada ( 1984 CanLII 2065) the Ontario Court of Appeal said that the plaintiff’s entitlement to commissions ended at the end of the notice period even though commissions from their original sale continued for a period far beyond that date.

One would have thought that the same principle would apply in this case.

If the Plaintiff had quit half way through the vesting period, would he then be entitled to 50% of the value ?

Just because  other employees  had different contracts that allowed this pro rata entitlement, why should this Plaintiff, who did not negotiate such a prevision , benefit from another employee’s contracts?

The Judge makes reference to the fact that ” at least some employees ” received this benefit. Presumably that means that the other employees who were terminated did not receive such a benefit.  Why was this Plaintiff put in the first group and not the second  less entitled group?

I am advised by defence counsel that they will be filing a Notice of Appeal .

If you want a copy of this case, email me at barry@barryfisher.ca

To book a mediation, go to www.barryfisher.ca

To access the Wrongful Dismissal Database, go to www.wddonline.ca

 

 

 

 

 

 

In Taylor v British Columbia ( 2026 BCSC 1047 ) Justice Leblanc had a situation where a civil servant who was dismissed without cause was entitled to 24 months severance. This is what the Judge said on this issue

[182]     It is not disputed that that defendant withheld the plaintiff’s severance payment for 15 months.

[183]     Paragraph 4 of Employment Termination Standards, B.C. Reg 379/97 [“Termination Regulation”] provides that if an employer terminates employment without cause and excuses the employee from performing the employee’s duties under s. 3(1)(d), the employer, in its sole discretion, may provide the employee with severance. The severance must be in the form of periodic payments unless the employer, in its sole discretion, considers a lump payment to be more appropriate.

[184]     In this case, the defendant exercised its discretion to make a lump sum payment. The amount of severance is established pursuant the Regulation and that amount is not in dispute.

[185]     The defendant presented the plaintiff with release paperwork (the “Severance Release”) that it stated had to be signed and returned to receive the severance payment. In the ensuing months, the plaintiff sought to regain her employment which the defendant communicated was not available. The plaintiff in turn communicated that she would not sign the Severance Release. Notwithstanding these positions, it was not available to the defendant to withhold the plaintiff’s severance once it had exercised its absolute discretion to make a lump sum payment.

[186]     Once the employer has exercised its discretion to pay severance, the Regulation does not prescribe terms that can attach to the payment of severance, other than the amount of the payment.

[187]     Accordingly, I find the defendant breached the terms of the Termination Regulation when it asked the plaintiff to release the defendant from liability in exchange for payment of severance. This was a breach of the contractual duty owed to the plaintiff.

[188]     Due to this contractual breach, the plaintiff’s source of income was abruptly stopped, and the plaintiff was forced to look for alternative income sources. The plaintiff exercised her pension early, which she testified had a negative impact on its value. While the plaintiff has not quantified the negative impact, I do accept the plaintiff’s evidence that she would not have relied on her pension at that time had she received the severance payment when she was terminated.

To punish this behaviour, the Judge awarded punitive damages of $200,000 . There were two matters that led to this award, by here I am only setting out what the Judge said about the delayed payment issue.

[226]     I also find the defendant’s withholding of severance payments, without legal explanation, to be worthy of punishment that has not been compensated for in the aggravated damages award I have made. The defendant acted in a high-handed and arbitrary way.

[228]     Further, while the defendant exercised its discretion to pay the plaintiff a lump sum, it was not then open to withhold the payment in exchange for the plaintiff agreeing not to commence legal action against it. Abruptly terminating the plaintiff and holding her severance payment ransom for a release of liability was high-handed, malicious, and arbitrary. It was also contrary to the statutory provisions on which the defendant sought to rely to limit the amount of severance payable.

My Comments:

It seems that this case could also be applicable where an employer refuses to pay a terminated employee certain amounts which are not in dispute in order to extract a release.

For instance, where an employment contract calls for a fixed termination payment but there is a dispute about an outstanding bonus earned prior to the termination, can the employer get into trouble if they refuse to pay the contractual termination payment without also resolving the bonus issue?

What about a situation where there is no dispute that the terminated employee is entitled to $10,000 in outstanding vacation pay but the parties  cannot agree on what reasonable notice the employee is entitled to? Can the employer refuse to pay the vacation pay unless the entire dispute is resolved?

For a copy of this case email me at barry@barryfisher.ca

To book a mediation, go to www.barryfisher.ca

To access the Wrongful Dismissal Database, go to www.wddonline.ca

 

 

In COPE  v IAM Local 1922 ( 2026 CanLII 42517 ) Arbitrator Christopher White found that the Grievor was dismissed without just cause but as reinsatement was not a viable option, he instead awarded compensation in lieu.

Traditionally there have two ways of approaching how to calculate these damages . This is how the Arbitraor described the two methods:

  With respect to the method to be used in calculating damages in lieu of reinstatement, arbitral caselaw identifies two methodologies that have been widely used.  The first is the fixed-term method which assumes that, but for the improper termination, the terminated employee would have continued in employment with the unionized employer until an anticipated retirement date (e.g. age 65).  The damages calculated in respect of that period are then reduced to reflect contingencies that might otherwise have caused the employment to end at an earlier date.  Contingencies considered by arbitrators using this method vary widely and very much depend on the specific circumstances of the case.  The second method is the common law approach that calls on the arbitrator to utilize the factors generally considered by the courts in wrongful dismissal cases in their determination of a reasonable notice period where no just cause or contractual stricture otherwise governs.  Many arbitrators using this method provide an enhanced notice period to the grievor as compensation for the lost value and protections offered by the collective agreement that are unavailable to a non-unionized employee.

The arbitrator then decides that the enhanced common law approach is the better method:

I have carefully considered all the decisions provided to me and have come to the conclusion that the common law approach is to be preferred.  In particular, I find the reasons of Arbitrator Jones in Board of Governors of Mount Royal University v. Mount Royal Faculty Association (supra) to be particularly compelling.  Ultimately, the requirement to predict contingencies, especially when a long potential period of service remains in a grievor’s employment with the terminating employer, creates too much uncertainty and speculation.  It may be noted in any event that the contingencies applied by many arbitrators using the fixed term approach result in damage awards that are not dissimilar to those that would have been produced by an enhanced common law approach.  

The arbitrator then takes a two step approach to determine the proper notice period ;

First he determined that the common law notice period considering the usual Bardal Factors was 3 months .

Then he multiplies that number by 1.5 to take into consideration that the loss of a unionized position involves loss of the enhanced job security that flows from being covered by a collective agreement.

He therefore awarded 4.5 months notice in lieu of reinstatement .

For a copy of this case, email me at barry@barryfisher.ca

To book a mediation go to www.barryfisher.ca

To access the Wrongful Dismissal Database go to www.wddonline.ca