[10]        Vermilion argues that I should use the $17.14 share price on the April 1, 2023 vesting date. It says that this award would fully compensate Ms. McElgunn for what she lost, and that to award damages based on a higher share price would speculatively overcompensate her, since there is no evidence about her holding and trading practices regarding earlier Vermilion share awards.

[11]        Ms. McElgunn says that the Shares should be valued using the highest trading price after the April 1, 2023 vesting date for which there is evidence. This was $21.60, the trading price on September 11, 2023. She says this award would properly give her the benefit of the doubt as the wrongfully terminated employee, giving effect to the principle that where the employer’s conduct deprived the employee of the choice of when to sell shares, the employer should bear the burden of that conduct. In the alternative, Ms. McElgunn submits that the average of the vesting price and the highest trading price (which would be $20.11) would also be a fair award, in recognition of the fact that no one can now know when she would have sold her shares, and it is unlikely that she would have sold at the very peak of the market.

The Court decided that the vesting date was appropriate in this case.

Vermilion’s breach was to not provide the Shares to Ms. McElgunn on April 1, 2023. But for that breach, she would have had the Shares on April 1, 2023. However, Ms. McElgunn bore the onus of leading evidence to prove what she would have done with the Shares, had she received them at that time. There was nothing preventing her from introducing evidence on that point in the Arbitration, alongside the detailed evidence that was introduced about the post-April 1, 2023 share prices. However, Ms. McElgunn did not enter any such evidence. Vermilion did nothing to prevent her from leading that type of evidence.

As a result of this evidentiary gap, it would be completely speculative for me to make any finding that Ms. McElgunn would have employed any particular strategy and sold the Shares at any particular time, for any particular price.

In these circumstances, there is no legal or equitable basis on which I could give Ms. McElgunn “the benefit of the doubt” or make Vermilion bear the consequences of her failing to satisfy her onus by leading evidence on this point.

My Comments:

This case makes it clear, that absent evidence to the contrary, the proper date of valuation is the vesting date.

This makes sense for a number of reasons:

First and foremost it creates certainty, something that is gravely missing from employment law.

Second it is neutral. Sometimes the price after vesting goes up and sometimes it goes down.

Third, if the Plaintiff truly thought that the price would go up after the vesting date, there is nothing preventing them from going into the market ( assuming the company is publicly traded ) and buying the shares themselves.

I am only aware of one case where evidence was actually led to show that in the past the Plaintiff did not sell the shares on the vesting date . In Adelman v IBM ( 2026 ONSC 420) the evidence showed that in the past the Plaintiff held on his IBM shares an average for 402 days. Therefore the Court valued the shares 402 days after vesting.

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His former employer sued for the overpayment .

The Small Claims Court Deputy  Judge found in favour of the former employer.

The former employee appealed to Divisional Court.

The relevant clause was as follows:

Compensation: 

As a result of this employment offer, you will be paid a draw against commissions for the first three (3) years in the amount of $90,000 annually, paid on the 15th of every month, based on the following commission structure. 

The Judge pointed out that were two types of draws against commssion;

While there is little doubt that reference to a “draw against commission” generally refers to a compensation payment structure whereby a salesperson is given money in advance of it being earned by future sales earnings, (thereby lending a degree of financial stability and support for new hires), the more fundamental legal reality, lying at the heart of much of the caselaw in this area, is that not all “draws against commission” are intended to have the same character in the event paid draws exceed earned commissions. Some are intended to be “recoverable draws”, while others are intended to be “non-recoverable” draws. In particular:

1. 1. Some situations involve draws against commissions that are intended to be generally “recoverable” and repaid by the salesperson to his or her employer via whatever funds are required in that regard, to the extent the salesperson’s sales do not cover the amount or amounts paid in advance by the employer. In such cases, a “recoverable draw” is an advance that essentially operates like a short-term loan, intended to be repaid in any event from the salesperson’s corresponding earned commissions to the extent there are any, (via a reconciliation calculation performed in that regard), and otherwise from the salesperson’s general resources; i.e., from a source of funds other than earned commissions. If the salesperson’s earned commissions are less that the paid draw amounts, the salesperson owes the deficit back to the payor in any event; i.e., with the deficit constituting a repayable debt to be addressed from the debtor’s general assets like any other debt. Such an intended arrangement effectively casts the overall financial risks of the employment relationship on the salesperson; i.e., exposing such a salesperson to potential debt accumulation and repayment pressure and stress. 
   2. Other situations involve draws against commissions that are intended to be “non-recoverable”; i.e., essentially operating as a guaranteed minimum payout to the salesperson, while the salesperson retains an incentive to generate commission in excess of that payout to receive augmented compensation through an agreed commission structure. If the employee fails to sell enough to generate commissions sufficient to cover the paid draw amount or amounts, the salesperson does not have to pay the difference back, and the employer payor absorbs the loss. In other words, repayment of such draws is to be addressed solely via earned commissions, to the extent they exist, but do not otherwise constitute a debt repayable from the salesperson’s other resources. Such an intended arrangement effectively casts the overall financial risks of the employment relationship on the employer, which nevertheless might be willing to assume such risks to promote other business objectives; e.g., to attract top-tier sales professionals looking for financial stability, (by offering guaranteed baseline support via a more traditional “salary plus commission” type of compensation arrangement), when such professionals otherwise might be inclined to reject “pure commission” employment lacking a financial safety net.

How then do we determine which type of draw agreement is applicable ?

This judgement gives us some guidelines :

In my view, this matter should have been relatively straightforward and easy to decide, insofar as it effectively stood on all fours with the decision rendered by the Superior Court of Justice in Holman Design Ltd. v. Desmarais-Worgan, supra, which the Deputy Judge himself cited. Without limiting the generality of the foregoing, including the more specific and detailed reasons outlined above:

The question of whether the defendants had an obligation to repay paid draws exceeding earned commissions from any fund other than earned commissions was to be decided by the specific intention of the parties to this particular employment relationship, rather than any supposed legal presumption. 

The clear wording of the parties’ agreement in this case specified, in relation to the compensation arrangement, that the draws to be paid were “paid against commissions”, (i.e., the contemplated commissions to be earned), without the contract, drafted by the plaintiff employer, going on to specify that the defendants had any obligation to repay draws paid in excess of any such earned commissions in any event from a fund other than such earned commissions.

 Such an obligation cannot be imposed on an employee such as Mr Pepe after the fact, especially when doing so would “overwhelm” the actual wording the parties chose to employ in their agreement, and represent a deviation from the fundamental principle that the interpretation of a written contractual provision must always be grounded in the text, read in light of the entire contract. In this case, the arrangement expressly agreed upon by the parties specified that draws were to be paid “against commissions”, and therefore repayable from such earned commissions. No other term, enabling the plaintiff to recover such draws from any other source, was included in the agreement. Nor can such a term be implied, particularly when one has regard to the “entire contract” provisions expressly agreed upon by the parties. 

Once it is recognized that there is no legal obligation on the defendant to repay paid draws exceeding earned commissions in any event from funds other than earned commissions, and that the defendants accordingly are permitted to retain draws paid in excess of the commissions earned, Mr Pepe effectively will have received compensation for his employment exceeding the minimum wages and vacation pay to which he was entitled by virtue of the ESA, and the concerns about violation of the ESA’s guarantees regarding payment of such minimum wages and vacation pay fall away. 

This last point regarding the ESA requires some explanation. If the employee had been required to pay back the $33,000, he would have actually received less than the ESA minimum wage. The Small Claims Court Deputy Judge determined that the employee was actually an independent contractor and therefore the ESA did not apply. The Divisional Court Judge found that to be an obvious error as neither of the parties argued that point and in fact both sides conceded that there was an employment relationship. Moreover the contract used the term “employee ” multiple times.

I note that the actual citation on the case sent to me by counsel is 2016 ONSC 4676. I assume that this is a typo because the case was argued on October 3, 2025. I have therefor listed the citation as 2026 ONSC 4676

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A) Sections 60 and 61 of the ESA require the same calculation of what is to be paid to the dismissed employee

I agree with Dr. Wigdor that, properly interpreted, s. 61(1)(a) of the ESA requires that the lump sum payment to which an employee is entitled where pay is provided in lieu of working notice must be calculated on the basis that there are no alterations to the terms or conditions of employment during the statutory notice period.

Section 61(1)(a) defines the lump sum payment to which an employee is entitled if termination is without notice or is with less notice than required under ss. 57 or 58 of the ESA.3 Section 61(1)(a) clearly defines the amount of the payment in lieu of notice as: “a lump sum equal to the amount the employee would have been entitled to receive under section 60 had notice been given in accordance with that section” (emphasis added). The text of s. 61(1)(a) is clear that the lump sum must be “equal to” the amount the employee would have been entitled to had they been given working notice under s. 60. 

The trial Judge had made a distinction between the compensation that would flow from a working notice termination and a pay in lieu of notice termination, The OCA says that was an error and the monetary result must be the same .

B) In determining the validity of the contract, we look at it time of formation of the contract not what the employer did at the time of termination :

The application judge only considered whether the RSU termination provisions complied with the ESA through the lens of a termination where pay in lieu of notice is given because, apart from four days of working notice, Dr. Wigdor was given pay in lieu. By focusing only on circumstances where pay in lieu is given, the application judge failed to consider the effect of the terms of the contract at the time the contract was entered into. In other words, in this case, if the terms of the RSU Agreements purporting to deprive terminated employees of vesting of RSUs during the notice period for a termination contravene the ESA because they alter a term or condition of employment, they do so at the time the employment contract is entered into whether for a particular employee a later termination is with working notice or pay in lieu. 

C) The Court did not decide whether equity based compensation was ” wages ” within the definition in section 1 (1) of the ESA:

It is not necessary to address this issue to decide this appeal, and I decline to do so. Dr. Wigdor’s argument is that the entitlement to RSUs constitutes a “term or condition of employment” within the meaning of s. 60(1)(a) of the ESA.5 5 Dr. Wigdor made submissions, in the alternative and in response to the intervener’s submissions, on the “wages” issue. However, his primary position was that it is not necessary to decide if equity-based compensation is “wages” to decide this appeal. As outlined above, I would decide the appeal on this basis. Whether the RSU entitlement also constitutes “wages” need not be decided. The question of whether equity-based compensation falls within the definition of “wages” in the ESA is better left to an appeal where its resolution is determinative. I would add that, depending on the evidentiary record, it may be the case that the answer is more nuanced than a blanket determination that all forms of equity-based compensation are or are not “wages” under the ESA. 

D) Savings Language in the Clause Does Not Work:

The 2021-2023 RSU Agreements also purport to end vesting immediately upon termination. Although the 2021-2023 RSU Agreements appear to attempt to include a saving provision with the language “unless explicitly required by applicable legislation”, there is nothing “explicit” in the ESA about continued vesting of RSUs during the statutory notice period. The saving language is not engaged. 

E) Just Because the plaintiff received some of  these RSU’s in part because of a commercial transaction that does not mean that the ESA does not apply:

The only reasonable conclusion on the record in this appeal is that Dr. Wigdor’s RSU entitlements were part of his employment compensation. As I have outlined above at paras. 107, 118-19, the employment agreement and the RSU Agreements structure Dr. Wigdor’s RSU entitlements as employment compensation. Further, the RSUs that vested during the time Dr. Wigdor was employed by the Respondents were treated as employment income. Thus, the ESA applies to the RSU entitlements.

To the extent that UTS is advancing an argument that in the context of a commercial contract, the ESA provisions do not apply, we disagree. There is nothing in the ESA that indicates that it is inapplicable in employment relationships connected to commercial transactions. 

F) The ruling innMikelsteins v. Morrison Hershfield Limited, 2021 ONCA 155, is not applicable in this case :

Mikelsteins is distinguishable from the circumstances of this appeal. Mikelsteins concerned an “employee-owned engineering firm” that allowed certain employees to purchase shares in the parent corporation using their own funds. When an employee decided to purchase shares, their rights regarding the shares were determined by the terms of the shareholders agreement. This court held that receipt of shares was not employment compensation subject to the ESA for two reasons: (1) because the employee had to purchase the shares using their own funds; and (2) because the employee’s rights as a shareholder in relation to the shares, once the employee made the choice to purchase the shares, were determined under the shareholders agreement, not the employment contract: Mikelsteins v. Morrison Hershfield Limited, 2019 ONCA 515, at paras. 2-6, 12-19; Mikelsteins v. Morrison Hershfield Limited, 2021 ONCA 155, at paras. 11-13, leave to appeal refused, [2019] S.C.C.A. No. 363. 

[132] By contrast, as I have outlined above, in this case the RSU entitlements were a form of employment compensation that automatically vested in consideration of ongoing employment. 

My Comments;

This is a very important case that should be read in its entirety.

By the way,  the RSU issue was worth $4,711,647 USD or over $6.5 million  of our dollars

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[31]      Subsequent case law, consistent with the result in Saafeld, demonstrates that when the Court of Appeal said two to three months is “typical” for a short-term employee (less than 18 months), this should be interpreted as a “starting point”, which should only be departed from if there is a compelling reason, which will typically be an unusually lengthy job search, but may also be unusual commitments by the employer or unusual detrimental reliance by the employee in taking the job, whether characterized as leaving secure employment, inducement by the employer, or uprooting the employee’s community: Greenlees v. Starline Windows Ltd., 2018 BCSC 1457[Greenlees]; Younesi v. Kaz Minerals Projects B.V., 2021 BCSC 614 at para. 37 [Younesi].

The Court goes on to review a number of very short employment cases where the awards allow in excess of 2 to 3 months notice and the rationale behind that decision.

In this case Mr Ho was a 41 year old Corporate Controller with 2.5 months service. He was awarded 4 months notice. The reason for awarding him more than the starting point was as follows:

My Comments:

In my mediation practice , I see many employees with service of less than 18 months.

Predicting notice periods for short service employees has been been much more difficult than  for longer service employees .

I believe that this case could be very useful in resolving notice periods for very short service cases. It at least gives us a logical process:

1. We start with a notice period of between 2 and 3 months.
2. Then we look at whether there are any ” compelling factors” which should extent that notice period.

This is similar to how some courts have viewed  cases calling for a a notice period in excess of 24 months notice, where the onus shifts to the plaintiff to show what “extraordinary factors” should allow for a notice period in excess of 24 months.

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The Mutual Funds Dealers Association, of which the Defendant was a member, has certain reporting requirement;

1. Pursuant to MFDA Policy No. 6, Information Reporting Requirements, Part B, 6.1, Members [RMFI was a Member] shall report to the MFDA: 

(b) whenever a Member is aware, through a written or verbal complaint or otherwise, that the Member or any current or former Approved Person [Ms. Silva was an Approved Person] has or may have contravened any law or regulatory requirement, relating to: 

(i) theft, fraud, misappropriation, forgery, money laundering, market manipulation, insider trading, misrepresentation, or unauthorized trading; 

(ii) a breach of client confidentiality; 

(iii) engaging in securities related to business outside of the Member; 

(iv) engaging in an undeclared outside activity; or 

(v) personal financial dealings with a client. 

Upon her termination the Defendant the required report was filed.

They also filed another required from called a NOT which is described by the Judge as follows:

1. The NOT is a regulatory filing made with the OSC when a registered individual leaves a sponsoring firm. As noted at the beginning of these reasons, The NOT is filed with the National Registration Database using Form 33-109F1, and is notice to all interested parties that the individual is no longer authorized to act on behalf of the sponsoring firm. 
2. One of the NOT’s purposes is to provide regulatory oversight, ensuring that if an individual leaves amid allegations of misconduct, future employers can conduct appropriate due diligence during the hiring process. 
3. The NOT, completed by Ms. Papaevangelou, provided that Ms. Silva was dismissed for cause, and reported that she had been investigated for possible material violations of fiduciary duties, regulatory requirements or compliance procedures. Further, Ms. Silva had repeatedly or materially failed to follow compliance policies or procedures. The “Details” section sets out the following: 

The investigation determined that, contrary to RBC policies, the individual forwarded confidential client and RBC information to her personal email account and processed authorized transactions for clients prior to obtaining their signatures. 

The OSC conducted their investigation:

1. On October 30, 2018, four months later, the MFDA released the results of its review. The MFDA found Ms. Silva to be in breach of MFDA Rule No. 2.1.1(b) Standard of Conduct; MFDA Rule 5.1(b), Requirement for Records; and MFDA Rule No’s 2.5.1 and 1.1.2, Compliance by an Approved Person. 
2. The MFDA labeled the breaches as “minor in nature”. The MFDA took no action beyond a cautionary letter designed to prevent similar breaches in the future. Possible sanctions included a warning letter or formal disciplinary proceedings.

The Judge found that the Defendant failed to prove just cause and awarded 16 months notice

.However the Judge went on to award significant additional damages under the category of ” Loss of  Earning Capacity”

1. It has been accepted that damages for loss of earning capacity can be appropriate in a wrongful dismissal claim. The Court of Appeal in Boucher v. Wal-Mart Canada Corp, 2014 ONCA 419, 120 O.R. (3d) 481, at para. 103, commented that “a claim for future loss of income can arise in an employment context where a plaintiff has not recovered from the effects of the wrongdoer’s action and the plaintiff has thus suffered a loss of any earning capacity because of the wrongdoer’s tortious conduct.” This speaks to the principle of putting the plaintiff in the position she would have occupied had she not been wrongfully dismissed. 
2. The Court of Appeal declined to award Ms. Boucher with loss of opportunity damages. Ms. Boucher did not have an employment contract that guaranteed her employment to age 65. Instead, the Court of Appeal found she was entitled to be put in the position she would have been in if the contract had been performed: employment subject to dismissal in accordance with the terms of her contract. 
3. I find this case to be distinguishable from Boucher. While Ms. Silva was not guaranteed employment to age 65, her inability to find comparable employment was directly linked to the filing of the NOT by RBC. This wrongdoing has thus left Ms. Silva unable to work in the financial planning industry. 
4. In Ojanen v. Acumen Law Corporation, 2021 BCCA 189, the British Columbia Court of Appeal awarded $100,000 in loss of opportunity damages to Ms. Acumen, an articling student whose legal career was delayed by her wrongful dismissal. Ms. Ojanen’s employment was terminated for cause after the employer made unfounded allegations of plagiarism and disclosure of confidential information. Ms. Ojanen sought damages for the loss of income that she suffered as a result of not being able to become a lawyer at the end of her articling term. The trial judge found that Ms. Ojanen had no reasonable prospect for employment in the legal profession in Canada while the allegations brought by the Appellants were being pursued against her. 
5. In my view, Ms. Silva’s case is similar to Ojanen. Ms. Silva had no reasonable prospect for employment in the financial planning profession while the allegations brought by the NOT were filed. 
6. Ms. Silva testified that she had no intention of retiring before age 65 owing to her late arrival in Canada and desire to accrue CPP. This position was not shaken during cross-examination. 
7. Ms. Silva is currently 55 years of age. She has expressed a desire to return to the financial services industry as a financial planner. I am satisfied she will do so. 
8. Assuming she resumes her career given the dictates of my judgment, a damages award to age 60 would afford Ms. Silva five years to secure a position in the field, re-build her client base, and re-establish her clients’ trust. Five years is not unrealistic – both Ms. Silva and Mr. Agardi confirmed it took Ms. Silva eight years to build her first book of business. 
9. I am satisfied Ms. Silva has established on a balance of probabilities that she is entitled to an award for loss of earning capacity.
10. Ms. McKeating has quantified Ms. Silva’s future income and benefits losses at $1,919,272 if Ms. Silva were to retire at 60. This figure includes adjustment for negative contingencies, including disability and mortality. 
11. I award Ms. Silva $1,919,272, to which shall be added pre-judgment interest. 

The judge also said this about the Notice of Termination filed with the OSC:

Notice of Termination 

1. While I found that the wording contained in the NOT was not defamatory, in light of my reasons, it is now incorrect. RBC did not have cause to dismiss Ms. Silva. 
2. I order that RMFI file with the MFDA (now IIROC) a notice of correction of the NOT. If the parties cannot agree on the form of correction, I will remain seized of the issue to ensure that the final correction accurately reflects the outcome of the case 

My Comments:

The damage claim for Loss of Future earning capacity is a concept well known in the personal injury field. Under tort law, you are entitled to be put in the same position as if the tort  had not occurred . In other words, if you suffered a permenant  loss of an arm and your prior employment was that of a carpenter, then you would calculate how much more money you could earn in the future had you not lost that arm

But contract law is different. In contract, you are to put in the same position had the contract been complied with. In this case, had the Defendant not alleged just cause, they would owe her 16 months pay in lieu. Period.

The Judge seems to have awarded these extra damages because of the filing by the employer of the NOT . The employer is required by law to file such a notice . The OSC investigated and four months later they virtually cleared her. 

Therefore how can the employer be on the hook for filing a report that they are compelled by law to report. The OSC conducted the investigation and cleared her.

Yes there well have been a lingering stigma affecting her future career because of the Defendant’s position of just cause but how is that different from any employee who is fired for cause and then has to wait years for a Court to clear their name?

In this case, her name was cleared in 4 months. Therefore the stigma of the charges no longer exists.

The Judge also found that the Plaintiff was entitled to $150,000 for aggravated damages and $250,000 for punitive damages

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Nothing special.

The Plaintiff was fired as he admitted for the many years as he had been a supervisor, he and all the night supervisors, had engaged in the practice  of “topping up” ” time cards. If an employee worked through his  or her lunch or break or is they completed their assigned work before the end of the shift, the supervisor would go into the time recording system and adjust the system to show they worked to the end of their shift, whcn in fact they had not.

The Judge found that this was not just cause for the following reasons;

1. This had been a long standing and consistent  practice among the entire night workforce.
2. The plaintiff did not personally benefit from this practice.
3. The Union contract guaranteed 40 hours a week for the peeople he was supervising.

However the Judge found that there were many factors about the investigation that warranted additional damages.

[129]      In the present case, there is sufficient evidence that Olympic engaged in bad faith and unfair dealings when dismissing Willsher that would justify awarding an extended notice period to Willsher. This evidence, includes inter alia, the following:

1.    The “investigation” specifically targeted Willsher without any attempt to determine the nature and extent of the “topping up” practice.
2.    No other supervisors were interviewed about the “topping up” practice, nor were other supervisors’ edits of employees’ timesheets audited in the course of the “investigation” as, according to Peroff,[4] Olympic “was not required to prove the plaintiff’s case”.
3.    Willsher’s October 5, 2023 “interview”, conducted by Peroff and Sousa, closely resembled an interrogation and not an investigation or interview. The meeting was implemented without notice, without explanation, without due process, without representation and was conducted in a high-handed, one-sided and biased manner, intended to intimidate Willsher.
4.    Willsher’s replacement, Jacob Bailey, who assumed Willsher’s position as Night Shift Supervisor in October 2023, was terminated in December 2025 (immediately prior to trial) “for the same practice”[5] which supports a finding that Willsher’s termination was personal, directed, and intended to remove Willsher from the company, not to correct or prevent the “topping up” practice from continuing.
5.    The termination letter provided to Willsher on October 5, 2023, accused him of “fraudulent behaviour” and “theft of time”. Willsher’s ROE recorded “dismissal/suspension” and prevented him from obtain unemployment benefits. Further, Willsher was not provided with any references after 17 years of employment with Olympic and, as such, he was inhibited in his search for new employment and mitigating his losses.

[130]      Despite attempts to secure new employment, Willsher has been unable to find a new job and has suffered embarrassment and humiliation at the hands of Olympic. In these circumstances, Willsher is entitled to damages in the form of an extended notice period extended to the date of release of this decision which equates to a further 14 months’ notice, for a total notice period of 33 months.

My Comments :

Most judges punish bad behaviour by employers by awarding either punitive or aggravated damages. However this Judge ruled that :

“the actions of Olympic in terminating the employment of Willsher do not rise to a level that would warrant punitive damages.”

The Judge made the same comment about aggravated damages.

Instead the Judge awarded an 14 month extension  of the notice period, which given his salary of $62,000, amounted to an award of approximately $72,000.

So as far as I can see there are now at least 3 levels of employer misconduct that will bring about an award in excess of reasonable notice.

Bad = Extension of the notice period

Really Bad: Aggravated damages

Really Really Bad: Punitive Damages

However there is a bigger problem. The Supreme Court of Canada in Honda Canada v Keays ( 2008 SCC 39) said this  about extending the notice period to compensate for bad employer behaviour.

Moreover, in cases where damages are awarded, no extension of the notice period is to be used to determine the proper amount to be paid. The amount is to be fixed according to the same principles and in the same way as in all other cases dealing with moral damages. Thus, if the employee can prove that the manner of dismissal caused mental distress that was in the contemplation of the parties, those damages will be awarded not through an arbitrary extension of the notice period, but through an award that reflects the actual damages. Examples of conduct in dismissal resulting in compensable damages are attacking the employee’s reputation by declarations made at the time of dismissal, misrepresentation regarding the reason for the decision, or dismissal meant to deprive the employee of a pension benefit or other right, permanent status for instance (see also the examples in Wallace, at paras. 99‑100). 

Isn’t the law wonderful ?

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Justice Morishita had a situation where a dependant contractor had the following termination clause:

10. TERMINATION

This Agreement may be terminated at any time by either party, with or without cause and with or without notice or any compensation in lieu of notice and, without limitation, may be terminated by [Investors Group] upon the breach by the Consultant of any of the terms, conditions or provision of this Agreement. On any termination or pending termination of a Consultant, [Investors Group] shall provide its clients with the appropriate notice.

In other words, this seemed to allow the defendant Investors Group to terminate with zero notice .

As the Judge notes, dependant contractors are not employees so they are not covered by the Employment Standards Act.

In Machtinger v. HOJ Industries Ltd., 1992 CanLII 102 (SCC), [1992] 1 S.C.R. 98 the Court cited the following as the basis for the implied term of reasonable notice:

“The presumption at common law that a contract of employment for an indefinite term is terminable only on reasonable notice would have been rebutted by the clear language of the contract specifying shorter notice periods.”

The issue then is zero notice a ” shorter notice period”

The Judge said NO.

[100]    In my view, “no notice” or “zero notice” is incompatible with “some other period of notice” or a “shorter period of notice.” “Some other period of notice” or a “shorter period of notice” implies some other amount, but not nothing. Because the Employment Standards Act does not apply to Mr. Salina, the shorter notice period could have been any amount of time, even one day.

[101]    Because the Termination Provision does not clearly specify any other period of notice, it does not rebut the common-law presumption of entitlement to notice and is therefore unenforceable.

What a difference a day makes.

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The parties chose the arbitrator together. Then one party found out that the opposing lawyer was also using the same arbitrator on another file. That party brought a motion before the arbitrator requesting that the arbitrator recuse. The arbitrator refused and ordered costs against the party who brought the motion.

The losing party brought an application in ONSC to overturn the arbitration award. They lost. They appealed. They lost again.  They sought leave to the SCC. This was dismissed .

This is what the ONCA said:

[8]        We reject the appellants’ contention that the terms of the arbitration required the arbitrator to disclose that he and the respondents’ counsel were involved in another arbitration. The arbitrator was required to disclose circumstances that could give rise to a reasonable apprehension of bias. Simply being involved in a separate arbitration with one party’s lawyer is not, on its own, such a circumstance. The parties had no agreement that they could only select an arbitrator that neither had worked with before. Nor did the terms of the arbitration agreement require the arbitrator to disclose any previous involvement with the parties’ lawyers. We observe that it is not uncommon for lawyers to select arbitrators for the very reason that they have worked with those arbitrators before. There is no merit to the appellants’ submission that any non-disclosure created a reasonable apprehension of bias.

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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 .

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