On June 1, 2017, the Supreme Court of Canada dismissed an
application for leave to appeal of the decision of the Alberta
Court of Appeal in Styles v. Alberta Investment Management
Corporation.1 This leaves the Alberta Court of
Appeal's decision undisturbed and binding on lower courts in
Alberta.
As previously reported in
Workwise, Styles had moved from Ontario to Alberta to work as
an investment manager. He was dismissed without cause after 3 years
of employment. The issue was whether Styles was entitled to a bonus
under his employer's Long Term Incentive Plan (LTIP). The Plan
stated that no rights to the LTIP vested until there had been four
years of employment and to be eligible, the employee was required
to be an 'active' employee on the vesting date of the
bonus.
In finding that the employee was entitled to the bonuses
regardless of the plain wording of the LTIP, the trial judge found
that the employer failed to reasonably exercise its discretionary
contractual powers in terminating the employee's employment
without cause prior to the vesting date.
The Alberta Court of Appeal rejected the trial judge's
conclusion and held that any general principle of "reasonable
exercise of discretion" in contractual performance constituted
a radical extension of the law. In allowing the appeal, the Court
provided useful guidance on the application of good faith in
contractual performance, as established in the SCC decision
Bhasin v. Hrynew2. The Court also
clarified that while the Bhasin principle related to the
performance of the contract, "[i]t does not relate to the
negotiation or terms of the contract."3
Since the Supreme Court of Canada has now refused leave to appeal,
employers can now be comfortable that the Court of Appeal's
limitation of the scope and application of Bhasin, as earlier
reported, remains good law in Alberta. This will limit
employees' ability to use Bhasin to try to undermine clearly
written employment contracts.
Field Law's
Labour and Employment Group can advise and assist employers in
drafting and interpreting employment contracts and help to minimize
costs and conflict when planning and making these sorts of
organizational changes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
