Case information

Employment law — Termination without a serious reason — Employee worked for employer for approximately 5.5 years — Employee terminated without a serious reason and without notice —Employee offered indemnities in lieu of 39 weeks’ notice with respect to base salary, short term incentive plan, and perquisites — Employee offered indemnity equivalent to pro–rated award under long term incentive plan (LTIP) that ended two weeks following the employee’s termination — Trial judge dismissed employee’s claim for further indemnity under the LTIP due to a clause limiting pro–rated LTIP payments in the case of termination without a serious reason — Appeal dismissed – Whether the Court of Appeal erred in not applying Matthews v. Ocean Nutrition Canada Limited, 2020 SCC 26 — Whether arts. 2091 and 2092 C.C.Q. entitle employee to further indemnity — Whether employer can terminate without notice in order to reduce indemnity that would otherwise be payable for termination without a serious reason.

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The applicant, Mr. Leyne, worked for PSP Investments Canada Inc. (“PSP”) for approximately 5.5 years from April 2010 until November 2015 as Managing Director of Value Opportunity. His compensation included a base salary, a short-term incentive program (“STIP”), a long-term incentive program (“LTIP”), and other perquisites and benefits.

On November 4, 2015, PSP terminated Mr. Leyne’s employment without a serious reason and without notice. PSP ultimately paid an indemnity representing 39 weeks of base salary and perquisites, STIP awards pro-rated to November 4, 2015, and LTIP awards pro-rated to Nov 18, 2015. For most employees, LTIP awards normally “vest” after four years. However, the LTIP contained two special provisions related to LTIP entitlements in the event of termination without a serious reason, which provide that LTIP payments include pro-rated awards to the “the later of the date of the event or the end of any statutory notice period in the case of termination.”

Mr. Leyne sued PSP and sought a reasonable notice period of 12 months and additional indemnities, including pro-rated LTIP awards to the end of the reasonable notice period.

The trial judge ordered that PSP pay Mr. Leyne additional amounts with respect to the STIP and his pension contributions. However, it declined to order any additional amounts with respect to the LTIP because of the LTIP provisions that limit such payments in the case of termination. The Court of Appeal dismissed Mr. Leyne’s appeal.