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New rights for employees
A number of new employment laws came into force in April 2024 to provide greater flexibility for employees, including enhanced flexible working rights and new leave entitlements.
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Canada | Publication | October 28, 2021
The Ontario Court of Appeal has overturned the trial judge’s decision in Battiston v Microsoft Canada Inc. This decision provides some helpful insights as to what constitutes adequate notice of termination provisions in stock option agreements and other stock awards.
Mr. Battiston was terminated without cause after almost 23 years of service. He brought an action for wrongful dismissal claiming, among other things, damages for all stock awards that were scheduled to vest during the common law reasonable notice period. The Stock Award Agreement expressly provided that if award holders’ employment was terminated for any reason, their stock awards would cease to vest as of the date of termination and the vesting period would not be extended by any notice period.
The Ontario Superior Court of Justice ruled that the termination provisions in the Stock Award Agreement were not adequately drawn to Mr. Battiston’s attention and could not be enforced because they were harsh and oppressive. Specifically, the trial judge found that the email notifications alerting the employee of stock awards year to year did not constitute “reasonable measures” to bring the harsh and oppressive terms of the termination provisions to the employee’s attention, notwithstanding the employee’s click box confirmation of the terms. For this reason, the employee was awarded damages in lieu of the stock awards that were scheduled to vest during the notice period. For more details on the decision at Superior Court, see our previous update.
The Ontario Court of Appeal reversed the trial judge’s conclusion, finding that the employee was not entitled to the stock awards that were unvested as at the date of his termination. In particular, the Court of Appeal found that the trial judge’s conclusion did not consider the following:
The appeal was allowed with costs in the amount of $20,000 awarded in favour of the employer.
This decision offers reassurance to companies that providing their employees with a copy of the stock option plan or other incentive compensation agreement at the time of grant to read, review, and acknowledge should be sufficient to uphold the terms of such plan or agreement, without needing to draw attention to specific provisions. To rely on this assurance, employers should ensure that their employees expressly agree to the terms of the options or other stock awards at the time of grant.
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