Alberta Court Of Appeal Confirms Employee Entitlements Following Without Cause Termination

In Carroll v ATCO Electric Ltd, 2018 ABCA 146 ("ATCO Electric"), the Alberta Court of Appeal (the "Court") considered the entitlements owing to a senior long-term employee terminated without cause. In doing so, the Court helpfully addressed a number of central employment law principles that are of considerable importance to employers. In particular, the Court confirmed that employee entitlements to certain benefits during the notice period are strictly governed by the terms of such plans. This position was recently set out in Styles v Alberta Investment Management Corporation, 2017 ABCA 1 ("Styles"), which was welcome news for Alberta employers.

BACKGROUND

The facts underlying this appeal are largely set out in the trial decision of Justice Mah in Carroll v Atco Electric Ltd, 2017 ABQB 267 (the Trial Decision).

At the time Carroll's employment was terminated he had been employed by ATCO (and its related entities) for a period of 28 years. He was 55 years old and held the position of Vice-President, Projects and Construction.

His compensation included an annual base salary of $180,000, as well as participation in the company's:

executive Bonus Plan ("Bonus Plan"); stock option plan ("SOP"); share appreciation rights plan ("SAR Plan "); defined benefits pension plan; and supplementary employee retirement plan. Carroll was the only vice-president at ATCO that did not receive a bonus for 2009. The rationale for this decision related to two projects Carroll oversaw, which the company's top management viewed as failures. Under the rubric of the Bonus Plan, which involved considerable discretion and subjective assessment by the Company's top management, Carroll received a performance rating of 1-2 for 2009. A rating of 3, 4 or 5 was necessary to receive a bonus payment. Notably, Carroll had received significant bonuses in 2007 and 2008 ($102,000 and $144,000 respectively).

On May 4, 2010, Carroll was notified that his employment was being terminated without cause. He was offered a period of vacation and paid leave until September 1, 2010, at which point he could retire. In addition, he was offered 18 months' salary continuance and a lump sum payment to be paid at a later date. By structuring the offer in this manner, ATCO allowed Carroll to turn 55 prior to September 1st such that he could retire pursuant to the terms of the company's pension plan.

ANALYSIS

Notice Period

The Court confirmed that Carroll's notice period commenced on May 4, 2010 and...