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Constructive dismissal without reasonable notice and the crystallization of benefits during the notice period. Employers beware!!

Nov 19th, 2020

By Laurent Debrun

In Matthews v. Ocean Nutrition Canada Ltd[1], a unanimous Supreme Court of Canada held that an employee, victim of a brutal constructive dismissal without any notice, was entitled to the extensive remedies sought. Based on the fact that the employment contract is deemed to continue in all of its effects beyond the time of dismissal, during the reasonable notice period, except for certain exceptions, the employee may claim all of the benefits accruing during this period. Even if the ruling concerns the application of common law rules, it heralds changes that could have major repercussions in Quebec. We shall address the latter in the second part of this article.

As a general rule, an employee who files suit to claim damages for constructive dismissal has left his employment by resigning, without receiving any reasonable notice or compensation. The employer does not believe that it is any longer accountable to the employee. Wrong! If the employee takes action and proves that he was the victim of constructive dismissal without notice or compensation, he is entitled at common law, in addition to a period of reasonable notice, to the benefits, including bonuses, that would have become due to him during the notice period. In order for the employer to be relieved of such obligation to pay for post termination benefits crystallizing themselves during the reasonable notice period, the terms of the contract must be very clear, on point and known by the employee at the time of the formation of the contract.

Part 1: Matthews and reparation under the common law:

The employment contract remains in force during the reasonable notice period, decides the Supreme Court. As a general rule, the wrongfully terminated employee has the right to full compensation, including for monetary benefits accruing during the notice period. To oust such a right, it will take very clear and precise terms, made known to the employee at the time when he was hired or when the plan was introduced,  providing  specifically that the benefit is lost in the event of an unlawful dismissal. When the employer decides to terminate an employee without cause, it will be important for the employer and employee alike to take into account the principles outlined in Matthews before agreeing on what future benefits are or are not to be included in the reasonable notice period or indemnity in lieu thereof.

Matthews settles certain diverging provincial decisions which had addressed an employee’s entitlement to the benefits crystallizing during the notice period and from which the employee was deprived of solely because of the wrongful or constructive dismissal.

Matthews claimed to be the victim of a constructive dismissal carried out in a manner that was oppressive and in bad faith and, moreover, without any reasonable notice. In addition to damages equivalent to a notice period of 15 months of salary, Matthews claimed as damages full payment of an incentive bonus set forth in a long-term plan, which bonus fell due during the notice period. According to the plan, to be entitled to the benefit (the definition of which excluded it as salary ­), the employee had to be employed by Ocean Nutrition Canada Ltd (Ocean) at the time of the realization event (here the sale of the company). Before the Supreme Court it was admitted by Ocean that Matthews had been constructively dismissed. The question was the extent of the compensation due to him and if the terms of the plan clearly excluded Matthews’ common law right to that benefit as damages, a position defended by Ocean.

Matthews, a senior executive and chemist, was employed by Ocean since 1997. The environment changed in 2007 and became toxic; by 2010, Matthews understood that his days were numbered. His superiors conducted themselves in a disloyal manner toward him from 2007 to 2011, which led to his resignation.  The employee, realizing that the sale of Ocean could take place shortly, tried in vain to negotiate a waiver of his right to reasonable notice or to an indemnity in exchange for maintaining his rights under the long term incentive plan offered to him in 2007.

He left his employment in 2011 against his will and accepted a position with a new employer. Ocean considered it to be a resignation and did not pay him any compensation upon his "resignation". One year later, Ocean was sold for 540 million dollars. Had Matthews been employed at that time, he would have received an incentive bonus of close to $1.1M.

The Supreme Court recognizes that the right to reasonable notice relates to the employee's self-worth, an essential component of his work. Certain non-monetary benefits are derived from the mere fact of holding employment. If an employer constructively dismisses an employee in a dishonest manner, the court can grant relief to allow the employee to regain his sense of dignity. This is over and above the role played by the granting of damages equivalent to the reasonable notice.

Good faith animates the whole of the performance of the employment contract, from its formation to its termination. The incentive bonus included in the plan should be part of the damages granted to repair the severe breach by Ocean of its duty to provide reasonable notice and to act fairly. The failure to provide reasonable notice constitutes an abuse of right by the employer. An employee who can prove that such abuse caused damages over and above the mere failure to provide reasonable notice may claim them as compensation of a contractual breach independent of and above the failure to provide reasonable notice.

The employer need not be guilty of having intentionally misled the employee with respect to a matter related to the performance of the employment contract. Giving reasonable notice or paying an indemnity in its stead is a tacit obligation under the employment contract, Recognizing such right to the employee being terminated is an aspect of the duty of good faith in the performance of the employment contract.

The fact that a dismissal is abusive, unjust or in bad faith cannot serve as a basis to increase the amount of reasonable notice to which the employee would have been entitled to. However, it may give rise to an additional remedy seeking reparation of the foreseeable damages resulting from the employer's abusive behaviour.

At common law, the general rule is that an employer can dismiss an employee without cause or prompt him to leave. However, the employer is strictly required to provide reasonable notice or compensation in the form of an indemnity in lieu of. This is an implicit and implied condition of an employment contract. If the employer fails to provide reasonable notice, it will be ordered to pay damages equivalent to what the notice period should have been. However, if the employer lies, misleads the employee or acts in bad faith with respect to the dismissal or constructive dismissal and does not provide the notice, it can be  liable for distinct damages, in addition to the basic duty to pay as damages an amount equivalent to the reasonable notice. If the employer breaches the standard of good faith, there must be compensation if such bad faith conduct results in additional foreseeable damages. The same would apply to mental suffering stemming from the manner in which the dismissal took place, based on a subjective test, specific to the reality of the dismissed employee. Justice Kasirer provides the following justification at common law: A breach of the duty to exercise good faith in the manner of dismissal is independent of any failure to provide reasonable notice. It can serve as a basis to answer for foreseeable injury that results from callous or insensitive conduct in the manner of dismissal.

Courts should ask two questions when determining whether the appropriate quantum of damages for breach of an implied term in an employment agreement to provide reasonable notice must include bonus and benefit that came into effect or vested during the notice period:

First, what are the common law rights of the employee? But for the termination, would he have been entitled to the bonus or benefit as part of his compensation during the reasonable notice period? The issue is not whether the employee is entitled to the benefit of the incentive plan, in accordance with its  terms and conditions, or if the latter are plain and unambiguous, but rather to determine what damages he is entitled to and if he is entitled to compensation for a benefit he would have earned if Ocean had not breached the employment contract. Should the damages to be awarded to the employee include an amount to compensate him for his loss of entitlement under the plan?

The event that triggered the right to the benefit took place during what should have been the reasonable notice period and, as such, had he not been the victim of a constructive dismissal, the employee would have received the payment set forth in the incentive plan. In these circumstances, there is no need to ask whether this payment was an integral part of his salary. On the first question, the Court held that Matthews was entitled to damages as compensation for the lost bonus because, had he been given proper notice, he would have been full-time or actively employed throughout the reasonable notice period. For the purposes of calculating wrongful dismissal damages, the employment contract is not to be treated as terminated until after the reasonable notice period expires. The employee must be awarded the amount set forth in the plan as part of his common law damages for breach of the implied term to provide reasonable notice.

In light of the answer to the first question, the Court must then determine if the terms and conditions of the employment contract or of the plan clearly limit or remove the employee's common law right to the bonus during the notice period. According to the Supreme Court, it does not. Yet, for some observers, the language could be seen as fairly clear and direct. The two main clauses of the plan read as follows:


                    [Ocean] shall have no obligation under this Agreement to the Employee unless on the date of a Realization Event the Employee is a full-time employee of ONC. For greater certainty, this Agreement shall be of no force and effect it the employee ceases to be an employee of ONC, regardless of whether the Employee resigns or is terminated, without or without cause.


                    The Long Term Value Creation Bonus Plan does not have any current or future value other than on the date of a Realization Event and shall not be calculated as part of the Employee’s compensation for any purpose, including in connection with the Employee’s resignation or in any severance calculation.

The Court found that the plan is not unlike a contract of adhesion in that the employee did not have the opportunity to negotiate its terms (the Court noted that it will be also important to know in each case if the clause limiting rights had clearly been made known to the employee at the time of hire or when the plan came into force, a question which does not apply here). With contracts of adhesion, the interpretation of an exemption or limitation of liability clause is strictly construed and, as such, if the drafting of the clause is not absolutely plain and unambiguous, it is not enforceable against an employee to deprive him of his common law rights.

When a clause is intended to remove an employee's common law right to damages, even if he is dismissed "with or without cause", as apparently contemplated in clause 2.03 of the plan, such a provision is not sufficiently clear to set aside the employee's right to compensation in the event of an abusive constructive dismissal without notice or compensation. In this case, there was an unlawful dismissal since the employee was constructively dismissed, without notice.  Exclusion clauses must clearly cover the exact circumstances which have arisen, otherwise they are inadequate. A dismissal without cause does not include per se an unlawful dismissal, one done without notice. Even if clause 2.03 of the plan had expressly referred to a wrongful dismissal, the Court suggests that such language would not have unambiguously altered the employee's common law right. Had the employee been given proper notice of his dismissal, he would have remained a full-time employee of the company on the date of the realization event and would have received the payment set forth in the plan, so that clause 2.05 of the plan is also insufficient to deprive him of such right.

The damages awarded to the employee must take into account this loss of opportunity. Even if there is no evidence that the employer made a conscious effort to deprive the employee of his right to benefit from the plan, based on the facts, the employee, a victim of constructive dismissal, was deprived of a bonus of over one million dollars to which he would have been entitled to had he still been employed by Ocean.

 The Court awarded the employee damages for lost earnings equal to the reasonable notice (15 months), the sum of $1,086,893.36 for the loss of payment under the plan which he would have received during the notice period and loss of other benefits arising from his employment agreement, less an amount of $78,000 for mitigation of damages, an amount representing the remuneration received during the notice period from his new employer.

 PART II: Dismissal and constructive dismissal in Quebec and the vesting of benefits during the reasonable notice period

In Farber v. Royal Trust Co.[2], the Supreme Court developed an objective test, under the civil law, comprised of operational criteria to support a finding of constructive dismissal. What remains somewhat uncertain is the exact quantum of damages to which the employee is entitled to. Is an employee victim of constructive or wrongful dismissal entitled to all quantifiable benefits originating during what should have been the reasonable notice of termination period? Three cases of the Quebec Court of Appeal provide guidance. It is the author’s opinion that Matthews goes further in terms of reparation than what the Court of Appeal has held is warranted in similar circumstances. Matthews may bring some changes.

In IBM Canada Ltd. v. D.C[3] the Court of Appeal held that articles 2091 and 2092 of the Civil Code of Quebec (C.C.Q.) grant discretionary powers to the trial court to calculate the reasonable notice of termination to which an employee, victim of a constructive or unjust dismissal is entitled to (24 months is now considered the maximum standard, except in special circumstances).

As a general rule, the employer or employee who wishes to terminate the employment relationship must provide reasonable prior notice of termination to the co-contractor (art. 2091 C.C.Q.). The C.C.Q. declares that the employment contract remains in force until it is terminated, upon expiration of the notice of termination period and, during the notice period, each party must, in principle, continue to fulfil their obligations under the contract. During the notice period, the contract remains in force between the parties and continues to be a source of obligations.

The compensation regime in article 2092 C.C.Q. only comes into play in the event of a violation of the rule set forth in article 2091 C.C.Q. and, to some extent, this is a field ripe with ambiguity. Without the giving of an adequate notice, is the employment contract terminated as soon as one party ceases fulfilling the contract, or does it rather continue having some effects until the expiry of what would have been a reasonable notice? Let us not forget that a majority of tribunal decisions and scholars recognize the legitimacy of an employer terminating the contract unilaterally, namely without the approval of his co-contractor, so as to immediately terminate the employment relationship. At least at first glance, it may seem surprising that committing a derogatory act can have beneficial consequences on the employer, provided that it pays in advance the damages resulting from the non-compliance with the rule found in article 2091 C.C.Q. As noted by Justice Pelletier in IBM, the civil law abhors that a party can legally cause the extinction of his obligations by the simple fact that he is prepared to pay damages resulting from his breach.

On the other hand, it is difficult to disregard the actual benefits of this practice in the modern economy. Employers faced with a potentially uncomfortable transition period often prefer causing an immediate termination of the employment relationship. Sometimes it is the employee who is dismissed or has resigned who wishes to leave immediately. The theory of the immediate and unilateral termination has the advantage of offering a pragmatic solution. This theory, which does not do justice to article 2091 C.C.Q., appears to be based less on the letter of the C.C.Q. than on a widespread practice that has acquired credibility over the years.

Yet the distinction is very important. Is the contract terminated at the time of dismissal or does it continue producing its effects during the reasonable notice period? If the termination is done without cause and without notice, should this make a difference as to the post termination benefits the employee is entitled to as damages?

In most cases, the employer and employee negotiate at the time when notice of termination is given what the reasonable notice period will be and what benefits will be paid or continue to be paid during such period despite the fact that the employee shall no longer be employed. In IBM, the Court of Appeal is concerned with the situation of an unjust or constructive dismissal. This is how Justice Pelletier presents the issues at stake:

(in-house translation): Several precedents have recognized the employee's right to all forms of compensation and benefits to which he would have been entitled to during the notice of termination period. When it comes time to apply the recourse set forth in article 2092 C.C.Q., in most cases, the theory of immediate termination (of employment) produces a practical result similar to that emerging from the theory which holds that the contract remains in effect until what would have been the expiry of the reasonable termination notice period. However, the two approaches sometimes produce different results. This is the case when the solution to a particular problem is dependent on the exact date of termination of the employment relationship, namely when a third party's obligation depends on the existence of a similar connection. For example, let us say that amongst the various benefits associated with employment is life insurance protection for the employee. If, unfortunately, the employee dies during the notice of termination period, we could consider two situations with very different effects. In the first case, the employer had given the employee a prior notice of termination. It then seems very clear that the insurer must pay the insurance coverage (assuming no other obstacles to coverage exist). In the second case, the employer chooses to immediately terminate the employment contract by opting to pay a compensatory allowance to serve in lieu of the notice, without the employee having consented to being terminated without cause and to cease executing the employment contract. According to the theory of the right to immediate termination of the contract, the insurer would not be required to pay the insurance coverage. However, the employer may be liable for coverage in accordance with the principle that the employee (including his successors) is entitled to all rights that he normally would have been able to obtain during the notice of termination period. There are clearly differences of opinion in case law, as shown, amongst others, in the dissenting reasons of Justice Nuss in Aksich and the ones I rendered in Asphalte Desjardins. They question the accuracy of the legal theory according to which a party (the employer) can unilaterally cause the immediate end of employment (and of the employment contract), without having to fulfill all of his obligations provided for in article 2091 CCQ.

However, the reasons of the majority in IBM seem at odds with those of Justice Kasirer in the Matthews case as regards certain key points relating to the effect of the constructive dismissal on the employee's rights to benefits crystallizing themselves during the notice of termination.

In the IBM case, the employee claimed to be entitled to a benefit under the pension plan offered by IBM. He argued that the plan is an adhesion contract and that the stipulation requiring that the employee work for IBM until the age of 55 to be able to enjoy the fruits of the plan is abusive. In his view, this provision deprives him of the right to receive the accrued benefits as a result of being prematurely and abusively terminated by the employer. According to Justice Pelletier, IBM was entitled to terminate the employment without cause, subject, of course, to its obligation to give a reasonable notice of termination. The argument that the clause is abusive is unfounded, to the extent that the plan pursued a legitimate objective, which was known and accepted by all, namely to retain senior employees by encouraging them to pursue their careers with IBM until the age of 55. (...) That being said, the employee could have legally been entitled to such compensation if he had established that his dismissal sought to deprive him of the amounts virtually accrued in the plan. That is not the case. (in house translation)

At the end of the notice of termination period, the employee of IBM would have been 53 years old.  Under the plan, his rights were certain only when he reached 55.  However, despite IBM having terminated the plan during the notice of termination period, all employees who were still employed by IBM at that time were grand-fathered as to their rights under the plan. Why was the employee D.C. not gveven the same right in the form of damages? If the reasoning of the Supreme Court in the Matthews case were to apply in Quebec, the IBM case may have produced a different result. In the Matthews case, the Supreme Court held that the employee should receive everything that he would have received during the notice of termination period, had there not been a constructive dismissal without notice.

In the IBM case, the employee was also forced when he was forced to resign to sell shares of IBM that he had acquired after previously exercising stock options. The price then obtained was below the highest price for the same IBM share on the market during the notice period.  The Court of Appeal refused compensation for this loss. It found that it amounted to a mere non-indemnifiable lost opportunity and that there was no evidence that the employee had the required knowledge to sell his shares at the highest market price.  Is this not a benefit that originated during the notice period and for which the employee is deprived as a result of the constructive dismissal?

In the IBM case, there were other loyalty programs. The employee claimed the full benefits thereof during the notice period.  The following are certain terms of the plan:

About Your IBM Long Term Incentive Award Long term incentive awards are not part of your normal or expected compensation, and shall not be considered compensation for the purposes of calculating any severance, redundancy, resignation, end of service payments, bonus, long-service awards, pension, retirement or other benefits or similar payments provided for under applicable laws and/or IBM plans or programs.

 The RSUs awarded under this Agreement will vest according to the table below on the condition that you continuously remain an employee of the Company until such date. […] In the event you cease to be an employee (other that on account of death or becoming disabled as described in Section 12 of the Plan) prior to the Vesting Date(s) set forth above, all then unvested RSUs under this Award shall be cancelled. In the event of a management approved leave of absence, any unvested RSUs shall continue to vest as if you were an active employee of the Company, subject to the terms above.

For purposes of the Plan and this Agreement, you shall be considered to be terminated from your employment with IBM or its affiliate on the earliest of the following dates : a. the date on which you give your employer notice of resignation;  b. that date on which the employer gives you notice of termination of employment (whether or not for cause), or c. the date you cease to provide services to the employer or any affiliated company, regardless of whether such date is the last date upon which the employer is required by statute, common law, agreement, or otherwise to pay you wages or salary in lieu of notice.

The Court of Appeal agrees that it may be a contract of adhesion. According to the employee, the clauses stipulating the premature termination of the benefits set forth in the loyalty programs amount to a waiver in advance by the employee of his right to obtain reparation for the injury he could suffer in the event of an insufficient notice or abusive termination of his employment contract, which is contrary to article 2092 C.C.Q. The incentive measures constituted employment-related conditions, within the meaning of the Aksich decision. Even if the contracts covering the incentive measures are part of the employee's work conditions, the Court of Appeal held that they must be applied according to their wording, provided they are not abusive. Again, the question may have been decided differently if it had been addressed by the Court in Matthews, as the IBM and Ocean clauses have strong similarities and article 2092 C.C.Q. is a rule of public order.

Asphalte Desjardins Inc. v.  Commission des normes du travail, 2013 QCCA 484

 Justice Pelletier dissented in this case. The employee had given 3 weeks notice of his resignation, but the employer renounced to it and laid off the employee without compensation, considering itself entitled to waive the benefit of the prior notice given by the employee pursuant to article 2091 C.C.Q.  Justice Pelletier found that by giving a prior notice, the employee was only fulfilling his obligation toward the employer so that it could mitigate the effects of the announced departure, [4]the employer being free to renounce it, but in consideration of the payment of the prescribed notice. The majority of the Court of Appeal found otherwise.  A resignation is not equated to a dismissal by the simple fact that the employer renounced its right to receive a reasonable notice, which is required of an employee.  The notice given by the employee deferred the implementation of the resignation, and the contract remained in effect during that period.

Speaking for the majority, Justice Bich noted that if it can be argued that the employment contract remains in force during the notice period, there are exceptions to the rule.  This would be the case if the employer chose to pay the employee a compensatory indemnity, rather than give a notice of termination.  It would also be the case if the employee who receives the notice renounces his right to such notice under article 2091 C.C.Q. In both cases,  the contract of employment ends and it no longer produces effects during what would have been the reasonable notice period.

Giving the prior notice of article 2091 C.C.Q. constitutes a kind of term exclusively in favour of the dismissed employee. However, when the employee resigns and the employer renounces the notice, this does not terminate the contract, which remains in effect during the notice period;  the employer is only discharged from its obligation to pay the employee.

However, the majority of the judges confirmed the legal validity of the practice in Quebec, namely that an employer may, at its sole discretion, immediately terminate the employment contract, rather than wait until the end of the notice period, provided the employer pays the employee an indemnity equal to the salary and other benefits to which the employee would have been entitled if he had worked during the notice period, without the employee having to mitigate its damages.

Aksich v.  Canadian Pacific Railway, 2006 QCCA 931,

Justice Nuss, dissenting, reaffirmed that the employee dismissed without cause is entitled to damages, including all benefits of which he was deprived and which would have been acquired or to which he would have been eligible during the notice period during which he is entitled to continue working. In this case, Mr.  Aksich, senior executive of CPR, was dismissed at the age of 52 and a half.  CPR had put in place a program allowing employees aged 55 who had accumulated a certain number of points based on a precise scale to opt for a 5-year early retirement plan with reduced salary and benefits (but with the right to find other gainful employment) and to regain full eligibility upon retirement, with the last 5 years of contribution being taken into account. The Superior court had not awarded damages to the employee to compensate for the loss of the retirement benefits.

For Justice Nuss, if Mr.  Aksich had been given the right to work during the notice period, he would have reached 55 with all the required points during the notice period.  CPR claimed that the right to the program depended on the employer's discretion, but the evidence indicated that all eligible executives had always been entitled to all benefits under the plan, following the exercise of the option.

Can an employee who is not awarded a notice period with the right to remain an employee during such period claim all the benefits of which he is therefore deprived,  including those which would have crystallized during the notice period? Justine Nuss held that no distinction should be based on whether the employer recognizes or not the employee's right to work during the notice period. Otherwise, it would mean giving the employer an undue advantage by opting for a dismissal without notice period, in breach of the employee's right set forth in article 2091 C.C. Q.

Madam Justice Mailhot accepts the reasoning of Madam Justice Bich acting for the majority.  Although agreeing with Justice Nuss that in the circumstances, the notice period should be 24 months and that since the employer had breached this duty the employee was entitled to damages suffered by such breach, the Court of Appeal refused to grant to Mr. Aksich the loss of admissibility to the early retirement plan, as damages.

Justice Nuss will do so by giving priority to the terms of the internal policy of CPR which comes into effect upon dismissal, by concluding that the employee was not entitled thereto upon dismissal and that there was no proof that he would have been entitled thereto during the notice period which the employer should have given him.

The Court indicates that an employer who intends to dismiss an executive in Quebec when referring to article 2091 C.C.Q. has one option: to give notice of termination in reasonable time or terminate the agreement immediately in consideration of an indemnity equivalent to a reasonable notice. The indemnity given in lieu of the notice does not repair the damages resulting from termination of the employment relationship. Since the employer has the right to terminate the agreement without cause, the damages to which the employee is entitled are limited to the compensation he would have received during the applicable notice period, including the monetary benefits set forth in the employment agreement (less the duty to mitigate).

Even if the dismissal is abusive and done in bad faith, the damages awarded are only intended to compensate the employee for the damages resulting from such abuse of rights and not to increase the amount of damages in lieu of the notice which should have been given.

As regards the early retirement notice, the Court of Appeal notes that the difficulty lies in that we must distinguish between the loss resulting from the lack of or insufficient notice period and the loss resulting from the termination of the employment relationship, as only the former gives rise to compensation. Then there is the question of determining if the loss is direct or indirect, if the harm associated with the loss of retirement benefits is certain, which is often a loss of opportunity.

According to the Court of Appeal, the retirement policy of CPR would be discretionary. At the time of his dismissal, Aksich did not meet the requirements allowing him to choose.  However, Aksich alleges that the loss of option is due to the fact that CPR decided to pay compensation in lieu of the notice rather than grant him a notice period, in accordance with article 2091 C.C.Q. In the latter case, Aksich would have satisfied the criteria rendering him admissible to the early retirement plan during the notice period. 

The Court of Appeal made a distinction between a bonus, commission and car allowance, which would constitute monetary benefits related to his employment and compensable, and conditions of employment termination, as is the case here, which are not a benefit related to the performance of work. According to Justice, Bich, access to the early retirement plan would constitute an employment termination benefit and not an employment benefit.

Pursuant to CPR's employment termination policy, a dismissed employee who meets the specific criteria upon his dismissal is entitled to choose between an early retirement if he then had accumulate between 50 and 75 points or a predetermined compensation, without a duty to mitigate for the employee. As stated by the Court of Appeal, according to the terms of the plan, the notice period and the early retirement notice period were mutually exclusive, being two components of an alternative that materialized upon termination. The employee could not claim the notice period as a source of his right to an early retirement, as the latter is a substitute for the former. Since the evidence did not establish that CPR dismissed Aksich in order to deprive him of access to the early retirement notice period, the theory of abuse of rights cannot be claimed to remedy the terms of the plan. Yet the Court sentenced CPR to pay moral damages since it breached the principle of good faith which must preside upon termination of a contract, and therefore abused the right provided in article 2091 C.C.Q.  There was humiliation as a result of the abruptness of the termination.

Concluding Remarks: The Matthews decision of the Supreme Court of Canada could bring changes to the determination by Quebec courts of the scope of the post termination benefits to which the wrongfully dismissed employee is entitled to. The three Quebec Court of Appeal decisions reviewed here may reflect too strict an analysis of the competing principles. The two step analysis propounded in Matthews to determine if a right is subject to compensation by damages could be harmonized with the protective rules contained in articles 2091 and 2092 C.C.Q.

An employment contract is presumed to remain in force during the notice period if there has been termination without cause or in the case of a constructive dismissal. The burden should rest on the employer’s shoulders during the reasonable notice. This is perhaps the price to pay for not having negotiated a reasonable notice or an indemnity with the employee.

(this article was previously published by LexisNexis on their online publication The Lawyer’s Daily (

[1] Matthews v. Ocean Nutrition Canada Ltd. 2020 SCC 26 -

[2] (1997 CanLII 387)

[3] (2014 QCCA 1320)

[4] The distinction can be important. An indemnity may not give rise to the employee’s duty to mitigate lost revenues whereas this obligation exists in relation with the paid reasonable notice period.