Recently, the Ontario Superior Court of Justice awarded an employee $50,000.00 in moral damages because their employer dishonestly conducted their dismissal. In Gascon v. Newmont Goldcorp 2022 ONSC 2511, the Plaintiff was a General Manager of a mine, Goldcorp’s Red Lake Mine, which in 2019 was acquired by Nemont Mining Corporation, the parent company of the defendant, Newmont Goldcorp Integrated Service. The Plaintiff was retained by Newmont Goldcorp as the General Manager pursuant to an employment agreement executed on May 6, 2019. Part of the Plaintiff’s remuneration was Long-Term Incentives (“LTI”) compensation awards. LTIs usually represent a large portion of an executive’s compensation and are comprised of Restricted Share Units (“RSUs”), Stock Options and Performance Share Units (“PSUs”).
Employee was made to believe that his employment was secure after the sale of the business
In August 2019 the Plaintiff was advised that Newmont Goldcorp was potentially being sold. In September 2019, when the sale seemed more of a possibility, the Plaintiff was told by the Vice President of Newmont Goldcorp that he would be “going with” Red Lake Mine when it was sold. Newmont Goldcorp eventually agreed to sell the mine to Evolution with a closing date of March 31, 2020.
On November 26, 2019, the Plaintiff received an email from the COO of Newmont Goldcorp wishing him “every success in the future” and thanking him for his “time and service with Newmont Goldcorp”. The Plaintiff also received an email from the Vice President of Strategic Development thanking the Plaintiff for the work he had done “to make this transaction happen” and that he had “expressed [his] very positive view of [him] to Jake [Klein, CEO of Evolution]”. The Plaintiff became concerned that these comments may mean that he would not be an employee with Newmont Goldcorp after the sale of the mine.
On November 27, 2019, the Plaintiff reached out to the Vice President, Productivity of Newmont Goldcorp to clarify if he still had a job after the sale. The VP assured the Plaintiff that he would still have his job and later commented again that he would “go with” the mine. The Plaintiff understood this to mean this his employment was secured with Evolution.
Employee was not paid incentive plans and merit increases according to the schedule
When it came to the expected receipt of the Plaintiff’s annual LTI grants and merit increases in March 2020, the Plaintiff was advised that Evolution has a plan to replace them after the closing date of purchase. The Plaintiff was also encouraged to continue performing his duties as usual.
Employee discovers that his employment is being terminated
Soon after, Newmont learnt that Evolution was not going to make an offer of employment to the Plaintiff. At the same time, the Plaintiff also realizes that his employment will be terminated as his name did not appear on a distribution list for a letter that was being given to employees who would be remaining after the sale.
On March 31, 2020, the Plaintiff was terminated without cause. He brought a wrongful dismissal action against Newmont alleging that between November 2019 and March 30, 2020, Newmont misled him, acted dishonestly, and breached the duty of good faith.
Employee was owed a duty of good faith at dismissal
The Plaintiff submitted that his employer owed him a duty of candour and an obligation to be truthful and to act in good faith when he inquired about his employment status. The statement “go with” the Red Lake Mine when it was sold to Evolution was untruthful and led the Plaintiff to believe that his employment was secure with Evolution. The Plaintiff sought an award of exemplary damages of $60,000.00 as a result of the employer’s conduct. Additionally, the Plaintiff also submitted that he was entitled to damages in lieu of a notional LTI award in March 2020. He submitted that the LTI award would have fully vested immediately upon his termination without cause on March 30, 2020.
Was the employee entitled to his executive compensation?
The judge decided that the issue regarding the LTI award required a trial as there was some ambiguity surrounding the evidence that would entitle the Plaintiff to damages in lieu of the award and the quantum of such. The judge decided that if the Plaintiff is entitled to the LTI award in March 2020, it would be subject to a pro-rata vesting.
Due to the manner of termination, what damages are due?
The judge agreed with the Plaintiff that the conduct of Newmont Goldcorp between November 2019 to the date of the Plaintiff’s termination is relevant to the issue of what damages the Plaintiff is entitled to. The judge commented that the phrase “go with” the mine was a clumsy attempt to placate and/or mislead the plaintiff who was essential to the successful closing of the sale to Evolution. The judge found that the conduct of the Vice President was untruthful, misleading and unduly insensitive. He awarded the Plaintiff moral or exemplary damages of $50,000.00.
What is the lesson?
For employers, it is a reminder that they owe an employee a duty of good faith and not to mislead them in the manner of their dismissal.
For employees, it is important to know their rights and entitlements upon termination. If you are an Executive employee whose compensation is largely made up of stock options, RSU’s, LTIs, or other non-traditional compensation structures, you may want to think twice before signing a release. You have the option to negotiate your severance agreement to include this compensation.
Employees that have been terminated without cause could be leaving money on the table if they are not aware of their rights and entitlements. Before you sign a release, read the fine print, and understand fully what you are being asked to sign. Though an employer is obligated to pay you your minimums according to the ESA, depending on your employment contract and termination clause, you may be entitled to common law notice. Your employer may also be liable to pay you damages if their conduct in the manner of your dismissal is found to be dishonest or misleading.
Monkhouse Law is an employment law firm located in Toronto with a focus on workers’ issues. Contact us if you have any questions regarding your rights and potential options when negotiating your employment contract, compensation plans, or severance agreements.
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