Employee was aware of risk in employment contract that employer could terminate profit sharing plan

Employee M participated in profit-sharing plans called “carried interest plans” (CIP) that had defined investment periods (Funds 1 and 2). Employer RDS Inc. terminated employment, wound down Funds 1 and 2, terminated CIP, and paid employee for his entitlement under Funds 1 and 2. Trial judge allowed employee’s action for wrongful dismissal. Judge awarded employee $953,392 for lost opportunity to earn entitlements under CIP during notice period and awarded employee $190,789 for his earnings under CIP during employment, calculated using exchange rate as of date of investment, rather than as of time of disposition or maturity of investment. Employer appealed CIP awards. Appeal allowed in part. Award of damages for lost opportunity was set aside. Judge wrongfully concluded that employee was presumptively entitled to damages in respect of CIP because they historically had constituted significant form of compensation. Judge did not identify any term of CIP that entitled employee to earnings during notice period beyond his share of profits in Funds 1 and 2, which he was paid. Judge made palpable and overriding error by holding that provision in CIP permitting employer to terminate CIP did not purport to limit employee’s common law entitlements. Employee was aware of risk in employment contract that employer could terminate CIP. Award concerning foreign exchange methodology was upheld. CIP did not contain clear language about choice of foreign exchange methodology. Employee's experience in managing investments and evidence that his methodology was used by employer in past provided support for judge's acceptance of employee's methodology.

Manastersky v. Royal Bank of Canada (2019), 2019 CarswellOnt 11462, 2019 ONCA 609, K. Feldman J.A., David Brown J.A., and B.W. Miller J.A. (Ont. C.A.); reversed (2018), 2018 CarswellOnt 2177, 2018 ONSC 966, P.J. Monahan J. (Ont. S.C.J.).

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