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Employment - Profit-Sharing. YG Limited Partnership and YSL Residences Inc. (Re)
In YG Limited Partnership and YSL Residences Inc. (Re) (Ont CA, 2025) the Ontario Court of Appeal dismissed an appeal, here from an earlier appeal which reversed "the Trustee’s decision disallowing [the respondent employee's] profit-sharing claim"."
In this insolvency context, the court finds that a wrongful dismissal wages-in-lieu notice period does not limit contractual profit-sharing:Issue 3: The appeal judge did not err in finding that the common law notice period does not apply to the profit-sharing claim
[81] The Trustee submits that the appeal judge erred in finding that the profit-sharing claim is not tied to the notice period. The Trustee had argued that the notice period in this case was 24 months. Because the YSL project was not meant to be completed within the 24 months following Ms. Athanasoulis’ termination, she would not have been entitled to a share of the profits once the project was completed. In making this argument, the Trustee relied on Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26, [2020] 3 S.C.R. 64, at para. 49, wherein the Supreme Court stated that, in the normal course, the remedy for breach of an implied term to provide reasonable notice is to award as damages what the employee would have earned during the notice period.
[82] The appeal judge rejected this argument, reasoning that the facts in this case are distinguishable from the general principle enunciated in Matthews because, in this case, Ms. Athanasoulis’ entitlement to share in the profits of the YSL project was not dependent on her continued employment with YSL:[Even] if Ms. Athanasoulis had been given two-years working notice and her employment had then terminated, it is not a given that her entitlements under the Profit Sharing Agreement would have automatically ended. The preservation of her entitlements under the Profit Sharing Agreement is consistent with the Arbitrator’s finding that the Profit Sharing Agreement was intended to recognize her past and continuing contributions and was not just an incentive for future contributions. The Arbitrator expressly found that YSL could not eliminate Ms. Athanasoulis’ claim by terminating her and could not reduce her share to zero after her prior years of contributions in the form of advance sales, etc. simply by terminating her employment on notice (at para. 160). It follows from these findings of the Arbitrator that, unlike in Matthews, the termination notice period is not determinative of the Profit Share Claim. [83] I see no error in this reasoning. The arbitrator had found that Ms. Athanasoulis’ entitlement to share in the profits of the YSL project did not end with the termination of her employment. The parties proceeded on the understanding that the findings of the arbitrator were binding on the Trustee and on any appeals from the Trustee’s disallowance decision. In the circumstances, the appeal judge did not commit any errors in distinguishing Matthews from this case and in finding that Ms. Athanasoulis’ profit-sharing claim survives her notice period.
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