Canada: "No Employment, No Vesting, No Bonus": Alberta Court Of Appeal Overturns Controversial Bonus Award In Styles v. AIMCo

Last Updated: January 11 2017
Article by Sheena Owens

In an era that has been marked by an economic downturn and several very lengthy notice period awards in favour of employees, the Alberta Court of Appeal has granted a win to employers. In its much anticipated and first decision of 2017, on Jan. 4, 2017, the Court of Appeal overturned a trial decision under which a dismissed employee had been awarded an incentive bonus even though the contractual preconditions had not been met. The Court of Appeal also firmly rejected the notion that when an employer dismisses an employee, it is exercising a discretionary power that it must exercise in good faith. Lastly, the Court of Appeal dismissed the holding that an employer must provide reasons or a business justification for dismissing an employee.


David Styles was an investment manager with AIMCo. He was dismissed without cause after three years of employment. The issue in the case was whether he was entitled to a bonus under the company's Long Term Incentive Plan (the "Plan"). The Plan documents made it clear that no rights vested under the Plan for four years. They also expressly stated that an individual had to be an active employee on the vesting date in order to be eligible for a bonus.

Trial decision1

The trial judge interpreted the Plan as giving AIMCo a "discretion" to "forfeit" the bonus entitlement of an employee who was not actively employed on the vesting date.  She also considered that AIMCo was exercising a discretionary power when it decided to terminate Mr. Styles without cause.  Purporting to follow the Supreme Court of Canada's decision in Bhasin,2 she reasoned that such discretion had to be exercised in good faith, and that the actions of AIMCo fell short of this standard, since it could not "justify" the decision to terminate Mr. Styles. 

Court of Appeal's decision

The Court of Appeal unanimously agreed that the employer's appeal had to be allowed. The majority wrote detailed reasons which included an extensive review of some of the leading case law. They held that the trial judge had misinterpreted the Plan documents as giving the employer a discretion to forfeit an employee's bonus entitlement. Rather, the Plan made it clear that continued active employment on the vesting date was a condition precedent to the bonus entitlement.3 There was no discretionary power involved.

The majority issued a reminder that, contrary to the approach taken by the trial judge, "termination without cause does not involve a breach of the contract",4 and that an employer does not have to show "good faith" or "legitimate business reasons" for dismissal.5 The decision to terminate is not an exercise of a "discretionary power". The Court of Appeal also confirmed an employer does not have to provide reasons for the termination to the departing employee. The trial judge had therefore taken the wrong approach in holding against the employer for failing to provide reasons for the termination and the consequent denial of "grants" under the Plan.6 

The majority took the opportunity to engage in a detailed review of what the Supreme Court of Canada had, and had not, held in the Bhasin case.  It emphasized that Bhasin only applies to contractual performance and not to the negotiation of a contract.7  Further, it reaffirmed that that the parties to a contract are entitled to act in their own best interests – though at some point they cannot perform certain contracts in a way that seeks to "undermine [legitimate contractual] interests in bad faith".8 In the Styles case, there was no room to apply the "good faith" doctrine because the contract made it perfectly clear there was no bonus entitlement in the circumstances. Essentially, the court will not rewrite a bad deal for one of the parties.

Finally, the majority rejected alternative arguments advanced by Mr. Styles based on "relief from forfeiture", the doctrine of "unconscionable transactions" and the Employment Standards Code.9  The Plan documents were quite convoluted and, "use[d] some unfortunate wording". The draftspersons had caused some unnecessary confusion by using inapt words such as "grant" (to describe what was in fact only a notional yearly allocation to each employee for purposes of calculating future possible bonus entitlements) and "forfeiture" (as a clumsy way of conveying the point that that the bonuses were not to vest merely on the allocation of the "grant" but only in four years' time).  

The third member of the panel wrote succinct concurring reasons which are consistent with the reasons of the majority. Justice Berger's reasons rested on the central point that, as a matter of interpretation, the trial judge had erred in law in holding that the employee had an "earned entitlement" to compensation under the Plan at the time he was dismissed.10

Lessons to be learned

The Court of Appeal has provided guidance and removed the uncertainty and confusion that was created by the trial decision in the Styles case. First, if the documents governing employee compensation plans are clearly worded, in normal circumstances they can be relied upon as governing the question of what an employee is entitled to receive on termination. 

Second, bonus plans can be limited to employees who are "actively employed", though such limitations much be clearly defined and spell out what "active employment" means for the plan. With appropriate drafting, therefore, it is possible to define the compensation payable on termination of employment in a way that excludes bonuses that would have become payable after the date of termination had the employee not been dismissed.

Third, where an employee is being dismissed without cause, the employer is not under a duty to justify the decision or to provide the employee with reasons for his or her dismissal.

Fourth, absent evidence from the employee to the contrary, an employer is not acting in "bad faith" by applying the blackletter provisions of compensation plans merely because the application of such provisions works in a way that is detrimental to the employee.

Lastly, the decision acts as a salutary lesson on the benefits of avoiding repetition and complexity in drafting contractual documents. The document governing the Plan was 19 pages long and at least in some respects was poorly drafted.  Words such as "grant" and "forfeit" have important legal connotations in many contexts.  It is not surprising that their inappropriate use in the Plan documents in this case caused the trial court to attach an importance to them which the parties never intended. 


1 2015 ABQB 621 (CANLII)

2 2014 SCC 71 (CANLII)

3 2017 ABCA 1,at paras. 24-40.

4 2017 ABCA 1,at para. 34.

5 Wallace v United Grain Growers Ltd., 1997 CanLII 332 (SCC), [1997] 3 SCR 701 at para. 76.

6 Styles, 2017 ABCA 1, at paras. 39-41.

7 Styles, 2017 ABCA 1, at para. 51.

8 2017 ABCA 1,at para. 45, quoting Bhasin at para. 65.

9 RSA 2000, c. E-9, ss. 1(j), (x), 4, 8 and 9

10 2017 ABCA 1,at para. 88.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
14 Sep 2017, Seminar, Birmingham, UK

Has Cloud replaced traditional outsourcing models? We will compare cloud to outsourcing, consider whether they have effectively become the same thing for many solutions and assess some of the advantages and disadvantages of each model.

18 Sep 2017, Seminar, London, UK

Our annual event as part of the London Design Festival is now in its fifth year. We would be delighted if you are able to join us again.

21 Sep 2017, Seminar, London, UK

Has Cloud replaced traditional outsourcing models? We will compare cloud to outsourcing, consider whether they have effectively become the same thing for many solutions and assess some of the advantages and disadvantages of each model.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.