The former operations manager at First Light Technologies has been awarded $16,125 — or two months’ salary — after he quit his job following a change in the company’s ownership.
But that’s far less than the manager, AC, had been seeking, and is identical to an offer the company made early on in the dispute.
AC sought compensation under two clauses of the agreement: one pertaining to a material change in corporate structure and the other concerning bonus payment entitlements.
AC argued that he was owed a severance payment, additional compensation for the material change, and his annual bonus, totaling about $108,620.58.
First Light, on the other hand, maintained that AC was only entitled to two months’ salary as compensation for the material change, amounting to $16,125.00, and no additional severance or bonus.
The wording of the contract
The Provincial Court of British Columbia scrutinized two main issues: the interpretation of the “Resignation Clause” (section 6.6) and the “Bonus Clause” (section 2.3) of AC’s Employment Agreement.
Under section 6.6, AC claimed that he should receive one month’s salary for each year of service, amounting to three months’ salary, and a severance payment calculated according to common law.
That clause read: Should the Company undergoes [sic] a material change in ownership (“Change in Control”) the Employee will have six (6) months in which he may choose to resign and the Company will pay a lump-sum amount equivalent to one month’s salary per year of service to a maximum of 12 months; this is calculated from the original hire date and is in addition to any severance pay.
The court, however, found no ambiguity in the terms of the agreement, stating that an employee is entitled to one month’s salary for each year of service upon resignation due to a material change in ownership, and that AC’s interpretation was unfounded.
Regarding the severance payment, the court agreed with First Light’s argument that severance is typically due when employment is terminated by the employer, not when an employee voluntarily resigns.
Consequently, AC was not entitled to additional severance pay beyond the agreed compensation for the material change in ownership.
Bonus
As for the bonus payment under section 2.3, AC argued that he should be entitled to his annual bonus despite resigning, due to the unique circumstances of his departure.
However, the court determined that the clause clearly states an employee must be employed by the company on the date the bonus is paid.
That clause read: The Employee is eligible for a yearly bonus plan. The bonus plan is set at a rate of 25% of base salary measured against established performance goals of the Company. To be eligible to receive your bonus you must be employed with the Company on the date the bonus paid [sic]. Yearly updates are determined and articulated by the CEO, further details to be provided.
Since AC resigned prior to the bonus distribution date, he was not eligible for this payment.
Ultimately, the court ruled in favor of First Light Technologies Ltd., ordering that AC is entitled to $16,125.00, aligning with the company’s initial compensation offer.
For more information, see Clarke v. First Light Technologies Ltd., 2024 BCPC 23 (CanLII).
