OPG exec constructively dismissed in Crown corporation’s restructuring

Court awards 24 months’ notice to executive whose annual bonus was decreased and responsibilities reduced indefinitely
By Jeffrey R. Smith
|Canadian Employment Law Today

Ontario Power Generation (OPG) constructively dismissed an executive when it decreased his bonuses and reduced his duties indefinitely as part of a restructuring, the Ontario Superior Court of Justice has ruled.

Lawrence Doran, 57, was hired by Ontario Hydro in 1974 and worked continuously with the utility through its 1999 split into Hydro One and OPG, staying with OPG as vice-president of business development. His duties included identifying and developing new opportunities for OPG.

Ontario Hydro had an annual bonus plan for executives based on the performance of the company and the individual executive. If employees opted to participate, their salary would be reduced by five per cent but the potential bonuses could be as much as 40 per cent of salary, depending on the success achieved. Doran participated in the plan with the understanding if it was suspended, it would be replaced by a similar plan to prevent a decrease in total compensation and maintain it at market levels. While the bonus payout varied from year to year, Doran’s overall compensation increased nearly every year.