Even a 'notwithstanding' clause couldn't override an employee's dismissal rights
A nine-year employee of Vermilion Energy Inc. is set to receive share award damages after an Alberta court found the company's incentive plan language too vague to strip her of shares vesting during her notice period. In McElgunn v Vermilion Energy Inc, Justice C.D. Simard of the Court of King's Bench of Alberta issued the ruling on March 12, 2026.
Julia McElgunn was a Senior Geological Advisor with approximately nine years of service when Vermilion terminated her on August 24, 2022, without cause or reasonable notice. An arbitrator found she was entitled to 10 months' notice, extending her compensation window to June 24, 2023.
Under Vermilion's Incentive Plan, McElgunn held 7,053 shares set to vest on April 1, 2023, a date that fell within her notice period. Applying the Supreme Court of Canada's two-step test from Matthews v Ocean Nutrition Limited, 2020 SCC 26, the Arbitrator found she would have been entitled to those shares but for her termination, a finding both parties accepted.
McElgunn appealed two issues from the arbitral award: whether the Arbitrator breached procedural fairness by relying on a Board Amendment Provision not expressly pleaded by Vermilion, and whether he erred in applying part two of the Matthews test. Justice Simard dismissed the first ground but allowed the second, finding that the 2020 Early Termination Provision did not absolutely clearly and unambiguously remove McElgunn's entitlement to the April 2023 Share Award.
‘Notwithstanding’ falls short
The 2020 Early Termination Provision stated that all unvested share awards would be forfeited "notwithstanding any other severance entitlements or entitlement to notice or compensation in lieu thereof." The plan defined "Date of Termination" as "the actual date the Service Provider ceases to provide services to the Corporation, regardless of the reason for the cessation of services."
Justice Simard found that definition ambiguous. The "actual date" of cessation could mean August 24, 2022, when McElgunn was dismissed, or June 24, 2023, the end of her notice period, since under Matthews her employment contract remained alive for compensation purposes throughout. "The words 'actual' and 'ceased to provide services .... regardless of the reason for the cessation of services' do not indicate 'absolutely clearly and unambiguously' which of the two dates is intended," Justice Simard wrote.
Vermilion, Justice Simard noted, is a sophisticated party that was capable of using far more precise words had it wished to clearly remove McElgunn's rights to Share Awards that would vest during her common law reasonable notice period after a wrongful without-cause termination. It could have specifically referred to events like "the date on which an employee is given notice of termination without cause, and before the expiry of any required reasonable notice period but which was not provided to the employee."
Clarity that confused
Vermilion's plan included a further passage labelled "For clarity," stating that during the 90-day period following the Date of Termination "and any notice period thereafter (whether actual or compensated in lieu thereof)" the Grantee would not be entitled to pro-rated vesting of any Share Awards or any other payment or compensation in lieu thereof.
Rather than resolving the ambiguity, Justice Simard found the clause added more confusion. It suggested share forfeiture might only take effect after both a 90-day period and the notice period had elapsed, noting the words "and" and "thereafter" strongly suggest those periods run consecutively, not concurrently.
"Thus, contrary to the opening words ('For clarity'), this clause does not add clarity," Justice Simard wrote. Had Vermilion intended to clearly and unambiguously remove Share Awards that would vest during a wrongfully terminated employee's common-law reasonable notice period, and to do so 90 days after delivering notice of termination, it could have drafted the clause much more precisely.
