The Court of King’s Bench has awarded 26 months’ reasonable notice of termination in Lischuk v K-Jay Electric Ltd, 2025 ABKB 460, exceeding the traditional 24-month “upper limit” of wrongful dismissal damages for the first time in Alberta.
The employee’s wrongful dismissal damages for the 26-month reasonable notice period totalled $1,522,841, based on “exceptional circumstances”.
Exceptional circumstances
As the Court explained, “exceptional circumstances” arise if an employee begins working for a company as a young adult and has their employment terminated near potential retirement age, after becoming a key or highly specialized employee. On termination, the employee’s prospects of obtaining similar and comparable employment are significantly limited based on factors specific to their singular employment. The termination of their employment is akin to being “forced into retirement”.
In this case, the plaintiff had been employed for his entire 34-year career with the defendant employer, working his way up from a labourer to a key employee as General Manager and shareholder. At the time of termination, he was 55 years of age. Interestingly, while the employer did not allege cause for termination, the employer chose to terminate the plaintiff’s employment because of his “old school mentality”.
While exceptional, the 26-month reasonable notice period was a function of the Court applying the usual factors in determining the length of reasonable notice from Bardal v Globe & Mail, including age, length of employment, character of employment, and availability of comparable employment. The particular combination of the factors in this case warranted exceeding 24 months. Notably, there was no written employment contract limiting entitlement to notice of termination.
Bonus entitlement
The majority of the wrongful dismissal damages awarded to the employee were based on the employee’s projected bonus payments over the reasonable notice period. The employee had historically been entitled to bonus payments based on his shareholdings in the employer corporation, K-Jay Electric Ltd. (through the plaintiff’s numbered company). While the bonus payments were made based on the employee’s shareholdings, they were historically paid to the employee as employment income.
The Court found that the provisions in the Unanimous Shareholder Agreement were insufficient to exclude entitlement to bonus payments as part of the employee’s wrongful dismissal damages, following the Supreme Court of Canada’s decision in Matthews v Ocean Nutrition. Further, the Alberta Court of King’s Bench rejected Ontario appellate law limiting the effect of termination upon entitlements related to shareholdings or shareholder rights.
Mitigation
Finally, the employee acknowledged that he had made no efforts to mitigate his damages or find alternative employment. Despite the employee’s acknowledgement, the Court declined to reduce the employee’s wrongful dismissal damages for failure to mitigate, reasoning that the employer had failed to demonstrate that comparable alternative employment was available.
The exceptional entitlement to notice in Lischuk – including substantial bonus entitlement – highlights the importance of implementing and updating written employment agreements.
If you have any questions about how this decision may impact your business, please do not hesitate to contact the authors or any member of our Canadian Employment and Labour Law Service Group, listed here.