Alberta Court Awards Extended (26 months!) Notice and Bonus Damages in Complex Wrongful Dismissal Case

Lischuk v K-Jay Electric Ltd, 2025 ABKB 460 is a wrongful dismissal case decided by the Court of King’s Bench of Alberta. Glenn Lischuk, a long-term employee and shareholder of K-Jay Electric Ltd., was terminated without cause. The case focuses on several issues arising from his termination, including entitlement to vacation pay, reasonable notice period, mitigation of damages, annual bonus payments during notice, and claims related to the value of shares held through his holding company.

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Why This Decision is Important

• The decision clarifies how courts determine reasonable notice periods in wrongful dismissal claims, particularly when an employee has a long tenure and complex roles.
• It addresses the distinction between personal employee claims and corporate shareholder claims, especially when shares are held through a separate corporation.
• It applies and explains the Supreme Court of Canada’s test for damages relating to bonuses during reasonable notice (Matthews v Ocean Nutrition Canada Ltd.).
• It highlights the onus on employers to prove failure to mitigate damages, especially when no job search efforts are made by the employee.
• The ruling confirms that termination does not necessarily end employment rights until the end of the reasonable notice period, impacting compensation calculations.

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Case Details

Background

• Glenn Lischuk worked with K-Jay Electric Ltd. for 34 years, progressing from helper to General Manager and shareholder via his company 997878 Alberta Ltd. (997).
• In 2013, K-Jay decided to change its management style and terminated Mr. Lischuk without cause.
• At termination, Lischuk’s base salary and bonuses totaled approximately $254,000 annually.

Issues Addressed

1. Vacation Pay: Lischuk claimed unpaid vacation for six weeks he had earned but not taken.
2. Reasonable Notice Period: Dispute over whether Lischuk was entitled to 24 or 26 months’ notice.
3. Mitigation: Whether Lischuk failed to seek comparable employment after termination.
4. Annual Bonus Payments: Whether he was entitled to bonuses during the notice period despite share repurchase triggered by termination.
5. Share Value Increase: Whether Lischuk was entitled to the increased value of shares held through 997 during the notice period.
6. Calculation of Bonus Damages: How to calculate damages for lost annual bonuses.

Court’s Analysis

Reasonable Notice: Court found 26 months reasonable notice due to Lischuk’s age (58), length of service (34 years), key role, and limited transferable skills—exceeding Alberta’s usual “rough upper limit” of 24 months.

• Vacation Pay: Awarded six weeks’ vacation pay ($20,320) since he proved entitlement under Employment Standards Act.
• Mitigation: Despite no job search efforts by Lischuk, K-Jay failed to prove availability of comparable employment; thus, no reduction in damages for failure to mitigate.
• Bonus Payments: Court held Lischuk was entitled to bonuses during his notice period as part of employment compensation based on Matthews test; USA (Unanimous Shareholders Agreement) did not unambiguously remove this right.
• Share Value: Claim for increase in share value denied because shares were owned by 997, a separate legal entity; lifting corporate veil rejected.
• Bonus Damages Calculation: Used a combination of historical bonus amounts and new bonus structure post-termination with adjustments for financial accounting entries and buyouts, totaling $948,626 in lost bonuses.

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Outcome

• Total damages awarded to Glenn Lischuk: $1,522,841.33, consisting of:
  • Vacation pay: $20,320
  • Base salary, Christmas bonus, benefits: $553,895.33
  • Annual bonuses: $948,626
• No reduction for failure to mitigate.
• Interest awarded per Judgment Interest Act.
• Share value increase claim dismissed.
• The decision emphasizes that employment-related rights extend through the reasonable notice period even if share repurchase occurs.

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Key Takeaways

• Reasonable notice periods can exceed 24 months in Alberta if exceptional circumstances exist (advanced age, long service, limited transferable skills).
• Employees holding shares through a corporation are treated separately from their corporation for wrongful dismissal claims—personal employment rights do not automatically transfer to shareholder claims.
• Employers bear the burden of proving availability of comparable employment to reduce damages for failure to mitigate.
• Bonuses tied to employment must be considered as part of damages during reasonable notice unless clearly excluded by contract.
• Termination date does not always end employee rights; the contract is considered active during the reasonable notice period for damage calculations.
• Courts will carefully distinguish between corporate law matters (share ownership) and employment law matters (wrongful dismissal).
• Accounting practices affecting company profits (like accrued severance liabilities) can impact bonus pool calculations when assessing damages.

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References

https://www.canlii.org/en/ab/abkb/doc/2025/2025abkb460/2025abkb460.html

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