For the first time in Alberta, a court has awarded more than 24 months' reasonable notice in a wrongful dismissal case. In Lischuk v K-Jay Electric Ltd. ("Lischuk"), the Alberta Court of King's Bench ordered an employer (the "Company") to pay an employee with 34 years of service, and significant minority shareholder (the "Plaintiff"), 26 months termination pay.
The decision marks a significant departure from the province's long-standing, unofficial 24-month cap. In addition to breaking the reasonable notice ceiling, the Court addressed key employment law issues including entitlement to vacation pay, the appropriate length of the reasonable notice period, mitigation of damages, entitlement to bonuses during the notice period, and whether the Plaintiff could recover for increased share value during the reasonable notice period under a Unanimous Shareholders Agreement ("USA").
The Court ultimately awarded the Plaintiff more than $1.52 million in damages.
Case background: How an Alberta wrongful dismissal led to record-termination pay
The Plaintiff devoted almost his entire working life to the Company, an Edmonton-based residential and commercial electrical contractor. Starting in 1978 at age 23, he first worked as a labourer and rose through the ranks, obtaining his journeyman and master electrician certifications. In 2008, he was promoted to General Manager, overseeing day-to-day operations while the company founder retained control over corporate finances and strategic direction.
In 2002, through a holding company, the Plaintiff became the first employee-shareholder of the Company, eventually acquiring a 20.1% ownership stake. Over the years, other employees also acquired shares, but the Company remained closely held, with the founder's family retaining significant ownership.
In November 2013, when the Plaintiff was 58 years old, the Company terminated his employment without cause. The termination triggered a mandatory share buyback under the USA, resulting in the sale of the Plaintiff's shares back to the Company. Disputes arose, including, but not limited to the following:
- Unpaid vacation pay;
- The length of the reasonable notice period;
- Failure to mitigate damages; and
- Entitlement to bonuses during the notice period.
First in Alberta: Reasonable notice beyond 24 months
Traditionally, Alberta courts have described 24 months as a "rough upper limit" for reasonable notice. While Ontario courts have recognized awards beyond 24 months in "exceptional circumstances," no Alberta decision had done so until now.
In its analysis of the reasonable notice period, the Court considered the principles established in Bardal v. Globe & Mail Ltd. ("Bardal"), which include the character of the employment, the length of service, the employee's age, and the availability of comparable employment in the market, given their experience, training, and qualifications.1 Additionally, the Court recognized historical and recent cases concerning reasonable notice period limits, which have increased incrementally, but do not provide "a particular maximum."2
While Alberta courts have considered whether plaintiffs have had special circumstances to exceed a reasonable notice period of 24 months, they had not yet found that a plaintiff had met said circumstances.3 The Court referenced the Ontario Court of Appeal's stance that "there is no absolute upper limit on reasonable notice," and cited cases from Ontario and British Columbia where exceptional circumstances were established.4
Justice Angotti found that none of the cases before her stated a hard cap of 24 months and that exceptional circumstances typically exist where an individual begins with a company as a young adult and is terminated near retirement age after becoming a prominent or highly specialized employee.5 The Court held that the Plaintiff met the threshold for exceptional circumstances based on the following factors:
- 34 years of continuous service with a single employer;
- 58 years old at termination, with limited transferable skills outside the electrical industry;
- Termination amounting to a forced retirement, despite no intentions to retire; and
- A high-level role as a key employee and shareholder in a successful, closely held, business.
Considering these factors holistically under the Bardal analysis, the Court held that a 26-month notice period was warranted, breaking Alberta's previous unofficial ceiling.
Vacation pay entitlement upon termination in Alberta
The Court found that the Company owed the Plaintiff six weeks of unused vacation pay for 2013, worth $20,320. The Court noted that there was an absence of a written vacation policy or adequate tracking records. The Plaintiff met his onus to establish that he had earned eight weeks' vacation but took only two.
Failure to prove job availability defeats mitigation of damages defence
Although the Plaintiff made no effort to seek alternative employment, the Court held that the Company failed to prove that suitable jobs were available. The onus to establish a failure to mitigate rests with the employer, requiring evidence of comparable opportunities. In the absence of such evidence, the mitigation defence was dismissed.
Termination does not eliminate bonus entitlement during notice period
The Court applied the Supreme Court of Canada's two-part test in Matthews v. Ocean Nutrition Canada Ltd. to determine whether reasonable notice includes bonus payments. The test looks at:
- But for the termination, would the employee have been entitled to the bonus during the reasonable notice period?
- If so, do the terms of the employment contract or bonus plan unambiguously take away or limit that common law right?6
The Court found that if not for his termination, the Plaintiff would have remained a shareholder and therefore been entitled to his bonus payments, which were paid to him, not his holding company.7 As well, the USA did not unambiguously limit the Plaintiff's right to bonuses during the reasonable notice period.8
Therefore, the Court awarded the Plaintiff $948,626 in bonus damages, calculated using a mixture of the future and historical calculation method that accounted for both historical averages and post-termination changes to the Company's bonus structure.9 Additionally, adjustments were made for the Company's financial practices, including the allocation of severance liability and disproportionate payments to other shareholders.10
Alberta wrongful dismissal case results in $1.52 million total award
The Court ultimately awarded the Plaintiff $1,522,841.33 in damages, comprising:
- $20,320 in vacation pay;
- $553,895.33 for base salary, benefits, and Christmas bonus during the 26-month notice period; and
- $948,626 in bonus damages.
Key takeaways
1. Reminder: 24 months is not absolute
Historically, Alberta courts have treated 24 months as the "rough upper limit" for reasonable notice in wrongful dismissal cases. However, Lischuk signals that our courts may follow Ontario's lead and be willing to find exceptional cases that warrant beyond 24 months' reasonable notice.
This case serves as a reminder that employers should not assume that 24 months is a firm limit for reasonable notice periods. Employers should assess each case individually, considering all contextual elements that may be considered by courts in applying the Bardal factors.
2. Importance of employment agreements
Lischuk emphasizes the importance for employers to have unambiguous and enforceable employment contracts in place to effectively limit employee entitlements to notice upon termination. The outcome of this dispute may have been significantly altered if the Plaintiff had been subject to an employment agreement.
3. Mitigation burden on employers
Employers cannot rely solely on an employee's inaction: they must provide evidence of actual comparable job opportunities to succeed on mitigation arguments. Only then can an employer successfully use the defence that the employee failed to mitigate their losses.
Conclusion
The Lischuk decision underscores that employers cannot assume a 24-month cap on reasonable notice in Alberta, nor can they rely solely on an employee's inaction to reduce damages. To limit their damages, employers should ensure that:
- Termination provisions in employment agreements are unambiguous and enforceable;
- Termination decisions are supported by thorough documentation; and
- Evidence of comparable employment opportunities is gathered promptly when relying on a mitigation defence.
Failing to address these points can significantly increase termination costs, as demonstrated by the $1.52 million award in this case.
Our Labour and Employment team works with employers across Alberta and Canada to draft enforceable agreements, assess termination risk, and defend against wrongful dismissal claims. If your organization is facing a potential termination or employment dispute, contact us to discuss proactive strategies to limit exposure and protect your business.
Footnotes
1 Lischuk v K-Jay Electric Ltd, 2025 ABKB 460at para 9.
2 Ibid at para 11.
3 Ibid at para 14.
4 Ibid at paras 15-16.
5 Ibid at paras 19-20.
6 Matthews v. Ocean Nutrition Canada Ltd., 2020 SCC 26at para 55.
7 Lischuk, supra at para 62.
8 Ibid.
9 Ibid at paras 76, 94.
10 Ibid at paras 97-100.
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