In Lischuk v K-Jay Electric Ltd., 2025 ABKB 460 (Angotti) is an interesting and important Alberta employment law case, both factually and in terms of legal analysis. The Court awarded the dismissed employee, a 58 year old general manager, 26 months' severance. The Court also found that the employee had not failed to mitigate despite not looking for work, and that the employee was entitled to share bonuses during the reasonable notice period that were in respect of shares owned by the employee's corporation, not the employee.
This case is important because it is the clearest amongst very few authorities suggesting notice periods exceeding 24 months are currently possible in Alberta. It is also important for its reasoning regarding the duty to mitigate damages and whether share bonuses related to re-purchased shares accrue in a reasonable notice period.
Facts
The following were some of the pertinent facts summarized by the ABKB:
- The plaintiff employee Glen Lischuk worked for the employer K-Jay Electric Ltd., which is an electrical contractor for residential and commercial sectors, based in Edmonton
- He worked for K-Jay for almost his entire working life, starting as a helper and working up to his final position of General Manager over 34 years of employment
- He was 58 years old at the time of termination of employment without cause
- Lischuk received high compensation at K-Jay
- Lischuk incorporated an entity ("Lischuk's Company") while at K-Jay. Lischuk's Company was issued some shares in K-Jay, and Mr. Lischuk would himself personally receive payments from K-Jay associated with these shareholdings. Note: the full details of share compensation are complicated, and not all relevant facts are reproduced here
- His employment was terminated by K-Jay without cause
- There was evidence that the reason K-Jay wanted to dismiss Mr. Lischuk because of his "old school mentality" and management style
- After termination of employment, K-Jay triggered repurchase of the Lischuk Company shares, although their value was disputed
- Lischuk did not look for work after his employment was terminated, and did not get a job during the reasonable notice period
- There was not much evidence of comparable positions he could likely have obtained had he tried
- This was a wrongful dismissal lawsuit where the main issues in
dispute were:
- How long the employee's reasonable notice (severance) period should be
- Whether the employee failed to mitigate his damages during the reasonable notice period
- Whether the employee was entitled to any share bonuses he would have received had his employment not been terminated
- Whether the employee was entitled to any increase in share value after the repurchase from Lischuk's Company was triggered
Analysis / Conclusion
On the issue of the reasonable notice (severance pay) period, Justice Angotti's analysis considered the historical and recent cases related to permitted reasonable notice period ranges and the "rough upper limit" or "cap" of 24 months. Justice Angotti found there was no strict "cap" or "limit" for reasonable notice periods, but that severance awards should not exceed 24 months except in "exceptional circumstances":
[20] "Exceptional circumstances" usually arise where an individual begins working for a company as a young adult and is terminated near potential retirement age, after becoming a key or highly specialized employee. The employee, upon termination, is in a situation where their prospects of obtaining similar and comparable employment are significantly limited based on factors specific to their singular employment, such that they have effectively been "forced into retirement".
The Court determined there were exceptional circumstances in this case, and awarded 26 months severance. The following were some of the highlighted facts:
- He was 58 years old
- He worked there 34 years
- It was effectively the only employer he ever had
- The reason for termination was that he had a "very old school mentality" which supports that other employers may think similarly
- He had a 20% equity stake in K-Kay, which is much higher than similar management positions in the electrical industry
A legal finding of 26 months severance pay is very significant in Alberta, because 24 months has long been considered the "rough upper limit" for wrongful dismissal severanceperiods.
On the issue of whether the employee failed to mitigate his damages, this case had the unique circumstance of both sides agreeing that the employee did not look for work.
The Court affirmed the more recent versions of the test for failure to mitigate, which is that the burden is on the employer to show both (1) that the employee did not make a reasonable effort to find comparable work, and (2) that had they looked for comparable work, they likely would have secured it.
The employer argued that the usual standard for the mitigation test should not apply when the employee madeno effortto mitigate. They argued that if an employer could prove there was no effort by the employee to find work, this alone should be sufficient proof by the employer that the employee has failed to mitigate and is not owed severance damages.
The employer also argued that the only real difficulty Mr. Lischuk would have had in obtaining comparable employment lay in the fact that no positions would likely exist that offered up 20% ownership equity. They suggested effectively that (1) he knew he'd never be able to walk into a directly comparable job (2) he knew if he ever wanted a comparable job he'd have to "scale down" to a non-equity management position somewhere and work back into ownership. Kay-J argued Mr. Lischuk's duty to mitigate included a duty to "scale down" to a bit lower position in these circumstances.
The Court disagreed. Citing some recent Alberta caselaw on the duty to mitigate, the Court noted that the employer must always prove the second part of the test – that the employee likely would have found comparable work – even when the employee has made no effort to mitigate his damages. The Court also disagreed with K-Jay's backup arguments on mitigation. The following was some of the reasoning:
[33] The second prong of the test is not simply satisfied by a failure of the plaintiff to take steps; it requires the defendant to prove that suitable jobs were available and, had the plaintiff taken steps to pursue such opportunities, they would probably have found employment: Plotnikoff v Associated Engineering Alberta Ltd., 2024 ABKB 706 [...]. Absent evidence of similar jobs being available, it would be "pure speculation" to find that the plaintiff could have found similar employment. Any gap in the evidence accrues to the plaintiff's benefit [...]
[...]
[39] [...] I further reject K-Jay's positions that Mr. Lischuk bears an onus of proof on mitigation or that he needed to "scale down". Both positions are contrary to the law I have already summarized.
[40] [K-Jay's owner] testified that Mr. Lischuk's income was "extremely high" compared to the market rate and it was "highly unlikely" that Mr. Lischuk could find a job with the same remuneration level or ownership. [...] Although Mark testified that he believed Mr. Lischuk could have found a job relatively easily in the market, K-Jay did not present any evidence of available jobs, let alone jobs equivalent to Mr. Lischuk's position with K-Jay.
[...]
[43] What is clear from the caselaw is that the onus always remains on the defendant; it does not shift when the plaintiff does not make any efforts to mitigate. [...] The defendant must then provide enough evidence of a labour market or specific job opportunities that would have sufficient potential to give rise to comparable employment for the plaintiff, had steps been taken to pursue the market. Only then is failure to mitigate proven. [underline added]
The Court then determined that Mr. Lischuk was entitled to the share bonuses that would have been paid during the reasonable notice period had his employment continued.The pertinent reasoning was as follows:
[61] The starting point for a dispute over bonus damages is Matthews v Ocean Nutrition Canada Ltd., 2020 SCC 26. The Supreme Court set out a two part test for determining whether reasonable notice damages include bonus payments: Matthews, at para 55. First, but for the termination, would the employee have been entitled to the bonus during the reasonable notice period? Second, if the answer is in the affirmative, do the terms of the employment contract or bonus plan unambiguously take away or limit that common law right?
[...]
[67] [K-Jay's cited cases regarding bonus payment] start from the premise that "the employee's employment is terminated when he or she is dismissed without cause, not when the notice period ends"; Evans, at para 26, summarizing the conclusion in Love for the relevant date for the valuation of shares.
[68] With all due respect, this appears contrary to the admonition and principles set out in Matthews, at para 53-54:
[...]Proceeding directly to an examination of contractual terms divorces the question of damages from the underlying breach, which is an error in principle.
Moreover, the approach in Paquette respects the well-established understanding that the contract effectively "remains alive" for the purposes of assessing the employee's damages, in order to determine what compensation the employee would have been entitled to but for the dismissal[...]
The test in Matthews requires a determination whether the employee had a right, as an employee, to acquire and to benefit from the shares, subject to the terms of, and under the limitations of, the USA: Kirke v Spartan Controls Ltd., 2025 ABCA 40, at para 17. The Court of Appeal also cites Taggart, confirming that an employee has "...the contractual right to work and to be paid his salary and receive benefits throughout the entire ... notice period": Spartan Controls, at para 21. Thus, damages are based upon principle of the employee working to the end of the notice period, which is inconsistent with the Ontario line of cases. [underline added]
[...]
[71] [...] I disagree that an individual shareholder, whose ability to hold shares is tied to their employment in any fashion, can be dealt with simply as a corporate law matter. This places the interests of the corporate employer above those of the employee, which is not consistent with the balance between employees and employers established over decades of employment law, a balance that is maintained by the required analysis set out in Matthews. Therefore, I decline to follow the Ontario line of cases.
[...]
[74] The first question is whether Mr. Lischuk would have been entitled to receive payments from K-Jay's annual bonus pool as part of his compensation during the reasonable notice period. Prior to his termination, Mr. Lischuk received both performance and share bonuses as part of his employment compensation. [...] Mr. Lischuk would have received these bonus payments as part of his employment compensation, had he continued working during his reasonable notice period. Mr. Lischuk isprima facieentitled to receive damages for the lost bonus payments.
[75] The second question is whether the [Unanimous Shareholders Agreement] unambiguously limits or removes Mr. Lischuk's common law right. [...] As the USA does not, in any fashion, deal with bonus payments or profit sharing, it does not unambiguously limit or remove Mr. Lischuk's common law right. The fact that there is a buy back of shares triggered by the termination of the employee does not change this analysis, as the language of Article 15.1 – "ceases to be an employee" and "termination of employment" – can be interpreted to include termination in accordance with the employment contract, being termination with reasonable notice such that employment does not end until the reasonable notice period ends.
As the final issue, Mr. Lischuk was also seeking the increase in the value through the notice period of the K-Jay shares Lischuk's Company had owned. K-Jay had triggered a buy back of these shortly after dismissal, and Lischuk's Company had agreed to a valuation process prior to this decision. The Court found Mr. Lischuk had no legal basis to make a personal claim for the increase in value of K-Jay shares owned by Lischuk's Company. So on this final point, Mr. Lischuk was unsuccessful.
My Take
Lischuk is an interesting case for lots of reasons, not least of which being that three major legal issues had some facts and law supporting both sides. Often, the parties are not far from agreement on the proper legal tests, but will emphasize the parts of such tests that best help their position. In a case like Lischuk, the facts are novel and extreme enough that the fringes of a number of legal tests have to be considered.
The facts in this case were almost ideal to crack the 24 month rough "upper limit" for severance in Alberta for the first clear time for many years. The highlights are that this was a person that started as a labourer and ended 34 years later as high paid, specialized general manager with 20% equity in a successful business. I say "almost ideal" because there are many factors which tend to increase reasonable notice periods, and while many of those are present here, some are not (in my opinion). Still, the facts in this case are very rare.
The Court found that these were "exceptional circumstances" to justify going beyond 2 years and awarding 26 months.
The facts in Lischuk were also ideal to test the strength of the recent formulations of the test of the duty to mitigate damages. The case draws a bright line between the two parts of the test, finding that even if an employee does nothing in pursuit of work after termination, the employer must still prove that reasonable effort would likely have resulted in commensurate employment.
One note of caution. Lischuk is employee-friendly on the mitigation issue, but it would be dangerous to assume the employee does not need to take steps to mitigate. Where there is any prospect of becoming re-employed, refusing to look for work during a reasonable notice period is very dangerous. Even if the employer is unable to show re-employment was likely, judges have significant discretion in finding facts, and are also skilled with the other tools to nudge a lawsuit in the direction that seems fair to both parties.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
