The recent decision from the Court of King’s Bench of Alberta in Lischuk v K-Jay Electric Ltd., 2025 ABKB 460, raises the upper limit for reasonable notice periods in the context of a wrongful dismissal in Alberta. This case, notably, is the first Alberta authority to award a reasonable notice period exceeding 24 months, setting a new precedent.
What happened in this case?
The employee in this case worked as an electrical contractor in Edmonton and was terminated without cause on November 21, 2013. He had an extensive 34-year career with the employer, starting at age 21 as a helper in 1978 and working his way up to General Manager in 2008. At the time of his termination, the Plaintiff, then 58 years old, earned a base salary and Christmas bonus of $254,000, along with $137 per month in benefits. He also held a 20.1% ownership stake in the employer’s company through his holding company.
Following his termination, several disputes arose regarding outstanding compensation, including vacation pay, the length of the reasonable notice period, mitigation of damages, entitlement to annual bonus payments during the notice period, and the increased value of his company shares.
A central issue was the determination of the reasonable notice period. While the employer argued for a maximum of 24 months, citing it as the “rough upper limit” in Alberta, the Court awarded the employee 26 months of reasonable notice. This groundbreaking decision was based on a combination of the Bardal factors (character of employment, length of service, age, and availability of comparable employment) and what the Court deemed “exceptional circumstances”. These circumstances included his 34 years of service, the fact that the employer was effectively his sole employer throughout his working life, his significant position of responsibility as General Manager, his advanced age at termination, and the company’s stated reason for termination – his “old school mentality” – which significantly limited his prospects for comparable employment in the specialized electrical contracting industry.
Regarding mitigation, the Court found that the employer failed to meet its onus to prove that the employee could have avoided some part of his loss through reasonable mitigation efforts. The Court emphasized that the burden always remains on the defendant to prove both that the employee failed to make reasonable efforts and that work could have been found.
Crucially, the Court ruled that the employee was entitled to damages for annual bonus payments for his 26-month reasonable notice period. These bonuses, paid as employment income and partly based on shareholdings, were considered an integral part of his employment compensation. The Unanimous Shareholder Agreement (USA) did not unambiguously limit or remove this common law right.
However, the employee’s claim for the increased value of 997’s shares during the notice period was dismissed. The Court upheld the distinction between the employee as an employee and his holding company as the shareholder, stating that only the holding company had the rights and obligations of a shareholder under the USA.
Ultimately, the employee was awarded total damages of $1,522,841.33, comprising vacation pay, base salary, Christmas bonus, benefits, and annual bonuses.
Significance for Employees and Employers
Every once in a while you find decisions from Ontario that challenges the common view that common law notices exceed 24 months (26 months in Currie v. Nylene Canada Inc., 2022 ONCA 209; 27 months in Milwid v IBM Canada Ltd.; 30 months in Lynch v Avaya Canada Corporation). Such kind of award is rare or non-existent from jurisdictions outside of Ontario. This decision from Alberta is the first in Alberta to award a 26-month notice period, and has profound implications for wrongful dismissal cases in this province:
- New Benchmark for Reasonable Notice: Previously, the Court in Carroll v ATCO Electric Ltd, 2018 ABCA 146, opined that 24-months is the “rough upper limit” in Alberta. For employees, this case provides a strong argument that the 24-month “rough upper limit” for reasonable notice is not an absolute ceiling in Alberta. Employees with very long tenure (30+ years) , significant responsibility (General Manager) , advanced age (late 50s) , and highly specialized skills, especially where their termination implicitly forces early retirement due to the employer’s perception of their suitability (e.g., “old school mentality”), may now more confidently seek notice periods exceeding 24 months.
- Employer’s Onus to Prove Mitigation: Employers are reminded that they bear a heavy onus to prove a failure to mitigate. It is not sufficient to merely point to an employee’s inaction; employers must demonstrate that suitable employment opportunities were genuinely available and that the employee would likely have secured one if reasonable steps had been taken.
- Bonus Entitlements as Damages: Employees should be aware that bonuses, particularly those consistently paid and linked to employment income, are likely to be included in wrongful dismissal damages during the reasonable notice period. Employers cannot easily circumvent this by asserting such payments are purely corporate.
- Clarity in Contracts is Paramount: Both employees and employers stand to benefit from meticulously drafted employment contracts and shareholder agreements. Ambiguous language regarding termination clauses, bonus calculations, and share buy-back provisions can lead to extensive and costly litigation, as demonstrated by the detailed analysis required in this case.
- Caution: It remains the case that courts are only willing to award 24 + months of notice in exceptional situations.
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