Employee’s entitlements to shares were separate from relief arising from employment contract

Labour and employment law - Employment law - Termination and dismissal

Plaintiff employee was employed by defendant employer for 31 years before his dismissal without cause and without proper notice. Prior to his termination, employee owned 5,108 shares of employer and he received share bonuses each year. Employer took position that, according to “Transfer Notice” provision of Shareholders’ Agreement, employee was deemed to have given his Transfer Notice and sold his shares 30 days following date of written notice of dismissal. Employee brought partially successful motion for summary judgment of his action for damages for wrongful dismissal. Motions judge found that employee was entitled to hold shares until end of reasonable notice period, and to receive damages for loss of share bonus that would have been payable through notice period. Employer appealed. Appeal allowed. Standard of review was correctness. Motions judge erred in concluding that employee was entitled to compensation in respect of his shares calculated at end of notice period by improperly conflating employee’s entitlement to compensation arising from breach of his employment contract with his contractual entitlements respecting his shares. Employee’s entitlements relating to his shares were separate and apart from relief to which he was entitled arising from his employment contract. Shareholders Agreement expressly provided that employer was entitled to repurchase shares 30 days from date employee was notified of termination by deeming him to have delivered Transfer Notice. Once it was concluded that shares had to be transferred as result of employee’s termination, he ceased to have entitlement to any bonus arising from shares that he no longer owned.

Mikelsteins v. Morrison Hershfield Limited (2019), 2019 CarswellOnt 10058, 2019 ONCA 515, P. Lauwers J.A., Fairburn J.A., and I.V.B. Nordheimer J.A. (Ont. C.A.); varied (2018), 2018 CarswellOnt 19420, 2018 ONSC 6952, S. Nakatsuru J. (Ont. S.C.J.).

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