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.).

Case Law is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. These cases may be found online in WestlawNext Canada. To subscribe, please visit store.thomsonreuters.ca

Free newsletter

Our daily newsletter is FREE and keeps you up to date on all the developments in the Ontario legal community. Please complete the form below and click on subscribe for daily newsletters from Law Times.

Recent articles & video

Ford government’s cuts to Toronto city council ruled constitutional

Histories of Canadian law and Métis people are entwined, says Jean Teillet

More women are on TSX company boards - but there’s slow progress to the C-Suite, says Osler

GM lawyer Michael Smith becomes partner at Bennett Jones

Ontario court rules cap on general damages does not apply to sexual abuse

House of Commons reveals legal fee reimbursement over $54k

Most Read Articles

Ontario court rules cap on general damages does not apply to sexual abuse

Man discharged from his fourth bankruptcy

Insurance lawyers reveal their referral philosophies

Court of Appeal rules auto insurer not liable for parental negligence claim stemming from accident