ABCA Bombshell On Wrongful Dismissal Entitlements?

In Kirke v Spartan Controls Ltd., 2025 ABCA 40, the Alberta Court of Appeal found that a dismissed employee was not entitled to certain compensation from shares that were purchased back by his employer after his termination of employment.

This case is important for a number of reasons, most of which are of interest to Alberta employment lawyers, including: (1) it clarifies that termination without reasonable notice is a breach of contract, and (2) it provides some guidance on how share-related compensation will be treated in a reasonable notice period.

Facts

The following were some of the pertinent facts summarized by the Alberta Court of Appeal:

• The plaintiff employee Bruce Kirke had worked for the defendant employer Spartan Controls Ltd. for about 24.5 years in a management position when his employment was terminated. He sued for wrongful dismissal reasonable notice
• Kirke was awarded 20 months’ reasonable notice (severance) in a summary trial
• The plaintiff’s appeal was related to the calculation of damages in the summary trial, pertaining to something called Spartan’s optional Profit Sharing Program (SHPS):
  • He had been issued shares in Spartan’s parent company, Spartech 1991 Limited, as part of the SHPS while employed at Spartan
  • Spartan had repurchased his shares under the SHPS on 90 days notice when terminating his employment
  • The plaintiff had claimed at trial for certain payments under SHPS as part of his damages to cover across the whole 20 month notice period
  • The court agreed that payments under the SHPS were part of his compensation which would normally be included in a reasonable notice period for him, but did not award any beyond 90 days after termination in this particular case
  • Essentially, Spartan had successfully argued at trial that any payments issued to Spartan shareholders from after that 90 day cancellation period would not be part of the reasonable notice period damages.
• Not all Spartan employees participated in the program by buying shares, but the plaintiff did do so
• To participate, the plaintiff was required to sign Spartan’s Unanimous Shareholder Agreement (“USA”) which contained a clause allowing Spartan to buy back any issued shares on 90 days’ notice. He signed the USA
• The plaintiff appealed to the Court of Appeal, again seeking payments under the SHPS for the whole 20 month reasonable notice period
• The plaintiff’s backup position was that he should be able to use the Oppression Remedy, on the basis that the only reason Spartan bought back the shares was to deprive him of SHPS payments

Analysis / Conclusion

The Alberta Court of Appeal started out the Kirke decision with a statement that implicitly acknowledges that its prior decision in Styles v Alberta Investment Management Corporation, 2017 ABCA 1 is no longer good law:

[1] At common law, employers have the right to terminate employment contracts without cause, subject to the obligation to provide reasonable notice. A failure to provide reasonable notice is a contractual breach that can lead to an award of damages.

The Styles decision had held that the breach arose from failure to provide notice or pay in lieu of notice, which led to significant controversy in Alberta around the calculation of damages for wrongful dismissal.

The SCC in Matthews v Ocean Nutrition Canada Ltd., 2020 SCC 26 was clear that Styles was wrong to suggest that termination without reasonable notice was not a breach of contract. 

Kirke is in line with Matthews, and while the ABCA does not explicitly overturn Styles, it seems clear that the ABCA is no longer following it.

SHPS Payments

The ABCA summarized Mr. Kirke’s position on his entitlement to SHPS payments as follows:

[20] Mr. Kirke’s position is predicated on the assertion that but for his wrongful dismissal, he had not just the right to work but the right to retain ownership of his shares and receive SHPS payments. He submits that the circumstances of his case are analogous to cases where the entitlement at issue was defined to require “active employment.”

The ABCA rejected this argument on the basis that Spartan had a clear and unrestricted contractual right to buy back the shares on 90 days’ notice:

[21] The difficulty with the analogy Mr. Kirke seeks to draw is that his right to retain shares and receive SHPS payments was not dependant solely on active employment. It was also and always subject to Spartech’s right to buy back shares pursuant to the terms of the USA. The summary trial judge made no palpable and overriding error in concluding that, among other rights, the USA gave Spartech an unrestricted right to buy back Mr. Kirke’s shares at any time upon 90 days’ notice. There can be no debate that is what section 2.6 of the USA says. The plain language of the USA enabling the 90-day buy back of shares distinguishes Mr. Kirke’s case from the cases upon which he relies. In each of them, the terminated employee received the bonus or benefit at issue as part of their wrongful dismissal damages because they had an otherwise unrestricted right to receive the bonus or retain the benefit had they worked during the reasonable notice period. In Taggart, for instance, Sharpe JA concluded the employee was entitled to common law contract damages for the loss of pension benefits (i.e., payment in lieu of notice) because the employee “had the contractual right to work and to be paid his salary and receive benefits throughout the entire … notice period”: at para 16. In contrast to the USA in Mr. Kirke’s case, there was no language in the Taggart pension terms that unambiguously permitted the employer to cease paying the pension benefit during the employee’s period of employment, including the reasonable notice period. […]

Oppression Remedy

The plaintiff’s “Oppression Remedy” claim was also unsuccessful.  He argued that he had a reasonable expectation that he would retain his shares during the reasonable notice period.  The ABCA found that he failed to establish such a reasonable expectation, because employees participating in this program were always required to sell their shares back upon termination and the SHPS program was able to deliver its historical returns to SHPS participants in part because of this.  The ABCA noted:

[24] Matthews did not introduce a generalized concept of good faith as a conflicting paradigm against the contractual rights Spartan Controls always had and Mr. Kirke knew about. Mr. Kirke cannot ask the Court to invoke Spartan Controls’ reliance on unambiguous terms of the USA as a lack of good faith to write out of existence the employer’s contractual rights […] Put another way, it would conflict with equity for Mr. Kirke to receive a benefit under the SHPS program considerably more beneficial than other shareholders and inconsistent with the clear language in section 2.6 of the USA.

My Take

The Alberta Court of Appeal makes practicing employment law interesting to say the least.  The reasoning in Kirke could be helpful for employees or employers in different scenarios.

This Kirke decision seems to close the door on Styles and to follow Matthews, which is beneficial to employees.

However, the reasoning in Kirke might also be useable for employers wanting to redirect compensation towards things like share dividends to avoid having to pay out large severance packages on termination of employment.

We’ll just have to wait and see how this caselaw develops.

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Bow River Law is a team of knowledgeable, skilled and experienced employment lawyers handling employment law, human rights (discrimination) and labour law matters.  Bow River Law is based in Calgary but we are Alberta’s Workforce Lawyers.