Employee Share Entitlements On Termination: A Matter Of Contract

In a recent decision, Mikelsteins v Morrison Hershfield Limited, 2019 ONCA 515, the Ontario Court of Appeal reversed the lower court's ruling that a former employee was entitled to the increase in the value of shares held in the parent corporation, along with a share bonus – effectively dividend payments – accrued during the reasonable notice period. The Court of Appeal held that common law principles with respect to compensation in wrongful dismissal cases did not apply to the employee's share entitlements – which it found to be governed exclusively by the Shareholders' Agreement in question.

Lower Court Decision

Under the terms of the Shareholders' Agreement, a Transfer Notice in respect of an employee's shareholding is deemed to have been triggered, at fair market value, 30 days from the date that the employee is notified of termination of employment. However, in a ruling now held to be contrary to the terms of the Shareholders' Agreement, the motion judge