Modern wrongful dismissal litigation continues to evolve beyond basic severance disputes, according to employment lawyers
A recent Ontario wrongful dismissal decision involving IBM Canada demonstrates how litigation strategy, equity compensation disputes, and contractual interpretation can significantly increase employer exposure during termination litigation.
The case, Adelman v. IBM Canada Limited, serves as an important reminder that wrongful dismissal claims can quickly evolve beyond severance disputes and into complex, high-cost litigation cases.
The employee, Jason Adelman, worked for IBM and its predecessor company for nearly 19 years before being terminated without cause in January 2023 at age 59.
At trial, the Ontario Superior Court awarded Adelman 24 months’ reasonable notice, citing several key factors, including:
- His senior executive position
- His lengthy service
- His age
- The challenging job market he faced following termination
The court also considered the employee’s mitigation efforts, noting that despite applying for more than 100 positions and participating in interviews, he was unable to secure comparable employment.
The damages award exceeded $682,000.
Equity compensation became a central issue
One of the most significant disputes involved IBM’s treatment of restricted stock units (RSUs) and stock options during the notice period.
IBM argued that the employee lost entitlement to certain equity compensation upon termination because he was no longer actively employed. However, the court found that the contractual language relied upon by IBM did not support that interpretation.
Importantly, the court referenced prior appellate authority involving similar IBM compensation language and expressed concern regarding the continued advancement of legal positions that had already faced judicial scrutiny.
The case highlights an increasingly important trend in wrongful dismissal litigation:
bonus structures, stock options, deferred compensation plans, and equity-based compensation continue to be heavily contested in termination disputes.
Employers should ensure that:
- Employment agreements are regularly reviewed.
- Equity plans contain enforceable language.
- Bonus and incentive structures are clearly drafted.
- Termination provisions comply with current employment law requirements.
Poorly drafted compensation language can create substantial financial exposure.
Litigation conduct can impact cost awards
In addition to the damages award, the court ordered IBM to pay approximately $215,000 in legal costs.
While the court did not impose punitive or elevated cost sanctions, the decision included criticism of aspects of IBM’s litigation conduct and legal positions throughout the proceeding.
The court noted concerns regarding positions maintained during the litigation that were later modified or abandoned shortly before trial.
This serves as another reminder that litigation strategy itself can influence overall exposure.
Wrongful dismissal disputes that proceed through lengthy litigation can involve:
- Significant legal fees.
- Extensive documentary production.
- Discovery obligations.
- Expert evidence.
- Internal management disruption.
- Reputational considerations.
In many cases, the legal costs alone become substantial.
Practical lessons for managing termination risk
The IBM decision offers several practical lessons for employers managing termination risk:
- Compensation language must be clear. Courts continue to carefully examine bonus, RSU, and equity compensation plans following termination.
- Litigation positions should be carefully evaluated. Employers should ensure legal positions advanced during litigation align with current case law and contractual language.
- Executive terminations require strategic oversight. Long-service and senior employees often present elevated legal exposure due to compensation structure, age, and re-employment challenges.
- Wrongful dismissal litigation can escalate quickly. Damages, legal costs, and compensation disputes can significantly increase employer liability when matters proceed through trial.
Along with the Ontario decision Warren v. Canaccord Genuity Corp. earlier in 2026, this decision demonstrates how modern wrongful dismissal litigation continues to evolve beyond basic severance disputes.
Courts are increasingly scrutinizing:
- Compensation structures
- Bonus entitlement language
- Equity plans
- Litigation conduct
- Contractual interpretation
- Executive termination practices
Employers should proactively review employment agreements, compensation policies, and termination procedures to help minimize legal exposure before disputes arise.
Ronald S. Minken is a senior lawyer and mediator at Minken Employment Lawyers, an employment law boutique in the Greater Toronto Area. Tanya (Tejpreet) Sambi is a lawyer at Minken Employment Lawyers.
