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Employer paid no notice or severance when it terminated employee of 36 years without cause

The Ontario Superior Court of Justice just decided that an employer terminated a 65-year-old long-term employee without the proper amount of notice or severance. As a result, the employer had to pay hefty damages, interest and costs award.

The employee started with the company in 1975. It was the first job he got in Canada after emigrating from India. His 36 years with the company made him the most tenured employee; his recent position was Assistant Warehouse Supervisor, whereby he supervised 11 workers.

The employee was terminated without cause as a result of restructuring due to economic issues. He was given no notice, no statutory severance pay and no assistance in finding a new job. The employee’s skills were focused on the automotive industry in the area of supervision. He tried to find alternate work but was unsuccessful.

When the employee launched a wrongful dismissal action, the judge found the employer didn’t even meet its statutory obligations regarding notice and severance.

The Court awarded the employee reasonable notice in the amount of 26 months (minus two weeks as there was a one percent chance of reemployment), no reduction on this notice award for failing to mitigate his losses (he searched for alternate employment but was unsuccessful, and the fact that he began searching a few weeks after the termination was irrelevant as he was in shock), the employee’s bonus (it formed an integral part of his compensation), benefits not continued by the employer, interest, and costs.

What can employers take from this decision?

All employment standards legislation across Canada has minimum statutory notice provisions, and Ontario and federally regulated workplaces also have severance obligations, that require payments to be made to terminated employees without cause. These provisions must be complied with as they are the minimum requirements.

That said, in cases dealing with long-term employees, minimum termination notice provisions are likely not enough. In this case, the employer paid nothing to the employee; however, even if the employer had met basic requirements which under the Employment Standards Act in Ontario is eight weeks for eight years of service or more, would likely have presented a problem in court.

Courts examine entitlements to reasonable notice periods based on individual circumstances of the case and various factors such as age and the possibility of replacing employment. Hence, long-term employees are usually provided with reasonable notice periods on the higher end of the scale.

Before terminating a valued long-term employee without cause, it is important to think the decision through, observe minimum statutory requirements, and consider the particular circumstances of the case that might increase a statutory notice period to a reasonable notice period. And, when in doubt, consult legal counsel.

Christina Catenacci
First Reference Human Resources and Compliance Editor

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Christina Catenacci

Christina Catenacci, BA, LLB, LLM, was called to the Ontario Bar in 2002 and has since been a member of the Ontario Bar Association. Christina worked as an editor with First Reference between February 2005 and August 2015, working on publications including The Human Resources Advisor (Ontario, Western and Atlantic editions), HRinfodesk discussing topics in Labour and Employment Law. Christina has decided to pursue a PhD at the University of Western Ontario beginning in the fall of 2015. Read more
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