Deemed Dismissal Results in Award of Common Law Damages

To many the question “Have I been fired?” may seem a little ridiculous. Typically one knows whether or not he has been terminated. And although usually the termination itself comes as a surprise, there is little question as to certainty of the situation.

And yet, in late 2011 a case came before the Court of Appeal for Ontario that asked the question of whether or not an employee was entitled to common law damages following his “deemed” dismissal from employment. (NB: for a description of what is meant by “common law damages” see my definition in Explaining Wrongful Dismissal under Ontario Employment Law)

Fixing the Duty to Mitigate

(c) istock/AndreyPopov

Is an employee, who is terminated without cause, required to mitigate his or her loss when entitled to a fixed term of notice or pay in lieu, and the contract of employment is silent with respect to mitigation?

In reasons for decision released June 21, 2012, Bowes v. Goss Power Products Ltd., 2012 ONCA 425, the Court of Appeal for Ontario answered that question in the negative.

The Law can be an Asset Sale

In an earlier post this blog commented upon the issue of successor companies and severance policies. However, another frequent occurrence is where an employer (what I will call “Old Co.”) only sells the assets of the company. In most cases the employee continues to work for the purchaser of Old Co’s assets, with a company that I will call “New Co.” What happens when the employee is terminated from New Co.? Is the dismissed entitled, for the purposes of calculating her notice and severance entitlements, to treat her employment with New Co. as starting when she started with Old Co.?

The recent decision of the Ontario Superior Court of Justice in Drake v. Blach, 2012 ONSC 1855, a decision of the Honourable Justice Ray may appear to signal otherwise.

Successor Co. Severance Policies

A frequent occurrence in what some once called “Silicon Valley North” is the overtaking of one company whose fortunes have changed (let’s say Nortel) by another.  For some employees the change is minor as they are fortunate enough to be hired on by these successor companies.  That is, however, until they are fired by these new companies.  As some employees of these new ‘grey knights’ are discovering not everything is necessarily the same as it was.

Some of these successor companies have attempted to insert “severance policies” into their employment agreements.  A frequently asked question I receive is whether or not these severance policies are enforceable.

Are Older Employees Entitled to More Severance?

Are older employees entitled to more severance?

While it is often repeated by Ontario employment lawyers that the ‘rough upper limit’ for notice periods is 24 months, baring “exceptional circumstances” (see e.g. Lowndes v. Summit Ford Sales Limited, 2011 ONCA 469), the case of Hussain v. Suzuki (2011), 209 A.C.W.S. (3d) 101 (ON SC) demonstrates that the employee’s advanced age can qualify as “exceptional circumstances” warranting a greater amount of reasonable notice.

That’s How One Makes Fundamental Changes!

In an earlier post I commented on the case of Chandran v. National Bank, 2012 ONCA 205.  In that post I commented that, “the bank’s more tactical move should have been to terminate Mr. Chandran’s employment as a senior manager - on appropriate notice - and then offered him the alternative positions within the bank.  Had proper notice been provided, the bank may have removed the possibility of a suit and its related costs.”

In making that comment I was employing the analysis set out in the Ontario Court of Appeal’s decision in Wronko v. Western Inventory Service Ltd., 2008 ONCA 327.  A recent case from the Ontario Divisional Court, Kafka v.Allstate Insurance Company of Canada, 2012 ONSC 1035 would appear to affirm that position.

Is Two Weeks Too Little?

Can an Ontario employment contract legally provide that an employer may terminate an employee’s employment without cause provided that the employer provides two weeks pay in lieu of notice.

The legal question is: could the employer enforce this provision to only provide the employee with two weeks pay in lieu of notice?

The short answer is probably not, but like most everything in law, the real answer is, “it depends.”

Frustration of Contract need not be Frustrating

Many employees who become chronically ill, are injured in a workplace accident, or get hurt in some other type of accident and are unable to return to work for medical reasons often believe that they have no option but to quit their job. By the same token, it is not uncommon for employers to take the position with their employees that the employee must either return to work or quit.

However, as this post will demonstrate the forced options of “return to work or quit” are, in fact, a false dichotomy. Employees have other options and employers have further responsibilities.