This is another wrongful dismissal case with a lot of interesting issues.   The case of Olivares v. Canac Kitchens  one of many reported wrongful dismissal cases against Canac Kitchens (There must be ten at this point…) since it shut the doors of its manufacturing department in 2008. The plaintiff, Mr. Olivares was terminated after 24 years of service with the Defendant Canac. He was paid 32 weeks as his basic termination pay and severance entitlement under the Employment Standards Act. They continued his benefits for 8 weeks.  When he was terminated he was 48 years old, a shipping supervisor and oversaw a team of loaders and coordinators in the shipping department making $93,000.00 a year.

The interesting part of the case is that Mr. Olivares communicated almost exclusively in Spanish over his 24 years of employment.  It was his first job upon his arrival from Chile 24 years ago. Counsel submits that these factors significantly disadvantaged the plaintiff in attempting to re-enter the job market.

The plaintiff referred to other decisions involving Canada, in particular Brito v. Canac Kitchens 2011 ONSC 1011 (CanLII), 2011 ONSC 1011 (S.C.J.) where the court found the appropriate notice to be 22 months for an employee who held the position of Team Leader which is acknowledged to be a position less than supervisor, with 23 years of experience and was 60 years old at the time of termination.

He also referred to Cardenas et al v. Canac Kitchens 2009 CanLII 17976 (ON SC), 2009, CanLII 17976 (Ont. S.C.J.) wherein one of the plaintiffs, Mr. Silva, who also held the position of Team Leader, was 43 years old, had 24 years of service, was awarded compensation based on 26 months’ notice.

The defendant submitted that that an employee holding a non-managerial position should generally be entitled to less notice than a senior manager or specialized employee holding a high rank in the organization.  Counsel for the defendant proposed that 18 to 24 months notice was generally reserved for very senior employees or executives. While on the one hand he proposed that 32 weeks for which the plaintiff received notice and severance constituted adequate pay in lieu of notice in the circumstances of this case.  In the alternative – if that was not suitable, the appropriate scope of reasonable notice should be 12-15 months.

Other Issues

In addition to the severance there were a lot of interesting issues in this case that we often get asked as lawyers:

1. Are damages should be calculated based on the plaintiff’s annual base pay, without reference to any overtime pay that he may have earned in past years?
2. Should damages should include the cost of lost employee benefits? and;
3. Should money earned during during the statutory notice period under the ESA should be deducted from damages awarded to the plaintiff above and beyond his ESA minimums?

How was reasonable notice determined? 

Based on the circumstances of the case, and comparable caselaw, Judge Lederman found that the appropriate notice period in the circumstances was 20 months.

Important to note was Justice Lederman’s statement referring to the Court of Appeal case of DiTomaso and Crown Metals.  Lederman J noted that:

 “It is clear from DiTomaso v. Crown Metal Packaging Canada LP 2011 ONCA 469 (CanLII), 2011 ONCA 469 at paras. 22-23 that there is no upper limit cap in respect of the notice period for non-managerial employees.”

 He decided reasonable notice in reference to all of the case’s particular facts and having regard to the factors set out in Bardal, in particular, the character of the employment in issue, the length of service of the employee, the age of the employee, and the availability of similar employment having regard to the experience, training and qualifications of the employee.

Lederman J. chose not to tinker with the Bardal factors and chose not to emphasize any importance of the character of the Mr. Olivares’ employment that would minimize the reasonable notice to which he was entitled to.

What do we take from this?

Since Keays more and more caselaw is obviously veering away from individualizing the specifics of the Bardal test. In Di Tomasso, the Court of Appeal referred to Keays case and noted that “[n]o one Bardal factor should be given disproportionate weight” – this is particularly in a case like ours, being that if an employer attempts to use character of employment to say that low level unskilled employees deserve less notice because they have an easier time finding alternative employment.

In the case of Bramble, Judge Drapeau J.A. put it this way, “The proposition that junior employees have an easier time finding suitable alternate employment is no longer, if it ever was, a matter of common knowledge. Indeed, it is an empirically challenged proposition that cannot be confirmed by resort to sources of indisputable accuracy”.

Other Issues

Judge Lederman noted that overtime pay is an integral part of the anticipated income of the terminated employee and should be considered as compensable damages and ordered that payment in lieu of notice be calculated based on total earnings inclusive of overtime.   He foudnd that Mr. Olivarez was entitled to an amount of $250 per month during the notice period for quantified benefits, except for 8 weeks that were covered by the defendant during the minimum notice period.  The Defendant Canac was also not allowed to deduct mitigation income during that notice period from other damages relating to the notice period beyond the ESA time frame.

Contact us
If you have an employment law issue or you need a severance package reviewed, we are Ontario employment law lawyers that can help.   We have 2 employment law offices to serve you better. We have employment law lawyers in Burlington and employment law lawyers in Milton.  To contact one of our wrongful dismissal  lawyers concerning an employment law issue, please fill in the contact form and a lawyer will try to reply to you within 5 hours during regular business hours. 

The case of Graham v. Marleau is a good launching pad. In that case,  Judge Nordheimer noted that there was a duty to mitigate (it is presumed) but there are exceptions, such as a contrary intention expressed in the contract of employment. For those of you the practice employment law, this case is an absolute  must read if you wish to understand the principles of mitigation in employment law and contract drafting. If you’re an employer, read on because the theory is interesting.

The Judge in Graham noted principles from older cases that are not necessary to get into, however if you wish to learn the history of mitigation with respect to employment law, have a read of paragraph 50 and work from there.

The long and short of the Graham case is that the Judge held that an employee has a duty to mitigate unless that duty was explicitly or implicitly waived.  He noted that he agreed that the “thrust of the cases hold that the principle of mitigation ought to apply even where provision that stipulate what (and how much) notice is to be given, or what payment to be made  in lieu of notice, if the termination of the contract occurs. Such stipulation, the Judge noted,  is nothing more than an agreement between the parties as to the length of the reasonable notice to terminate the contract.”

The Judge in Graham was firm on the theory that even if there is a provision that stipulates what notice is to be given, it still does not mean that an employee should not mitigate, unless there were clear exceptions to.  The Judge “did not see reason why there should be any distinction drawn between contracts of employment where notice periods were not stipulated and in those that are stipulated with the result that there would be a duty to mitigate the former but not the latter. If that were the case, it seemed to be an unfair result to the employer simply because they tried in advance to strike agreement and thereby eliminate the issues “of notice”…subject of course to the courts overriding right to  determine the reasonableness such an agreement in any case.”

The Judge found that even if there is an agreement as to the payment in lieu of notice at the time the contract is signed, it would be unfair to the employer that an employee should not mitigate because of this agreement, unless a duty to mitigate was explicitly or implicitly waived. Therefore, there is a very firm presumption that a duty to mitigate is necessary unless it is specifically or implicitly waived.

Specifically the judge noted:

“a)The principle of mitigation applies to a claim arising from any breach of contract, whether fixed- term or of indefinite duration.

b) The principle of mitigation also applies where there is an agreed-upon severance provision.

c) Even where there are agreed-upon severance provisions, there are exceptions to the principle of mitigation. In some cases, the contract of employment can be interpreted

as having exempted, expressly or by implication, the employee from the duty to mitigate. Examples of such exemptions are:

i. There is an express waiver of the duty to mitigate.

ii. There is an express obligation to continue the payments under the employment contract.

iii. The employment contract provides that the severance amount is payable immediately at, or very shortly after, the date of termination, implicitly suggesting a waiver

of the obligation to mitigate as neither the employer or the employee could know whether   mitigation could occur.”

Is important to notice provision “C” and that there is exceptions to the principle of mitigation. The exceptions are simply a reiteration of the theory of mitigation being express or implicitly waived contractually. You can see how important this case is to employment lawyers that draft employment contracts for employers on a regular basis.

There has been jurisprudence that has since applied the Graham case as a prevailing authority in law. You can see by these cases that the difficulty sometimes with mitigation is the timing of the issues.  For example, if the contract states that severance is payable immediately…then how can mitigation take place? If you don’t have an express or explicit waiver in the employment contract of mitigation issues then the timing of issues are going to be your real problem.

For example, in the case of Wells v. Conestega, the contract of employment noted that “the employee  can be terminated without cause immediately upon paying to the employee the termination amount which was stated as the sum equivalent the employee’s base salary for the remainder of the term.” In this case,  Judge Taylor found that the employee was not obligated to mitigate because of the timing issues noted in the contract. The proposition the contract was  that payment of severance is due immediately upon termination. The judge found no duty to mitigate because payment was due immediately. You can see  how this simple issue of noting that the payment is due immediately upon termination suggests implicitly waiver mitigation. It simply makes common sense.

It is important to know understand the principles of mitigation noted in case law when drafting employment contracts. The Court of Appeal has not yet commented on the Graham  case, but  it will be interesting with it does. In the meantime, be careful how you draft employment contracts, particularly the causes of termination and severance in shorter letters of offer and in the provisions of severance and longer contracts offer. This is a timing issues so draft accordingly!