ONCA Opines on Wrongful Dismissal

In February 2015 the Ontario Court of Appeal (the “Court”) released Arnone v. Best Theratronics Ltd., 2015 ONCA 63. The decision is noteworthy because the Court made a number of findings that will impact future employment law decisions.

1) Bridging an Employee to the Date of Pension Eligibility is Not a Relevant Factor When Calculating a Reasonable Notice Period

In cases where an employee is dismissed before the arrival of a date that triggers an entitlement to a benefit, such as the date when the employee will have earned the right to a full pension, a question inevitably arises as to whether the severance package offered to the employee should be structured in a way to “bridge” the former employee so that trigger date is achieved.

In Armone the Court held that the amount of time required to ‘bridge’ the dismissed employee to his date of eligibility for a full pension is not a relevant factor to consider when determining the employee’s right to reasonable notice of dismissal. The Court stated that this factor is not part of the “Bardal” analysis.

The Bardal analysis focuses considers four primary factors when calculating the appropriate reasonable notice period: the dismissed employee’s (i) age; (ii) length of service; (iii) character of employment; and (iv) the availability of similar employment. However, other factors may also be considered.

2) The Declining Importance of “Character of Employment” When Calculating a Notice Period

Armone reiterated that the character of an employee’s employment is of declining relevance when applying the Bardal analyses to determine an employee’s entitlement to reasonable notice of dismissal.

Traditionally, higher level employees such as senior managers and executives have been awarded longer reasonable notice periods than lower level employees. The presumption has been that it is more difficult for senior employees to find new employment since there are fewer jobs for senior level employees.

In 2011 the Ontario Court of Appeal (the “Court”) questioned the presumption that a junior employee should receive a shorter notice period than a senior employee. In Di Tomaso v. Crown Metal Packaging Canada LP., 2011 ONCA 469 (“Crown Metal”) MacPherson J.A., writing for the Court, stated that character of employment is a factor that is declining in importance.

Writing at paragraphs 27 and 28 Justice MacPherson stated:

Crown Metal would emphasize the importance of the character of the appellant’s employment to minimize the reasonable notice to which he is entitled. I do not agree with that approach. Indeed, there is recent jurisprudence suggesting that, if anything, it is today a factor of declining relative importance: see Medis Health and Pharmaceutical Services Inc. v. Bramble (1999), 175 D.L.R. (4th) 385 (N.B.C.A.) (“Bramble”) and Vibert v. Paulin (2008), 291 D.L.R. (4th) 302 (N.B.C.A.).

This is particularly so 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. The empirical validity of that proposition cannot simply be taken for granted, particularly in today’s world. In Bramble, Drapeau J.A. put it this way, at para. 64:

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.

However, shortly after Crown Metal was released, another panel of the Court released Love v. Acuity Investment Management Inc.2011 ONCA 130 (“Acuity”) in which the Court emphasized the importance of character of employment when considering the appropriate notice period for a senior employee. Goudge J.A, writing for the Court, stated at para. 22 that “[the plaintiff] was clearly a high level employee, something that this court has said favours a longer notice period.”

Crown Metal and Acuity are difficult to reconcile given the different weight placed by the Court on the character of employment. In Armone the Court followed the reasoning in Crown Metal and stated: “that that the character of employment is a factor of declining importance in the Bardal analysis”.

3) Dismissed Employees are Entitled Retiring Allowances in the Absence of an Express Term to the Contrary

In Armone the Court stated that the determination of whether a contract of employment entitles an employee to the receipt of a retirement allowance where his employment has been terminated without cause is an inherently-fact specific exercise.

Some employers offer long service employee’s retiring allowances at the end of the employment relationship. Often the retiring allowance is calculated based on a formula tied to the employee’s years of service.

In Armone the employer had a policy of providing a retirement allowance of one week per year of service to a maximum of 30 weeks to employees. However, the employer took the position that the plaintiff was not entitled to a retiring allowance because he had been terminated from his employment.

The Court rejected the employer’s argument and found that the retiring allowance was an implied part of the employee’s employment contract. The Court stated that if in the absence of any written term to the contrary, effect should be given this implied term of the contract of employment. If the employer wanted to limit the plaintiff’s entitlement to the retiring allowance it should have put it in writing.

4) Notice Period for a Long Service Employee

The Court overturned the motion judge’s award of 16 months’ notice and awarded the plaintiff with 22 months’ notice. The plaintiff had worked for the employer for 33 years and was 53 years old at the time of his dismissal. He held the position of a supervisor.

5) Summary Judgment Motions Are Appropriate for Straight-Forward “Without Cause” Wrongful Dismissal Claims

In case any doubts remain the Court confirmed in Armone at para. 12 that a straight forward without cause wrongful dismissal is usually amenable to be decided by way of a summary judgment motion. However, the appropriateness of bringing a summary judgment motion must be assessed on the particular circumstances of each case.

Without cause wrongful dismissal actions that may not be amendable to a summary judgment motion are actions involving claims for damages for the failure to pay bonuses, commissions, or stock options that involve highly disputed facts.