Gristey V. Emke Schaab Climatecare Inc.: The Effect Of Economic Factors On The Notice Period

Gristey V. Emke Schaab Climatecare Inc.: The Effect Of Economic Factors On The Notice Period

Wrongful Dismissal and Employer Notice

Justice Conlan’s decision in Gristey v. Emke Schaab Climatecare Inc. 2014 ONSC 1798 (Ont. S.C.J.) underscores the fact there is no complete catalogue of factors that go into determining the amount of notice that would be reasonable for an employee to receive.

By way of background, if an employee is let go without cause for dismissal, the employee is generally entitled to reasonable notice – either working notice or pay in lieu of notice.  There are, however, exceptions.  For instance, the employer and the employee can sign an employment agreement that limits the notice period to what the Employment Standards Act, 2000 provides.

The seminal decision in Bardal v. Globe and Mail tells us that there is no formula to determine how much notice of dismissal would be reasonable in any given case.  While the main considerations are the employee’s age, years of service, position and job market for comparable positions, the list of possible considerations is not fixed.

Facts of the Case – Wrongful Dismissal 

In this decision, the employer dismissed Mr. Gristey, a 54 year old gas technician with some supervisory responsibilities, after 12 years of service on a without cause basis.  The employer asserted that the basis for ending Mr. Gristey’s employment was a shortage of work.  Yet, the employer opted not to use a temporary layoff as provided for under theEmployment Standards Act, 2000.

Instead, the employer paid Mr. Gristey 8 weeks of termination pay and offered an additional 8 weeks as a gratuitous payment in exchange for a signed Full and Final Release.  Not surprisingly, Mr. Gristey refused the employer’s offer and sued for wrongful dismissal.

Issue Before the Court – Damages in Lieu of Notice

At trial, the main issue for Justice Conlan to consider was the appropriate amount of damages for pay in lieu of notice having regard to the fact that the employer no longer had enough work to keep Mr. Gristey busy.

Taking into account the Court of Appeal’s decision in Bohemier v. Storwal International Inc., Justice Conlan accepted the employer’s submission that its declining financial health should be a relevant consideration and discounted the initial assessment of a 12 month notice period by one-third to 8 months.  At paragraph 59 of the decision, Justice Conlan states:

Essentially, this is a recognition (as I have said above), had Mr. Gristey’s employment not been terminated, he would have likely worked less hours during the notice period.  Thus, it would not be fair to the Defendant to apply the full twelve-month notice period.

 Practical Considerations

There are a couple of take-aways from this decision.

First, paying an employee the bare minimum required by the Employment Standards Act, 2000 is not necessarily going to be enough of a deterrent to prevent the employee from starting a wrongful dismissal action.  There are other factors that must be considered.  Competent employment counsel can help you make this determination.

Second, judges deciding a case are ultimately concerned with arriving at a fair result.  This case is a good example of the analysis that a judge goes through in balancing fairness.  Employers and employees alike should keep in mind that the employer’s financial health is a factor that can tip a judge’s scales in assessing the reasonable notice period.

This article is intended only to provide general information and does not constitute legal advice.  Should you require advice specific to your situation, please feel free to contact me to discuss the matter further.

Employment Law and Liability for Constructive Employee Dismissal

Employment Law and Liability for Constructive Employee Dismissal

One of the realities of running a business is that sometimes an employee’s role has to change in order to ensure the efficient operation and, in some cases, the survival of that business. Unfortunately, despite an employer’s well-meaning intentions, this kind of business decision can result in liability for constructive dismissal.

This was the situation before the Ontario Court of Appeal in Farwell v. Citair, Inc. (General Coach Canada), 2014 ONCA 177 where a 58 year old VP of Operations with 38 years of service was returned back to his former position as a Purchasing Manager by the employer.

Employment Law: Constructive Dismissal

Unlike a wrongful dismissal, a constructively dismissed employee has not actually been dismissed.  Instead, the employer has made fundamental changes to the employee’s job without the employee’s input or agreement.  In effect, the changes made by the employer are so drastic that the job the employee accepted at the start of the employment relationship no longer exists.  Hence, the term “constructive dismissal”, a dismissal implied by operation of law.

At trial, the court held that Mr. Farwell was constructively dismissed and awarded him damages equal to 24 months of pay in lieu of notice.  The employer appealed on three grounds:

  1. The trial judge misapplied the principles of the law of constructive dismissal;
  2. The trial judge erred in her assessment of damages; and
  3. The trial judge erred in failing to find that Mr. Farwell did not mitigate his damages by working for the employer as a Purchasing Manager during the notice period.

Employment Law: Ontario Court of Appeal

On the first ground of appeal, the Ontario Court of Appeal accepted the trial judge’s conclusion that the demotion back to Purchasing Manager from VP of Operations was a significant loss of status and prestige that constituted a fundamental change to the employment agreement and a constructive dismissal.  With regard to the second ground of appeal, the court deferred to the trial judge’s assessment of damages and concluded that 24 months of pay in lieu of notice was reasonable for a 58 year old high-level manager who spent two-thirds of his life with the employer.

As for the third ground of appeal, the court acknowledged that the trial judge may have incorrectly taken a subjective approach in assessing that the stigma and loss of dignity was too great to mitigate by returning to work for the employer.  In other words, rather than objectively considering if a reasonable person would return to work under the same circumstances, the trial judge may have focussed her assessment on what Mr. Farwell thought about returning to work for the employer.  The court also acknowledged that, in light of the absence of any animosity between the parties, Mr. Farwell may well have been obligated to mitigate by working for the employer as a Purchasing Manager.

However, Mr. Justice Lauwers, writing for the court, pointed out, “To trigger this form of mitigation duty, the appellant was therefore obliged to offer Mr. Farwell the clear opportunity to work out the notice period after he refused to accept the position of Purchasing Manager and told the Appellant that he was treating the reorganization as constructive and wrongful dismissal.”  Herein was the fatal flaw in the employer’s case.  In order to successfully argue that Mr. Farwell failed to mitigate his damages by working as a Purchasing Manager during the reasonable notice period, the employer first had to offer the position after Mr. Farwell refused to accept the imposed changes.

Employment Law: Constructive Dismissal – Practical Considerations

The take-away for employers in this case is that it is not safe to assume that the employee is always free to accept the position unilaterally imposed on him in order to mitigate his damages.  Once the employee has rejected the change, the employment agreement is at an end. In order to bolster the mitigation argument, the employer must then make it clear to the employee that the very same position that led the employee to assert constructive dismissal is still available to mitigate damages.

For the employee, the take-away is that it is important to assess the workplace atmosphere before claiming constructive dismissal.  Depending on the circumstances, the employee may be obligated to return to work for the employer in order mitigate his damages, despite whatever hard feelings he may bear towards the employer.

As I stated in a previous blog post, employment law, and constructive dismissal in particular, can be a lot like a chess match.  It is often beneficial to have competent employment counsel advising you on how to best respond to the moves that the other side makes.

This article is intended only to provide general information and does not constitute legal advice.  Should you require advice specific to your situation, please feel free to contact me to discuss the matter further.

Written by Jeffrey Robles and originally published on the blog at http://jeffreyrobles.com. Jeffrey represents clients in the areas of employment law and personal injury in the Ontario Superior Court of Justice.