This questions was answered recently by the Ontario Court of Appeal in the case of Bowes v. Goss Power Products Ltd., a decision issues on June 21, 2012.

Peter Bowes had a written employment agreement with his employer.  The contract stated that he would receive six months’ notice or pay in lieu of notice if his employment was terminated without cause “prior to the completion of forty-eight (48) months from commencement.”  The contract said nothing about mitigation or about timing of the payment.

Mr. Bowes was dismissed without cause and he was able to find new employment after only two weeks.  His employer paid him out three weeks’ notice as required under the Ontario Employment Standards Act, but then refused to pay out the rest of the amount specified in the employment agreement.  Mr. Bowes was forced to file a lawsuit.  He was unsuccessful initially and then appealed his case to the Ontario Court of Appeal.

The Court of Appeal reviewed the case law dealing with mitigation of damages in these circumstances.  It emphasized that an employer and employee can fix an enforceable notice period which provides some certainty to both parties.  It may well be a lower amount than the employee would have otherwise been entitled to receive under common law.  However, by doing so, the employer gives up the right to the benefit of mitigation if the employee successfully mitigates damages.

In particular, the Court of Appeal stated the following, quite emphatically:

1.  “A fixed term of notice or payment in lieu is not equivalent to common law damages for reasonable notice.” and

2.  Payment in lieu of a fixed term of notice, being liquidated damages or a contractual amount is not subject to a duty to mitigate;

The Court of Appeal stated that it is unfair of an employer to draft an employment agreement with a set severance term, that is less than the employee might have had under the common law, and then try to get out of it at the point of dismissal by informing the employee “that future earnings will be deducted from the fixed amount.”

The Court decision, written by Chief Justice Winkler, on behalf of a unanimous Court of Appeal, concludes:

“Where an agreement provides for a stipulated sum upon termination without cause and is silent as to the obligation to mitigate, the employee will not be required to mitigate.”

In the present case, Mr. Bowes was awarded the full six months’ pay, as specified in employment contract, despite the fact that he found other work quickly.

This is a very important decision for Ontario employees as it clarifies an area in which there had been mixed case law.  The Ontario Court of Appeal has stated very clearly that employers must pay out fixed contractual severance amounts, even if the dismissed employee finds new employment quickly – unless the employment agreement very clearly states otherwise.

Employers can still use contracts that include mitigation provisions but these provisions must be included in the original employment agreement and must meet all of the other normal conditions of enforceability.

In a recent case of the Ontario Superior Court, Chevalier v. Active Tire & Auto Centre, a wrongful dismissal case brought by a 33 year employee was dismissed for failure to return to work.

The plaintiff, Earl Chevalier, a service centre manager with Active Tire, was placed on a lay-off with minimal notice and no compensation.  Mr. Chevalier wasted no time in suing Active Tire for wrongful dismissal two weeks after being dismissed.  He claimed that he could not be “laid-off” with no pay  and that this was a constructive dismissal.  In response to the lawsuit, Active Tire wrote to Mr. Chevalier, apologized and asked him to come back to work.  Mr. Chevalier elected not to return to work and instead proceeded with his law suit.

At trial, the Court agreed that Mr. Chevalier had been constructively dismissed.  Active Tire could not just lay him off with no notice after 33 years.  However, the main issue was whether Mr. Chevalier should have been required to return to work in these circumstances.  He argued that Active Tire had tried to “make his life miserable” in the period leading up to his dismissal and he therefore would have had to return to work in an atmosphere of “hostility, embarrassment or humiliation.”

After reviewing the evidence, the Court rejected Mr. Chevalier’s claims.  It held that a “reasonable person” would have returned to work in all of the circumstances.  Mr. Chevalier was not able to demonstrate to the Court that his workplace had become intolerable and he was therefore required to return.

If Active Tire had not called Mr. Chevalier back to work, the Court ruled that he would have been entitled to 16 months’ compensation – the time period it took Mr. Chevalier to find new employment.  However, the result in this case was that he was not entitled to anything and was required to pay legal fees to Active Tire, as well as his own.

This case is an example of the risky nature of wrongful dismissal litigation.  It illustrates the importance of obtaining proper legal advice and following it.  Under current Canadian case law, employees who are dismissed or laid off off must seriously consider an employer’s offer to return to work, if it is an offer made in good faith.  Important points to consider may be:

• Is the offer to return an offer for the same position that the employee held?
• Will the pay and working condition remain the same?
• Is there significant evidence of conduct that is embarrassing or humiliating?
• Does the employee have other employment possibilities?

Dismissed employees should carefully review all of these issues, as well as other related matters, with competent employment law counsel.  Making the wrong decision can be costly and harsh.

One employer that used this latter strategy, seemingly to the extreme, was Canac Kitchens, a Division of Kohler Ltd.  After closing its manufacturing operations in Canada in 2008, it fought with its former employees  tooth and nail over appropriate severance awards in a number of wrongful dismissal cases.  It took many of these cases all the way to trial and wound up with numerous reported court decisions, most, if not all of them, ruling against Canac’s position.

One of the wrongful dismissal cases from 2012 involved Washington Olivares, a shipping supervisor, who had been with Canac for 24 years.  At the time of his dismissal he was 48 years old, earning approximately $93,000.  When he could not resolve his dispute with Canac, he brought a summary judgment motion and was awarded 20 months’ compensation.  A few issues were decided in this case that could be helpful to other dismissed employees:

1.  Notice:  Justice Lederman of the Ontario Superior Court held that a long service employee is entitled to a lengthy notice period, even if he was not in an upper management role.  In coming to this conclusion, he relied on the decision of the Ontario Court of Appeal in DiTomaso v. Crown Metal Packaging, which I wrote about last year.

2.  Overtime Pay: The Court held that if an employee was routinely earning overtime pay before being dismissed, the employee will be entitled to common law severance pay on the basis of average overall earnings, including overtime pay, even if the employer can show that overtime pay was declining or that it may not have paid overtime pay in the future.

3. Mitigation:  The Court also clarified that any money earned by a dismissed employee during the statutory notice period (the first 8 weeks, for an employee with at least 8 years of service) and the statutory severance period (the next period of up to 26 weeks, depending on length of service) will NOT be deducted from the employee’s overall settlement.

4. Benefits:  The Court also held that, in assessing wrongful dismissal damages, employees are entitled to the full value of an employer’s monthly cost of employee benefits, even if the employee did not use them all while employed.

Essentially, it appears that Mr. Olivares won each of these disputes with Canac.  As well, he was awarded legal costs of $10,500.  The amount is not huge since the litigation was conducted as a summary judgment motion with no cross examinations or other procedural steps.

I was not involved in this wrongful dismissal case and I am not aware of what kinds of offers the parties may have exchanged before the hearing.

However, in many of these wrongful dismissal cases, employers can achieve a much better result by settling out of court and minimizing the legal fees that they may have had to pay.  The flip side is that if employers make reasonable offers to settle before trials or hearings, it will become much riskier for dismissed employees to proceed with litigation since they may face an award of legal costs if the employer does better than its settlement position in court.

Very few wrongful dismissal cases actually wind up going to trial, which is probably a good thing for most employers and their dismissed employees.  The fact that Canac now has so many reported decisions, most of them decided against Canac, suggests that this strategy of fighting every single case vigorously is not necessarily the best strategy to employ.

The case of Dimmer v. MMV Financial (2012 ONSC 7257) is a wrongful dismissal case involving a 50 year old senior vice president.  The plaintiff had been recruited by a corporate search firm and was employed for just under four years.  At the time he joined the company, he signed a one year non-competition agreement.  When he was dismissed on a without cause basis almost four years later, he abided by the non-competition agreement and was unable to find alternate employment for about a year.   At trial, he was awarded one year’s compensation, including compensation for his average historical bonus and his car allowance.

The defendant tried to argue that Mr. Dimmer had failed to mitigate his damages properly and had failed to conduct a sufficient job search.  But the Court pointed to the non-competition agreement and noted the difficulty that the plaintiff would have finding work while subjec to the agreement.  Moreover, the defendant was unable to demonstrate that there were available positions that the plaintiff could have obtained if he had taken different steps in the course of his mitigation efforts.

The Court held that the plaintiff was entitled to twelve months’ compensation, in part, because of the signficant level of responsbility, the high income level and the senior nature of the position that that plaintiff held.  In the circumstances, twelve months’ compensation was appropriate for a four year senior vice president.

Although this case does not address a large number of ground breaking legal principles, there are two interesting points that we can take from the decision:

1.  Senior executives will be entitled to significant notice periods even with relatively short service.  A one year notice period for a three to four year senior executive is within the reasonable range, even if it is at the higher end.

2. Courts may be willing to take into account draconian non-competition agreements when assessing notice.  For employers who choose to try to impose unreasonable non-competition agreements on their employees, they may wind up facing lengthier notice periods after dismissal.  Employees will not be required to try to get out of the non-competition agreement as part of reasonable mitigation efforts.

This reliance by the Court on a non-competition agreement in assessing notice is a useful step for plaintiffs.  In my view, it still does not go far enough.  To really level the playing field, courts should be willing to award damages for “loss of opportunity” where an employer has imposed an unreasonable non-competition agreement.  This would further ensure that employers make every effort to keep post-employment restrictions as narrow as possible to protect their reasonable proprietary interests.

For now, dismissed employees must choose between abiding by the agreement, ignoring it and facing litigation or commencing costly legal proceedings to obtain a court ruling on the enforceability of the agreement.  None of these steps are wholly satisfactory.  This recent Dimmer case provides employees with some comfort that they may be entitled to a lengthier notice period if they abide by an imposed non-competition agreement.

Most employers (and employees) do not want to wait and see how long it might take to find other work.  They want things resolved and out of the way.  So employers will often provide a salary continuance arrangement that provides some incentive for the employee to look for work and find a new position.  Usually, it is 50% of the remaining severance amount that they might have been paid. This is considered a reasonable provision and many employers will refuse to delete these clauses.  Nevertheless, most employees view these incentive payments as a “clawback” on the amounts that they are “owed” and become very upset with these provisions.  Some employers simply are very insistent on including these provisions as part of any severance arrangement.

Nevertheless and with that in mind – here are a few things you can consider when faced with a salary continuance proposal:

1.  The Length of the Notice/Severance Period:  Just because an employer has chosen some arbitrary number as the number of weeks or months that it will provide as a notice and/or severance period, that number may not be written in stone.  It may be quite flexible.  Sometimes employers will low-ball employees, hoping that they do not take any further steps.  Employees are often more likely to get the notice period increased than to get the “clawback” removed.  Many employers will increase proposed severance packages after receiving a letter from legal counsel.

2. Definition of Mitigation:  Some employers will state that the 50% payout will be triggered if the employee finds any work – even part time, consulting or temporary.  Empoyers are often willing to negotiate changes to these clauses so that the 50% will only come into effect if the employee has found a reasonably comparable employment or self-employment opportunity.

3.  What’s Included?:  Sometimes employers will offer a salary continuation on the basis of base salary alone.  Employees are entitled to be provided with benefits continuation, pension contributions, bonuses and other amounts that they would have earned if they had continued to be employed – even the severance arrangement is a salary continuation package.

4.  Other Items:  Employees should be able to get some other items included in their severance packages – like outplacement assistance through a decent agency and reasonable legal fees to have a package reviewed.  As well, some employers will provide a helpful reference letter though they cannot really be forced to do so.

The items listed above are items that employers will often consider changing, adjusting or adding.

It is fair to point out that, despite anything I have said above, some employers will be open to removing the salary continuation provision and paying out a lump sum.  They will usually want some concession in exchange – for example a lower overall amount or the agreement not to pay some of the “extra items” listed above.  But it is often  worth trying.

Other employers will not budge on anything and will tell employees to take the package or bring a lawsuit.  Employees then have to make a decision as to whether it is worthwhile to start a legal claim.  This can be a difficult decision, especially since neither the employer, the dismissed employee or the lawyer know how long it might take the employee to find new employment.

Nevertheless, in situations where employers have provided low-ball offers and are not willing to budge initially, dismissed employees will often come out ahead by proceeding with a Statement of Claim (i.e. filing a lawsuit in court).

This past week, the Ontario Court of Appeal upheld the trial court decision and dismissed the appeal in Chevalier v. Active Tire & Auto Centre.

The Ontario Court of Appeal acknowledged that the plaintiff had been wrongfully dismissed when he was improperly put on a “lay-off.”  The  lay off came about after the employer tried to performance manage the employee before it put him on lay-off.

The plaintiff sued right away for constructive dismissal after being put on lay off.   Right after he began his lawsuit, the employer recalled him to work.  He refused to return and took the case to trial, arguing that the workplace had become “poisoned.”

However, at trial, the Ontario Superior Court held that there was no “demeaning, objectionable or retributory conduct” by the employer and that the constructively dismissed employee should have returned to work.

The Ontario Court of Appeal has upheld this decision.  In doing so, it has reinforced the idea that when an employer tries to implement a performance improvement plan, this will not necessarily create a poisoned work atmosphere.  But more importantly, the Court of Appeal has reinforced the Supreme Court of Canada jurisprudence in Evans v. Teamsters Local Union 31 which states that wrongfully dismissed employees may be required to return to work if recalled by their employers.  This can apply even after the employee files a lawsuit.  Failing to return to work can lead to a finding of “failure to mitigate damages.”  The dismissed employee can lose the case completely in these circumstances.

Dismissed employees who are recalled to work will need to consider the recall notice very carefully.  Continuing on with a lawsuit after an employer purports to call the employee back to work can be risky and ultimately, very costly.

In the case of Hooge v. Gillwood Remanufacturing Inc., the plaintiff was a 36 year employee, working as a production supervisor at the time of dismissal.  He was put on a “lay off” by his employer without any advance notice or pay.  The defendant company claimed that it had the right to “lay off” the employee under the B.C. Employment Standards Act.  The plaintiff alleged that he had been dismissed and sued for wrongful dismissal.  One week after he filed his lawsuit, the employer purported to “recall” him back to work.

At trial, the B.C. Supreme Court held that the employee had in fact been constructively dismissed. The plaintiff had not had a written employment contract in place.  When he was put on a lay off, he was told that it was “indefinite” and that there were no plans to recall him.  He was given an ROE that said “shortage of work.”  The B.C. court agreed with the plaintiff that there was no term of his employment that would have permitted a “lay off” without pay after all of these years of employment.  He was, in fact, constructively dismissed and was entitled to eighteen months’ compensation.

However, the Court proceeded to look at the issue of mitigation.  “The law is clear that in certain circumstances an employee who declines an offer of re-employment from the same employer after having been dismissed, whether actually or constructively, may be found to failed to mitigate his damages, and have any award reduced on account of such failure to mitigate.”  As long as it would have been “reasonable” in all of the circumstances for the plaintiff to return to work, he or she may be obligated to do so.  The court discussed Evans. v. Teamsters Local Union No. 31  as well as other B.C. cases including Davies v. Fraser Collection Services Ltd. 2008 B.C.S.C. 942 and Besse v. Dr. A.S. Machner Inc. 2009 BCSC 1216.

Ultimately, the court concluded that the evidence did not establish acrimony, mistreatment, belittling, embarrassing actions or undermining of authority in the workplace.  The court concluded that the plaintiff should have returned to the same position, on the same terms and conditions, at the same rate of pay.  Here is the court’s reasoning:

“It seems to me that an employer who has laid-off an employee, or wrongfully terminated an employee without due notice, may very well come to the conclusion, particularly with the benefit of legal advice that its actions constituted a wrongful dismissal and may seek to mitigate its own exposure to the payment of damages by offering to re-hire the employee.”

Here, the court held that the plaintiff should have returned to work.

Fortunately, in this case, all was not lost for the plaintiff.  The defendant locked out its unionized employees and ceased operations approximately seven months after purporting to recall the plaintiff.  The court held that the plaintiff would not have been paid during the lock-out, so he would not have been able to mitigate his damages during that time period.  Nevertheless, he was docked 7 1/2 months’ pay for the time period during which he would have been able to work if he had returned to work when recalled.

This case, from a B.C. perspective, reinforces the interpretation of Evans that has become the law across Canada.  Employees who are fired, laid-off or otherwise dismissed – and then offered a return to work – even after they file a lawsuit, must be very careful in deciding how to answer the employer’s offer.  Refusing to return to work and then continuing a lawsuit can be very costly.

There is something to be said for the notion that employers might have made a mistake and should be entitled to reverse a decision and have an employee come back to work.  After all, in the unionized context, an employee can be reinstated.

However, more often than not, this type of case will simply be used by a range of employers looking to play games.  Employers can try to “lay off” employees without offering anything.  Then, if the employee sues, they can “recall” the employee.  This gives employers a way to try firing someone while minimizing the risk of owing any severance.  It seems to open up the door to all kinds of abuses by the types of employers that might choose to act unethically.  Certainly, there are situations in which employers may have a good faith “change of heart” or are otherwise justified in changing their minds and reversing a decision to dismiss an employee.

But that does not necessarily seem to be the case in many of the situations I see.  This line of case law creates uncertainty, economic and emotional stress for employees, and also makes it difficult to settle some cases reasonably, both from an employee and employer perspective.  Nevertheless, employees who ignore these decisions may be making a very costly mistake.

In this case, Fredrickson v. Newtech Dental Laboratory Inc. the plaintiff had worked as a registered dental assistant for more than 8 1/2years.  After what appears to have been an office dispute with her boss, the plaintiff went off on a medical leave.  During the leave, she provided minimalist medical notes.  In response to her leave, her boss demanded that she return to work and threatened to fire her without notice or compensation.  Nevertheless, she remained off on a medical leave.

A few months later, the plaintiff provided a note indicating that she was fit to return to work.  She showed up for work at her usual time and was promptly told that she was being put on a lay-off due to lack of work.  Two months after that, she retained a lawyer who sent a demand letter.  In response, the defendant told her that she was being recalled and  should return to work.  The plaintiff did not return to work but commenced a claim for wrongful dismissal instead.   The defendant subsequently offered to pay for the time that she had been out of work as part of the return to work proposal and made a similar offer after litigation was commenced.

The plaintiff sued for wrongful dismissal.  At trial, the defendant admitted that the plaintiff had been wrongfully dismissed but took the position that she had failed to mitigate her damages by returning to work.  The trial court judge agreed.

The court applied the Supreme Court of Canada decision of Evans v. Teamsters Local Union No. 31 and ultimately concluded that it was objectively reasonable for the plaintiff to have been required to return to work.  According the trial court, there had been a failure to mitigate.

In coming to this conclusion, the trial judge:

-ignored or disregarded the fact that plaintiff was put on a lay-off right when she returned from a medical leave and that she had been threatened while on leave with termination;

-disregarded or minimized the fact that the employer provided an unprofessional reference letter and a botched ROE;

-overlooked the fact that the employer did not offer to compensate the plaintiff for the time lost until after the plaintiff filed the lawsuit

-minimized the notion that the plaintiff had been subject to embarrassing and humiliating treatment.

The court concluded that the employer had not had a “sinister motive” when he put the plaintiff on lay-off and that would have been able to return to the work that she had performed for more than 8 years.  Accordingly the plaintiff was only entitled to damages from the date of the lay-off until the date she was recalled to work.  Ouch!

You can find a discussion of some other similar cases here.

The bottom line is this:

If an employer wrongfully dismisses an employee and then decides to recall the employee back to work – even after the employee commences a lawsuit, there are many court decisions from across Canada that support the position the employee must return to work.

If the employee is “recalled” to work, even after filing a wrongful dismissal lawsuit, but refuses to return, the damages awarded by a court may be minimal.

In a recent Ontario decision, the Court of Appeal weighed in on this issue with a decision that is quite helpful for constructively dismissed employees – finally.  In Farwell v. Citair Inc., a decision released on March 7, 2014, the Court of Appeal upheld a trial court decision that the plaintiff was not required to return to work after being constructively dismissed in order to mitigate his damages.

The plaintiff, Ken Farwell, had worked for the defendant for 38 years.  He was 58 years of age and was working as the Vice President of Operations.  The defendant restructured and transferred the plaintiff to the role of Purchasing Manager.  The plaintiff took the position that he had been constructively dismissed.  He resigned and brought a lawsuit.

The trial court judge held that the plaintiff had been constructively dismissed.    The new position would have involved a significant demotion and loss of prestige and status.  Monetarily, it would have left the plaintiff with a lower bonus even though other component of his compensation would have remained the same.  Overall, the demotion from VP Operations to Purchasing Manager was held to have been a constructive dismissal.

The defendant argued that the plaintiff failed to mitigate his damages by refusing to work out the notice period in the new position after having been constructively dismissed.  The trial court judge rejected this argument.  Morissette J. held that an employee is not required to work in “an atmosphere of hostility, embarrassment or humiliation.”  The court considered factors including “work atmosphere, stigma and loss of dignity.”  It concluded that it would have been objectively humiliating for the plaintiff to have returned to work.

On appeal, the defendant challenged several rulings of the trial court judge.

The Ontario Court of Appeal had little difficulty in concluding that the plaintiff had been constructively dismissed when he was demoted.  It also upheld the 24 month notice period quite summarily.

The real issue for the Court of Appeal was whether the plaintiff should have been required to return to work to mitigate his damages after having been constructively dismissed.  If the Court of Appeal had agreed with the defendant, it would have become virtually impossible to bring a constructive dismissal lawsuit successfully.

The Court of Appeal begins its discussion with a favourable interpretation of the Evans decision as one which promotes the efficient breach of contract.  The Court of Appeal lauds the effects of this decision, in general.

However, the Court then declines to overturn the trial court ruling on mitigation.  It grudgingly accepts that the plaintiff was not required to work in a lesser role after having been constructively dismissed since the trial court judge had held that this would have been “objectively humiliating.”

The crux of the matter, however, according to the Court of Appeal, is that the plaintiff was not asked to return and work out the notice period after having been constructively dismissed.  If the employer had asked him to return to the same position he had held, for the balance of the notice period, he would have been required to do so.  Here, the Court of Appeal held that there was no evidence of an appropriate return to work offer, after the plaintiff had been constructively dismissed.

This is quite a helpful case for constructively dismissed employees after a string of stinging defeats in courts across Canada. The decision suggests that if there is a constructive dismissal of the type that involves a significant demotion, the employee will not be required to mitigate damages by working out the notice period in the lesser role.  This contrasts with cases like Evans where the employee is asked to return to work in the same position – after being dismissed – actually or constructively.

The Farwell decision means that constructive dismissal lawsuits are still alive in Ontario.  If there is a provable case of demotion, loss of status, loss of prestige and perhaps, embarassment, the employee will not be required to return to work.  That being said, this may not be the last word on this line of cases.  Stay tuned and tread carefully.

The plaintiff had worked in residential gas installation for 12 years for the defendant.  He was earning an income of approximately $55,000 annually, though it fluctuated depending on the availability of work.  He was dismissed after 12 years of service on a “without cause” basis.  A number of other employees were also dismissed at the time.

At the time of dismissal, the defendant offered to pay the plaintiff a total of 8 weeks’ pay, which was the minimum that would have been owed under the Ontario Employment Standards Act.  It asked for a signed release.  The plaintiff refused and brought a claim for wrongful dismissal.  The defendant paid out the 8 weeks’ pay.

At trial, the defendant argued that business was slow.  It took the position that the plaintiff would have have worked a very small number of hours if he had not been dismissed and that his damages would have been reduced to a very nominal amount.  The trial judge rejected the argument that there was sufficient evidence to draw this conclusion.  In other words, the court concluded that the plaintiff still would have earned an income if he had not been dismissed.

However, the trial judge expressly accounted for tough economic times in assessing the notice period.  First, the judge concluded that the appropriate notice period should have been 12 months.  This is probably a reasonable conclusion, based on all of the common law factors.  The plaintiff was 52 when he was dismissed.  Looking at all of the common law factors, including length of service, position, age, availability of comparable work and other relevant factors, a 12 month award would have made sense.

Justice Conlan then proceeded to reduce the plaintiff’s award by four months’ pay because of the “market and economic health of the [defendant]” at the time of dismissal.  In doing so, the court relied on the decision of Bohemier v. Storwal International, (1982) CanLii 1764 (Ont S.C.J.), a decision that had been affirmed by the Ontario Court of Appeal in 1983.

The Bohemier decision held that a notice period should be fair to both the employee and the employer.  However, as it has been interpreted subsequently by other court decisions, it did not say that the plaintiff’s notice period should be eviscerated because the employer is facing tough economic times.  In fact, if times are really tough, the dismissed employee will have a more difficult time finding alternate employment and could require a longer notice period.

It may be that Justice Conlan was swayed in this particular case by the fact that the plaintiff’s hours fluctuated and there might have been less work over the notice period.  Or perhaps the court was not fully convinced of the plaintiff’s mitigation efforts, even though the court expressly concluded that the plaintiff had mitigated his damages satisfactorily.  In any case, the court concluded that 12 months’ severance was too much for the plaintiff and reduced it to 8 months, expressly relying on the fact that the defendant was facing difficult economic times.

It remains to be seen whether the plaintiff will appeal this decision.  the amount at stake would be approximately $20,000.  There could also be significant legal costs at stake, depending on what types of offers to settle, if any, were exchanged between the parties before the trial.  The Ontario Court of Appeal does not like to “tinker” with notice periods if they are in a “reasonable range.”  However, the plaintiff could try arguing that the court made an error in principle by placing an overly significant emphasis on the economic challenges facing the defendant.

If this decision stands, it would be a very helpful piece of ammunition for defendants facing tough times.  Defendants can use this argument to limit severance liability in tough economic times.

For plaintiffs, it can be a real double whammy.  The employee is let go in difficult economic times, where it may well take longer to find work. Then the plaintiff faces a reduced notice period because of those same difficult economic times.  There seems to be a problem with this logic…

We will watch to see what happens with this case and how (if at all) it is applied.