The decisions are likely to generate a high volume of litigation as employees and their former employers struggle to demarcate the new boundaries over some significant issues. The challenge for dismissed employees will be to find creative ways of getting around some of the implications of these decisions, while ensuring that their own conduct does not run afoul of the technical requirements of some of these cases.

This four part series of articles reviews and comments on these decisions.

Evans v. Teamsters Local Union No. 31 – Forced to Return to Work after being Wrongfully Dismissed

The Supreme Court’s 6-1 decision in Evans v. Teamsters is one of the harshest, pro-employer decisions issued by this Court in quite some time. Although the particular facts in this case probably narrow the implications of the decision, the Supreme Court nevertheless provides some comments which will concern many dismissed employees.

Evans had worked for the Teamsters for more than 23 years as a business agent in Whitehorse. He was dismissed following the election of a new union executive, which he had opposed during the union’s election process. The union terminated Evans’ employment and then asked to open negotiations. When the parties could not come to a deal, the union insisted that Evans return to work for 24 months of “working notice”. Evans refused to return to work. The union took the position that he had failed to “mitigate his damages” by refusing to return to work for the notice period.

The majority of the Supreme Court indicated that the appropriate question in this circumstance is whether a reasonable person would agree that the dismissed employee should be expected to return to work for his or her employer in all of the circumstances after being dismissed. The Court cited the requirement to consider work atmosphere, stigma and loss of dignity as well as nature and conditions of employment. However, the Court held that these questions should all be resolved by looking at an “objective” standard rather than a “subjective one”.

In this particular case, Evans had a number of concerns that would seem to have justified his concerns about returning to the workplace. After all, he had been dismissed by a newly elected union executive after siding with the losing side in a hotly contested election. He had what appeared to have been genuine concerns that the workplace would have been poisoned for him. These issues were all reflected in findings by the Trial Court.

Instead of accepting the Trial Court’s findings, the Supreme Court and the Court of Appeal overturned these factual findings even though that is generally not the focus of an Appellate Court. In particular, the Supreme Court focused on a letter that Evans had written in which he had said that he was willing to return to work if certain preconditions were met. Ultimately, the Supreme Court made a factual finding that “the relationship between Evans and the Union was not seriously damaged” and, “given that the terms of employment were the same, it was not objectively unreasonable for him to return to work to mitigate his damages”.

Justice Abella was the lone dissenting judge – and the lone glimmer of hope for dismissed employees facing this type of situation. She highlighted the fact that the Trial Court Judge had found nine reasons why it would be unreasonable for Evans to return to work and that generally it is not an appellate court’s role to overturn these types of facts.

For Justice Abella, the major issue here was whether or not it would be reasonable for Evans to be required to return to work. Justice Abella noted that employees cannot be forced to work against their will – and to continue to be required to work in an atmosphere not conducive to appropriate “personal relations” would be inconsistent with the law as it currently stands.

The end result as summarized by Justice Abella was that Evans was in effect fired twice. First he was fired without cause, which should have meant providing him with a reasonable notice period. Then he was dismissed with cause and not paid anything for refusing to return to work for the employer that had chosen to dismiss him. The conclusion is that a 22 year employee is left with no compensation because of the way he was dismissed and manipulated by his former employer.

As a practical matter, it may well be true that few employers will want to have their dismissed employees return to work for a lengthy notice period – especially where they have already chosen to issue a notice of dismissal instead of providing the employee with a period of working notice. However, employers may be able to use the Evans decision as a bargaining lever by threatening to recall employees to work out a notice period if they refuse to accept severance arrangements. Dismissed employees will have the obligation of showing why it would be objectively unreasonable to have to return to work for the employer that has just dismissed them

Luis Romero Olgin worked for Canac Kitchens as a cabinet maker and production supervisor for 24 years.  He was dismissed in 2003 at which time he was 55 years old.  His termination was “without cause.”  However, Mr. Olgin was not provided with common law severance at the time of dismissal, as required by Ontario law.  Instead, he was paid only the bare minimum amounts under the Ontario Employment Standards Act, amounting to 32 weeks’ pay.  His benefits were continued for only 8 weeks rather than for a reasonable notice period.

Only two weeks later, Mr. Olgin was able to find new employment with Cartier Kitchens, but at a much lower rate of pay.  With Canac Kitchens, Mr. Olgin had been entitled to Short and Long Term Disability Benefits (STD and LTD).  However, he could not get these benefits through Cartier.

Approximately 15 months later, Mr. Olgin underwent cancer surgery and continued to require cancer treatment, including various types of surgery for a number of years.  By the time this case came to trial, Mr. Olgin was still undergoing cancer treatment.  He was still disabled.

Mr. Olgin sued Canac Kitchens for wrongful dismissal.  At trial he was awarded a reasonable notice period of 22 months.  This meant that he was entitled to everything he would have earned for a period of 22 months, less whatever he earned while working for Cartier.  More significantly, Mr. Olgin was entitled to STD and LTD benefits from Canac for the entire reasonable notice period.  Since he became disabled approximately 16 months after being dismissed by Canac, Canac was still responsible for Mr. Olgin’s LTD coverage.  Based on available medical evidence, Mr. Olgin was awarded damages by the Ontario Superior Court (the late Justice Randall Echlin) for disability benefits to the age of 65.  These damages amounted to close to $200,000.  Mr. Olgin was also awarded punitive damages of $15,000 and compensation for legal costs of $125,000.

Canac appealed the decision to the Ontario Court of Appeal, which released its decision on January 31, 2012.  The Ontario Court of Appeal upheld the full award of STD and LTD benefits for Mr. Olgin to the age of 65.  However, the Court of Appeal overturned the punitive damages award since Mr. Olgin had not originally sued for punitive damages.

This decision has tremendous ramifications for employees and employers.  The Ontario Court of Appeal has made it clear that employers must provide STD and LTD benefits during any period of reasonable notice.  If an employee is dismissed and does not sign a release with his or her former employer, the employee will be entitled to disability benefits if he or she becomes disabled during the reasonable notice period.  This would not apply if the employer provides a severance package and the employee signs off – even if benefits are not included in the signed off package.

Employees in Ontario can sue for disability benefits if they become disabled at any time during a reasonable notice period as long as they have not otherwise reached a settlement with their former employer.

For employers in Ontario, the decision means that employers can be held liable for disability benefits if they cancel an employee’s benefits at the time of dismissal or shortly afterwards without a release.  Employers can avoid this liability by paying employees reasonably at the time of dismissal and by getting a signed release.  Without a release, employers can be liable for the full amount of any disability benefits.

This case clearly demonstrates that employees must be very careful when reviewing and deciding on whether or not to sign a severance package and release.  They may be giving up significant potential compensation and should only do so if the severance package is otherwise reasonable.

At the very easy end of the constructive dismissal spectrum are cases where employers unilaterally reduce an employee’s pay, with little or no notice.  Similarly, a significant demotion for an employee, even where the overall compensation is kept intact will usually be grounds for a constructive dismissal claim.  But there are many other cases that are in a much greyer area.  The reduction of some responsibilities, a change in reporting structure and sometimes, a change to the terms of a bonus plan, are all the types of changes that may not lead to clear results.

What about geographic relocation?  Can employees be asked to move as part of their employment?  Intuitively, one might have thought the answer would usually be “no.”  Although this might often be the case, the legal answer can depend on the context and the particular background.  Has the employee moved around before as part of the position?  Is the industry one in which employees are routinely expected to relocate?  Is the employer paying for moving expenses?  Is the employer offering any other alternatives?  These are all factors to consider.

In a recent case, the Alberta Court of Appeal (Robin Brown v. Pronghorn Controls Ltd.) held that a transfer from Red Deer, Alberta to Sedgwick, Alberta, approximately two hours away, was not a constructive dismissal.  The Court held the employee would be a branch manager in both places and would be entitled to the same terms and benefits, despite the disruption to his family life.

The Court of Appeal’s view was probably influenced by the fact that the employee had also refused another alternate position with the company in Red Deer and went on to find new employment, at a higher rate of pay elsewhere, quite quickly.  The Court looked at the background and history of Brown’s employment and applied those facts to conclude that this would have been a reasonable move.  In making its decision, the Court relied on a 1989 decision of the Ontario Court of Appeal (Smith v. Viking Helicopter) in which the Court had held that it was not a constructive dismissal to require an employee to move from Ontario to Quebec in the particular facts of that case.

This recent ruling from Alberta is not necessarily a definitive statement of Canadian law.  Other courts in other jurisdictions across Canada have taken and may well continue to take different approaches.  However, in determining whether a proposed transfer is a constructive dismissal, Canadian courts are likely to look at a number of factors including the following:

1. Is there an employment contract in place?  If so, does it permit the employer to relocate the employee?
2. Has the employee moved for work purposes while working for this employer?  Has the employee moved for professional purposes in the past, with other employers?
3. Is the proposed position equivalent in compensation, benefits and opportunity?
4. Will the employer be paying for all moving costs?
5. Is there a reasonable business purpose to the proposed transfer (i.e. as opposed to some type of vindictive relocation proposal).
6. Is the employer offering an alternative?

These are some of the questions that should be considered carefully when evaluating the likely success of a constructive dismissal claim as a result of a proposed relocation.  The legal answer may not always be as predictable as one might have expected.  Setting up a proper paper trail and asking the right questions can certainly help.  But ultimately, taking the wrong steps can be risky and costly, particularly, as with many other constructive dismissal claims, if there are other reasonable alternatives.

Antonio Di Tomaso worked for 33 years for Crown Metal Packaging as a mechanic and press maintainer.  He was 62 years old at the time he was dismissed.  He had applied for work with 22 other companies after being let go, but as of the time of the summary judgment motion, he had not yet found new employment.

Di Tomaso was awarded 22 months of compensation in the Ontario Superior Court. In issuing this award, the Court considered his length of service, age, anticipated difficulty of finding alternate work and other applicable common law factors.

Crown Metal Packing unsuccessfully appealed to the Ontario Court of Appeal.  It tried to argue that since Di Tomaso fell into the category of “clerical and unskilled employees” he should be awarded a much lower notice period.  It suggested that 12 months was the “cap” for Di Tomaso.

The Court of Appeal roundly rejected that argument.  In doing so, it completely eliminated the notion that there is a 12 month cap on notice awards for certain employees.  Although “character of employment” may still be a factor for courts to consider in awarding notice periods, it is only one factor among several and not the primary or controlling factor.

The practical meaning of this decision is that many Ontario employees may now be entitled to much higher notice awards when they are wrongfully dismissed.  They will still need to demonstrate that they have made reasonable and appropriate efforts to try to find other work.  But long service non-managerial employees should now be entitled to significantly better treatment when let go.

Here are some of the key things to look for as part of a “reasonable” severance package.

Severance Pay or Salary Continuation:  It goes without saying that the most important component is usually the severance itself.  Employers can choose to pay over time, with or without some kind of claw back (or “mitigation”) clause, or in one or more lump sums.  In most cases, this is the most important part of the severance package and in many cases, different components are negotiable.  The severance must, at a minimum, include compensation for the relevant provincial employment standards amount.  For example, in Ontario, the severance package must provide for notice pay under the Ontario Employment Standards Act and severance pay, if applicable.   If you are Federally regulated employee (someone who works in a bank, telecommunications company, tv network etc.,) the Canada Labour Code would apply instead of the provincial legislation.  Beyond the employment standards amount, employees can negotiate the length of time, the trigger for mitigation, the payment schedule or other terms.  This is all aimed at ensuring that the employee is compensated as required by Ontario common law, which itself, can vary wildly for each employee.  This is the area on which appropriate legal advice should generally be obtained.  The period of time for which the employee is being compensated is generally called the notice period or severance period.  

Bonus:  Dismissed employees should usually be compensated for accrued bonus for the current year (if there has usually been an annual bonus), as well as bonus for the severance period.  Many employers are quite reluctant to include the prospective bonus as part of the severance package.  If the employee has been getting the bonus every year and can show that he or she would have continued to get a bonus if employment had continued over the severance period, the bonus should be payable.  There may be wording in the original employment contract that overrides this entitlement, but it is often worth trying.  If there is wording in an employment contract or agreement that deals with the bonus, this will be something that needs to be properly assessed and considered. Commissions and Variable Pay:  For dismissed employees with fluctuating pay, the test is what the employee would have reasonably earned over the severance period.  Of course all accrued amounts are owed to the employee, subject to the terms of the employer compensation plan.  Going forward, most dismissed employees should be paid severance on the basis of overall estimated earnings, not just base salary for the entire notice period.

Benefits, RRSP and Pension Contributions:  Severance packages should include arrangements that compensate employees for all components of their compensation.  Generally, all benefits, including extended health benefits, STD and LTD insurance, RRSP contributions, pension contributions, and other perquisites should be continue during the notice period – or the employee should be compensated for the value of any items that are not being compensated.  For example, most insurers will not allow employers to continue LTD insurance plans.  Employees should request compensation for the loss of this employment benefit.  Many employers will agree to include that compensation in the severance package.  Pension losses can be a huge component of a severance package, particularly if the employer had a defined benefit pension plan.

Car or Mileage Allowance:  If the employee had the use of a company vehicle, the general rule is that the employee is entitled to be compensated for the personal use component of the vehicle.  In other words, if the employee used the vehicle for personal use 30% of the time (and showed that on his or her taxes), employers can be required to provide compensation for this loss during the notice period.  Some employers will be more flexible in this area and will either provide employees with the use of a vehicle over the notice period or pay a reasonable estimate of the real costs of the vehicle.

Outplacement or Retraining:  Strictly speaking, an employer is not necessarily required to provide outplacement or retraining as part of a severance package.  However, an employer can be required to pay for the employee’s reasonable costs of “mitigation” if the employee incurs costs in trying to find other work.  As a result, many employers will provide direct outplacement arrangements at their expense.  Dismissed employees may be able to negotiate the type of arrangements that are being provided, the organization, location, and value of such services.  As well, dismissed employees can often arrange to have an employer pay for some upgrade or retraining courses if that will help the employee find new employment.  Though some of this may sound expensive for employers, overall, providing these arrangements may help the employer reduce the time period that it will take the employee to find new work and that might save the employer some money.

References:  Employers are not strictly required to provide helpful references though some judges may look at this down the road and award extra damages for an employer’s failure to do, even if the judge does not state that expressly.  Employees should ask for a mutually agreeable reference and an agreement that any reference requests will be answered in a manner that is consistent with the reference letter or summary provided.

Legal and/or Accounting Fees:  Most employers should be prepared to make some kind of reasonable contribution towards the legal fees of a dismissed employee.  Once a lawsuit has been commenced, the employer can be required to make these contributions if the lawsuit had merit.  Employers will often try to avoid a lawsuit by including payment for some of the legal fees in a negotiated severance package.

Waiver of Non-Competition Clauses:  Some employers may be prepared to waive or modify certain non-competition terms or clauses that were contained in a dismissed employee’s employment contract.  This can often be a tricky conversation.  It is usually more likely that employers will agree to modify a non-competition clause (that might have been unenforceable anyways) than to modify a non-solicitation clause, that may actually protect the employer’s business.  Telling an employer that you would like to go and take their clients’ business is not usually the best way to get a great severance package.  But telling an employer that you won’t be able to find any work because of an overly broad non-competition clause may be viewed as reasonable.

Other Perquisites:  Employers will sometimes provide for items like health club memberships, personal cell phone costs, professional memberships, private annual physical examinations, employer discounts and other items.  These items should be reviewed and considered individually.  Employees will also need to weigh the value of pursuing an item that may not be significant in comparison to the other items.

General Damages:  Most wrongful dismissal damages are fully taxable as if they were income.  The withholding rate may be lower (i.e. 30% if the amount is over $15,000) but at the end of the year, the employee will have to pay tax on the full annual marginal tax rate.  An exception is if there is a basis for some of the damages to be paid as “general damages,” which are non-taxable.  This, fortunately, is not applicable for most dismissals. I say fortunately because it would be a harsh world indeed if every employer who dismissed someone had also acted in a way that would warrant general damages.  Nevertheless, conduct that violates human rights legislation or  other “bad faith” conduct can warrant payment of general damages. It is very rare that employers will actually negotiate and pay these damages without an actual lawsuit or human rights complaint but it does sometimes occur.

These are some of the items to look for in a severance package, though entitlements to these items will really depend on the terms of the person’s employment, the length of service, the type of position, the existence of any employment contract or offer letter and a range of other factors.  A key factor is the likelihood of the dismissed employee finding new employment since all of these items are only really payable if they are arranged initially, or if the employee is actively looking for work and unsuccessful.  Dismissed employees who find new employment quickly may only be entitled to the applicable employment standards minimums.

There is no set formula for exact severance pay calculation.  Despite the fact that some lawyers might claim there is a very exact number if you plug a few variables into a “severance pay calculator,” that only produces a rough average, which may not even be statistically significant.  In most cases, there is a range, sometimes a fairly wide range.  Employees need to consider all of the different aspects of the proposed severance including which items are being paid and which are not, whether the severance is being paid as a continuance or a lump sum, and other related factors.

This list of items is provided only as a guideline for things that employees should consider when looking at a severance package that has been proposed.  In most cases, particularly when a number of different items are listed, employees should make the tax-deductible investment of obtaining proper legal advice from a qualified employment lawyer.

The dismissed employee, Syed Hussain, was an assistant warehouse supervisor.  He had worked for the defendant Suzuki Canada for almost 36 years.  This had been his only full time job after immigrating to Canada from India in 1974.  Hussain was almost 65 at the time he was dismissed in February 2011, due to corporate restructuring.

After losing his job, Mr. Hussain took a period of time to get over the shock and to organize his efforts to find new employment.  He then applied to some 27 positions by July 2011, though his efforts were unsuccessful.

Justice Roberts, writing on behalf of the Court, noted that 24 months is usually the high end of  wrongful dismissal awards.  However, the Court held that Mr. Hussain was entitled to 26 months’ compensation due to the particular factors of his situation including his lengthy service, his age and other related factors.  The Court held that Mr. Hussain was entitled to benefits, RRSP contributions, and a discretionary bonus throughout the entire 26 month period.

Even though this wrongful dismissal case was decided only 10 months after Mr. Hussain was dismissed, the Court still awarded Mr. Hussain 25.5 months’ compensation and reduced the total notice period by only 1% for the contingent possibility that Mr. Hussain could find new employment over the remaining 16 months.

Finally, the Court ordered Suzuki Canada to reimburse Mr. Suzuki for almost $20,000 in legal fees.

This decision follows on the heels of the Ontario Court of Appeal decision in Di Tomaso v. Crown Metal Packaging, a case in which a long service mechanic was awarded 22 months’ notice in June 2011.

It is becoming quite evident in Ontario that long service employees are now entitled to notice periods at the higher end of the range, regardless of the type of position that the person held or the salary level that the employee enjoyed.

This trend is good news for Canadian employees, particularly long service employees who are not employeed in upper management positions.  Although for many years, the longest notice periods were usually awarded by courts only to the most senior employees in wrongful dismissal cases, that is now no longer an accurate summary of the law.  Age will still be a relevant consideration.  Employees who are dismissed after 20 years of service but are still in their 40’s may not be awarded the maximum amounts.  But dismissed employees in their 50’s and 60’s with many years of service will now all have a chance to obtain compensation of close to two years’ pay.

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.

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).