When dismissing large numbers of employees, employers use widely different strategies.  Some employers choose to provide relatively fair severance proposals, negotiate if necessary, and minimize their legal entanglements.  Other employers choose to offer low-end severance arrangements and fight vigorously over any improvements to the severance packages they have offered.  While employer-side legal counsel certainly benefit when employers use the latter strategy, their employer clients do not always come out ahead, even with the costs saving that they might achieve by convincing some employees to accept low ball offers.

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.