Wrongful Dismissal: Recent Decisions Made by Summary Judgment Motion

Apr 21, 2015

Last year I wrote a blog entitled, “Wrongful Dismissal Law: Summary Judgment Motions – The Way of the Future”. This blog introduced some important facts about summary judgment motions such as when they are appropriate to use and what they decide. Over the last year, these motions have become more and more common within the legal landscape.

On February 2, 2015, Justice Brown of the Ontario Court of Appeal in Arnone v Best Theratronics2015 ONCA 63 (CanLII), 2015 ONCA 63 (C.A.) wrote: “a straight-forward claim for wrongful dismissal without cause, such as the present one, strikes me as the type of case usually amenable to a Rule 20 summary judgment motion”.

Employment lawyers have taken note accordingly and are bringing summary judgment motions to decide wrongful dismissal cases. Here are four recent examples:

  1. Leeming v. IBM Canada Ltd., 2015 ONSC 1447 (CanLII)

The judge concluded that a 60-year-old employee with 8 years service working in a middle managerial administrative position was entitled to 10 months notice. The court also concluded it was OK for her to start her own business four months after her employment was terminated because her search for a full-time job did not result in a job offer.

  1. Wolfman v. Rocktenn-Container Canada, L.P., 2015 ONSC 1432 (CanLII)

The judge concluded a 52-year-old employee with 16 years experience working as a national account sales representative was entitled to 16 months notice. When calculating damages during this period the court took into account the employee’s salary, bonus, the value of group benefits, the value of pension contributions, and car allowance.

  1. Chen v. Purdue Pharma Inc., 2015 ONSC 1967 (CanLII)

The judge concluded the 56-year-old employee with 22-½ years service working as a Director of Business Development was entitled to 24 months notice. When calculating damages the judge took into account the salary increase the employee would have received during the notice period, and calculated his bonus on the average of his last two years bonus payments. The decision was issued before the end of the 24-month notice period and the employee was ordered to repay the employer any income he earned during the notice period.

  1. Fraser v Canerector Inc., 2015 ONSC 2138 (CanLII)

The judge concluded the 46-year-old employee with about 3 years service as a senior executive was entitled to 4.5 months notice. The employee was terminated in June, which had a negative impact on his job search. However, but for the time of the year he was terminated, “I should have awarded a somewhat shorter period of notice (three months)” wrote the judge. When calculating damages the judge did not include an amount for a bonus during the notice period.

For the past 25 years, Doug MacLeod of the MacLeod Law Firm has been advising and representing employers in connection with employee terminations. If you have any questions, you can contact him at 416 317-9894 or at [email protected]

There are many ways to attack the termination clause in an employment contract. 

I am now surprised if employee counsel does not claim that their client’s  termination clause is not legally enforceable - usually because the termination clause does not allegedly comply with the Employment Standards Act.

This blog considers a case, McKercher v Stantec Architecture Ltd., 2019 SKQB 100, where an employee successfully attacked the termination clause in his contract because he did not explicitly agree to it after being promoted. 

The Facts

In 2006, Mr. McKercher commenced employment as a staff architect. The termination clause in his employment contract stated: 

Termination other than for cause will be with notice or pay in lieu of notice, based on your length of service. If the Employer terminates your employment for other than just cause you will receive the greater of:

  1. a)   Two weeks notice or pay in lieu of notice during the first two years of employment increasing by one week for each additional completed year of employment to a maximum of three months notice or pay in lieu of notice.

      or

  1. b)   The minimum notice of termination (or pay in lieu of notice) required by applicable statutes.

Eleven years later, when Mr. McKercher was employed as a Business Centre Sector Leader, his employment was terminated. The employer paid him the three months termination pay he was owed under his employment contract.

 

Another way to attack a termination clause: What is the changed substratum doctrine?

An Ontario judge in a 2012 case, MacGregor v National Home Services, 2012 ONSC 2042 (CanLII), described this legal doctrine as follows: "The changed substratum doctrine … provides that if an employee enters into an employment contract that specifies the notice period for a dismissal, the contractual notice period is not enforceable if over the course of employment, the important terms of the agreement concerning the employee’s responsibilities and status has significantly changed."

 

The rationale for this doctrine has been described by one judge, Schmidt v AMEC Earth & Environmental Ltd., 2004 BSCS 2012 (CanLII), as follows: "In my view, it was incumbent on the defendants to advise Mr. Schmidt that they intended to continue to rely upon the termination provision set out in the Agreement when substantial changes in his employment occurred. This would have allowed him to consider the matter and to negotiate for other terms. If the defendants wished to continue to rely on the termination provisions there ought to have been a ratification of the provisions as the nature of Mr. Schmidt’s employment changed."

 

Decision

The judge hearing this case relied on the following factors when deciding not to enforce the termination clause in the employment contract: ”...there is no evidence that (the employer) made it clear to the (employee) that the notice of termination provisions were intended to apply to the positions to which he was promoted. The employment agreement contains no express wording to this effect, nor does it contain any wording to support the inference of such an intent. Further, and in keeping with the analysis in Schmidt, the Court received no evidence that, as it promoted the plaintiff, SAL reasserted its understanding and expectation that the notice of termination limit would remain in effect.”

 

Lesson to be learned:

An employer should make it clear that the termination clause in an employment contract applies when an employee is promoted. This expression of this intent should be in writing and should be clear and unambiguous. I recommend that an organization’s employment be reviewed by an employment lawyer every year or two. If your employment contract does not address this issue then think about doing so the next time it is reviewed.

 

For 30 years, Doug MacLeod of   the MacLeod Law Firm has been advising employers on all aspects of the employment relationship. If you have any questions, you can contact him at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

 

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