eCaseNote 2011 No. 03

“Bare Minimum” Compensation in Lay‐Offs of Unskilled Workers Results in Generous Severance Packages

Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469 Brito v. Canac Kitchens, a Division of Kohler Canada Co., 2011 ONSC 1011

The Ontario Supreme Court and Court of Appeal recently released two significant cases regarding the wrongful dismissal of unskilled employees that will likely reverberate across Canada. 

In Di Tomaso, the plaintiff (“Tomaso”) was 62 years old, and employed by Crown Metal Packaging Canada LP (“Crown”) for over 33 years as an unskilled, non‐managerial worker. In early 2010, Crown closed the plant where Tomaso worked.  

Tomaso was given five termination notices, the first of which was given on September 9, 2009 providing a termination date of November 6 2009. On November 4, 2009 he was given a second notice saying that his employment will be “extended” for a “temporary period” until December 18, 2009. This went on until the last notice was given two days before Tomaso’s final termination on February 26, 2010. Each work extension was less than 13 weeks.  

Tomaso was given the Ontario statutory minimum of 26 weeks severance, one month’s benefits and accrued vacation pay. Despite applying to 22 other companies, Tomaso could not find work. He filed an action in the Ontario Supreme Court against Crown wherein he was awarded 22 months severance. Crown appealed to the Court of Appeal.  

Crown claimed that the severance periods were capped in Ontario for unskilled workers at 12 months. Crown also claimed that the termination notices provided to the plaintiff were sufficient because none of the temporary work extensions were longer than 13 weeks. S. 6(1) of the Termination and Severance of Employment, O. Reg. 288/01 under the Employment Standards Act, 2000, S.O. 2000, c. 41 (“Act”) permits 13 weeks of extended work past a termination date before a new notice of termination is required.  

In dismissing the appeal, the Court of Appeal found that severance was not capped at 12 months for unskilled employees. In applying the Bardal factors (nature of employees work, employee’s age, length of services and availability of comparable work), the Court found that 22 months severance was at the high end for the nature of unskilled workers, but the other factors justified this. Where Crown suggested the nature of the employee’s work is the most important factor to consider, the Court of Appeal found this factor is diminishing in importance and that there is no empirical evidence that junior or unskilled employees have an easier time finding other employment than more senior or skilled ones.  

The Court of Appeal also found that the different periods of “extended temporary employment” were to be counted together as one long period of employment. The Court of Appeal found that to adopt Crown’s interpretation, the remedial purpose of the Act would be defeated as employers could stack temporary employment periods.  

In Brito, the Ontario Supreme Court considered similar issues. The plaintiff (“Olguin”) was one of several who filed the action but was the only one who did not settle. Olguin was employed by Canac Kitchens (“Canac”) for almost 24 years as an unskilled worker. He was 55 years old when he was dismissed without cause and given the Ontario statutory minimums of 31.79 weeks severance and 8 weeks of benefits. Olguin found another job at lower pay but soon after was diagnosed with cancer, became totally disabled and was unable to work.

In finding for Olguin, the Court said that Canac’s responsibility was to make Olguin “whole again”, and used the Bardal factors to award Olguin 22 months severance.  As part of making Olguin “whole again”, he was also awarded full benefits for that period of time. Because Canac did not have Olguin covered under a coverage plan due to his dismissal, they were held personally liable for the entirety of Olguin’s short term and long term disability benefits. These extended until Olguin reached age 65. Echlin J. described this lack of coverage as a “gamble” (that Olguin would remain healthy) that Canac lost.

   Canac argued that Olguin failed to mitigate his damages by not acquiring alternative coverage, but Echlin J. found there was insufficient evidence to show Olguin could find alternative comparable coverage. Canac further argued that while legally defined as a “notional employee”, Olguin was unable to fall under the “actively at work” definition required for his insurance coverage. Echlin J. rejected this argument as circular and required Canac to pay Olguin $15,000 in ancillary damages. The Court found that Canac’s behaviour was “cavalier, harsh, malicious, reckless, outrageous and high‐handed” towards Olguin.  

These two cases demonstrate a judicial attitude, at least in Ontario, that suggests that courts will not accept an employer’s attempts to take what the Brito Court called the “bare minimum” route when terminating employees, and that this extends to the treatment of unskilled workers. Employers across Canada would be wise to consider this a judicial trend that other Canadian courts will soon follow.

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