Court Awards Wrongfully Dismissed Employee 24-Month Severance Package

A significant issue that recently arose in Ontario employment law was whether or not an employee whose employment was terminated during the COVID-19 pandemic is entitled to more severance package. As previously discussed in this employment law blog, an employee who faces a wrongful termination may be able to negotiate a severance package with the help of an experienced employment lawyer.

In a wrongful dismissal claim, an employee maintains that they were unjustly fired as a result of the following:

the employer did not provide the employee with prior notice of termination or pay in lieu of notice (commonly called a “severance package“)
the employer terminated their employment falsely alleging just cause for dismissal

One specific exception to an employee being awarded a severance package as a result of a wrongful dismissal is if the employee was with for just cause or previously signed a legally enforceable employment contract (assuming there is a termination clause restricting the amount of termination pay or severance pay). If you receive a termination package as a result of your wrongful termination, an employment lawyer can review the terms of your employment and advise whether or not you are entitled to a better severance package.

How do You Calculate an Employee’s Severance Pay in Ontario?

If you were “let go” from your employment, you may be entitled to a severance package depending on if you meet a few requirements. It is important to note that in this article, we cover only an employee’s full severance pay entitlements under common law (which are more than the minimum termination pay and severance pay requirements under the Ontario Employment Standards Act, 2000).

Apart from the Employment Standards Act, 2000 stipulates the minimums noted above, many Ontario employees are not fully aware of the fact that they are entitled to their full severance pay under common law if they are wrongfully fired from their job. As discussed above, employees in Ontario have an underlying protection to receive prior reasonable notice of termination (unless they give that up in an employment contract). According to the courts, reasonable notice represents the amount of time it generally takes employees to find similar employment in their particular industry (e.g., similar level of income, job title and responsibilities). In severance package review and negotiation between employment lawyers, employers and employees often have opposite views in terms of how much reasonable notice the employee is entitled to (or the value of the severance package). Fortunately, the courts determine an employee’s severance package entitlements using objective standards, including by considering an employee’s age, length of service, position and job market conditions. Usually, an employee’s severance package amounts to approximately an additional 3-6 weeks of severance pay year of employment (although this could vary depending on each employee’s specific circumstances).

When you get an employment termination letter, you can generally assume your employer has glossed over your full severance package entitlements in the hope that you will quickly accept preparing your severance package. Unfortunately, many employers will succeed by counting on the fact that an employee is unaware of their employee legal rights or unwillingness to speak with an experienced employment lawyer to review a severance package. For this reason, we encourage all employees to exercise their right to seek legal advice before signing any termination document.

Case Example of Wrongful Dismissal and Severance Package

In a recent case called Williams vs. Air Canada, an Ontario court awarded a long-term employee 24 months’ notice, mostly due to the fact that she worked for many years for the company and given the economic difficulties at the time of termination (including the COVID-19 pandemic).

Facts

The employee was employed with Air Canada for a total of 24 years, from 1996 until her wrongful dismissal in May 2020 at the age of 52. In her most recent role, she was employed as a manager earning a base salary of $70,380, health benefits, pension plan contributions, bonus pay, profit sharing and travel privileges. When her employment was terminated, she refused the employer’s severance package and sued for wrongful dismissal. She then began searching for new employment (a total of 17 jobs following her wrongful dismissal). She was eventually only able to obtain part-time jobs nearly 2 years after her wrongful dismissal.

Court Decision

In agreeing that the employee was wrongfully dismissed, the court awarded her a severance package worth 24 months of compensation after considering her age, years of service, character of employment and current economic environment. In doing so, the court focused on the fact that she was an older employee at the age of 52; had worked for the company for nearly 24 years; and her employment was terminated during the COVID-19 pandemic and economic uncertainty. Generally, these factors entitle a wrongfully dismissed employee to a longer notice period (or severance package).

Further, the court rejected the employer’s argument that she was only entitled to 12 months’ compensation given that she had no direct reports and her managerial role was within the lower half of the hierarchy at the airline. In fact, the court stated:

“It seems to me that Air Canada unduly emphasizes the character of Ms. Williams’ employment, and thereby diminishes the importance of her age and length of tenure, to minimize the reasonable notice to which she is entitled.”

Following other Ontario court decisions dealing with wrongful dismissal claims, the court also noted that “character of employment” is a factor of declining relative importance (see Di Tomaso v. Crown Metal Packaging Canada LP).

Contact Ontario Employment Lawyer Today

If you are an employer who needs defence in a wrongful dismissal claim brought by one of your employees, or if you are an employee who believes you have been wrongfully dismissed by your employer and you would like to know if you have the right to sue your employer for wrongful dismissal or a severance package, review your employment contract or negotiate a severance package, our experienced wrongful dismissal lawyer at Bune Law, Toronto employment lawyer, can help. Even if your employer states you were fired for cause, you will find it helpful to consult with our recommended employment lawyers to review the circumstances of your termination. It will take an hour and at the least, we can offer you peace of mind that your employer has not short-changed you.

Contact us by phone 647-822-5492 or fill out the contact form to the side. Our employment lawyer in Toronto would be happy to assist in your employment law matter as quickly as possible.

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