By: Allison Taylor
Employers should be dismayed by the result in the recent case before the Ontario Court of Appeal in Di Tomaso v. Crown Metal Packaging Canada LP. Mr. Di Tomaso was employed by Crown for over 33 years as a mechanic. In September 2009, Crown Metal advised Mr. Di Tomaso that his employment would be terminated on November 6, 22009. However, over the next 6 months, 4 extensions on the termination date were provided, all by written notice. Mr. Di Tomaso was finally terminated by letter dated February 24, 2010, effective on the closing of Crown’s facility on February 26, 2010. He was paid a total of 26 weeks of statutory severance pay only. He was then aged 62.
Mr. Di Tomaso sued seeking common law damages of 24 months’ pay in lieu of notice. The company defended on the basis that he was an unskilled, low level worker and that, at most, common law notice would amount to 12 months.
On a motion for summary judgment, the Court agreed with Mr. Di Tomaso that the extensions made the working notice equivocal and that only the final letter actually provided notice of termination. Accordingly, Mr. Di Tomaso had been in effect terminated without notice.
The Judge also rejected the company’s argument that the low level of Mr. Di Tomaso’s job should result in a capping of the notice period at 12 months. Relying on the traditional factors from Bardal v. Globe and Mail case (nature of employment, length of service, age and availability of comparable employment), the Judge did not apply the Court of Appeal decision in Cronk v. Canadian General Insurance Co. in which a 12 month notice period was applied to a clerical employee with over 30 years of service, and instead relied on the later Court of Appeal decision in Minott v. O’Shanter Development Co. Ltd., which held that there is no cap and that an unskilled 43 year old employee with 11 years of service was entitled to 13 months of notice rather than the alleged “cap” of 12. As a result, Mr. Di Tomaso, at age 62 with 33 years of service, was awarded 22 months of notice.
Crown appealed to the Court of Appeal on the efficacy of the 5 month notice period and on the length of common law notice. The Court held that certainty was only arrived at with the last termination letter and that uncertainty rendered the earlier notices ineffective. Insofar as the notice period was concerned, the Court applied its decision in Minott and held that character of employment has become a “factor of declining relative importance” and that “the proposition that junior employees have an easier time of finding suitable alternative employment is no longer, if it ever was, a matter of common knowledge”. In other words, if that argument is going to be made, it must be made on specific evidence led by the employer, which did not occur in this case. The Court therefore dismissed Crown’s appeal.
The result of this decision is that employers can no longer assume that, regardless of their age and length of service, junior employees will always receive less notice than senior employees who are otherwise similarly situated. This can be expected to lengthen the notice periods for lower level employees. Given the current economic environment, this can only be bad news for employers. It is our recommendation, therefore, that greater care be taken in crafting severance arrangements for low level employees, that employment contracts be utilized which cap notice and that if working notice is to be provided, greater certainty about the end date of employment be provided than was the case for Mr. Di Tomaso.
An interesting counterpoint to this case is Love v. Acuity Investments (2011). A senior vice president was dismissed without cause after 2.5 years of employment. At trial, he received a 5 month notice period, and appealed. The Court of Appeal substituted a 9 month notice period, stating that the trial judge gave inappropriate weight to length of service to the exclusion of other factors, including the fact that the Plaintiff was one of only two senior vice presidents, reported to the CEO and would have difficulty finding similar alternative employment. It is interesting that in this case, the level of the job as opposed to length of service was given more emphasis, whereas in Di Tomaso, the Court of Appeal was critical of a case in which the reverse occurred.
It can be concluded, therefore, that a balance must be struck amongst all of the major factors set out in Bardal, and that one should not be predominant. It is also clear that, especially for more senior employees, notice does not remotely resemble a linear scale at the low end of service. Interestingly, the Court in Love held that employment ended when active service ceased, despite an earlier Court of Appeal decision in which it was stated that employment ended at the end of the notice period. The Court of Appeal has emphasized that the applicable date must be determined in a case-by-case basis. This consideration is important when the inclusion of stock options and bonuses in severance packages is at issue.