In times of economic downturn, employers often ask about ways to
reduce common law severance obligations to employees. In most
cases, courts will not have much sympathy for employers. However,
where there is evidence of real financial difficulty and a poor
market, there is some new authority that a court will reduce the
reasonable notice period to which the employee would otherwise have
been entitled. In a recent case, Gristey v Emke Schaab
Climatecare Inc., 2014 ONSC 1798 (CanLII), an Ontario court
concluded that "economic factors" – in this case,
evidence of the market and the financial health of the Company at
the time of termination of the plaintiff's employment –
were relevant factors for determining what was ultimately awarded
to the plaintiff.
The court found authority for this proposition in the decision
of Ontario's Court of Appeal from 1982 called Bohemier v
Storwal International Inc., 1982 CanLII 1764. Despite the
fairly circumscribed circumstances upon which such relief to an
employer would be provided, the court in Gristey accepted
that the Company's work was sparse at the time of the
plaintiff's termination and that its business market was
generally poor. The court also accepted that there was no sign of
material improvement for the Company in the foreseeable future.
Interestingly, the court also noted that the Company's
evidence with respect to how it determined what to offer the
plaintiff on termination was not based upon the Company's
ability to pay, but rather on what it viewed to be fair. There was
also an acknowledgment during the trial by the Company that the
business could have afforded continuing to pay the plaintiff some
amounts after the termination date and that the Company had made a
profit in the months following the termination. Despite these
latter findings, the court nonetheless accepted that the Company
was in financial difficulty at the time of the decision to
terminate the plaintiff's employment and agreed to discount a
reasonable notice period of 12 months by one-third.
Arguments to reduce notice periods will only be available in
limited circumstances and upon actual evidence of real and dire
financial difficulty on the part of the Company with "no sign
of material improvement in the foreseeable future". It remains
to be seen whether this case will renew a concept that has for the
past many years been generally rejected.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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