From 8 Weeks to 15 Months: Employee Wins Significant Severance

Vey Willetts LLP was recently successful on a motion for summary judgment, seeking increased severance for an employee who had been wrongfully dismissed. In its decision, Vinette v. Delta Printing Limited (2017 ONSC 182), the Superior Court significantly increased Mr. Vinette's severance entitlement from 8 weeks to 15 months.

In awarding a severance period for Mr. Vinette of 15 months, the Court noted that Mr. Vinette's job prospects appeared very limited as result of his age, his lack of post-secondary education and the fact that the printing industry is in decline.

The Facts

Mr. Vinette was employed with National Printers at a printing facility in Ottawa from 1999 to 2015. In or around August 2011, the Defendant took over operations at the printing facility, and employed Mr. Vinette on a go-forward basis, reducing his pay and requiring that he sign an employment agreement. Regardless of the change in employment, Mr. Vinette continued to do the same job each day, without interruption. On September 9, 2015, the defendant dismissed Mr. Vinette. He was subsequently paid eight (8) weeks' pay in lieu of notice.

At the time of termination, Mr. Vinette was 57 years old. He had been employed for the entirety of his career, since finishing high school, in the printing industry and had no post-secondary qualifications. 

Lessons for Ontario Employers and Employees

Beyond being a positive outcome for Mr. Vinette, this decision has three lessons for Ontario employees and employers alike:

1. Employers that fail to draft clear termination clauses will be liable for common law reasonable notice

In Ontario, employees are presumed to be entitled to common law reasonable notice, or pay in lieu thereof. Employers can avoid this presumption by putting in place a written agreement with the employee that removes this obligation, however, it must be done clearly or the employee will remain entitled to common law reasonable notice (read: fair severance).

Mr. Vinette's employment agreement included a termination clause that sought to remove his entitlement to reasonable notice. Justice MacLeod, however, struck down the termination clause as being invalid. Instead, the Court awarded Mr. Vinette a 15 month period as his entitlement to common law reasonable notice. The termination clause in Mr. Vinette's contract read as follows:

Termination without Cause: Delta may terminate your employment at any time on a without cause basis by providing you with written notice of termination or payment in lieu of that notice and severance pay, if applicable mandated by the ESA.

In the event of without cause termination Delta will continue those benefits mandated by the ESA for the period required by the ESA, and you will be responsible for the replacement of such benefits thereafter.

In concluding that the termination clause was unenforceable, Justice MacLeod found that:

The clause as worded does not exclude common law damages...if an employer wishes an employee to contract out of rights that accrue at common law, the words of limitation must be clear and the significance of the provision must be made clear.

As such, if you are an employee and lose your job (even if you have a written employment agreement), be sure to speak with an employment lawyer to ensure that you receive your entitlement to fair severance. Similarly, employers that wish to create certainty are best advised to have an employment lawyer draft an employment contract that will be legally enforceable.

2. Successor employers will become liable for the full duration of an employee's tenure unless they expressly opt out

Mr. Vinette began work at the printing facility in 1999. He worked for National Printers until 2011, at which time Delta assumed operations at the facility and offered him employment with them.

The Defendant argued that the court should refuse to find it liable for Mr. Vinette's time working at the printing facility with National, as it only assumed operations in 2011. Specifically, the Defendant asserted that it had offered new employment with a new employer.

The court rejected this argument. Justice MacLeod found that:

Where there is a change in ownership and the new employer does not advise the employees they will not be credited for years of past service, recognition of that service is deemed to be part of the contract of employment.

[...] It is the plaintiff's evidence that he reported to the same workplace to do the same work on an ongoing basis. Certainly the plaintiff was aware that his pay was being reduced and was aware that there was a change in the corporation he was working for but it has not been shown the plaintiff intended to surrender any accrued rights by continuing to report to work.

In light of this finding, it is incumbent on successor employers to address this potential unwanted liability upfront. In the context of a sale of business, the vendor and purchasor may address which party shall assume liability for employee severance. The purchasor may also require that any employees to whom it offers continued employment agree in writing that they will have no claim against the purchasor for severance flowing from their prior employment with the vendor.

3. Parties to a summary judgment motion must put their "best foot forward"

Rule 20.02 of the Ontario Rules of Civil Procedure requires that parties to a summary judgment motion "put their best foot forward" in terms of leading best evidence or risk an adverse finding. In this case, the Court found that the Defendant failed to lead any evidence of its corporate structure, its relationship with National Printers or whether or not it acquired assets belonging to National Printers. Moreover, the Court concluded that it was insufficient for the Defendant to assert in the course of the Motion that it can "provide more evidence if necessary." Justice MacLeod stated that:

the summary judgment court is entitled to assume that the evidence put before the court on the summary judgment motion is all the responding party has or is prepared to divulge.

Accordingly, whether as an employee or an employer, all parties to a summary judgment motion should ensure that they lead all necessary evidence to substantiate their position. The court has been clear that failing to raise evidence until the motion, and then stating that more information is available, is insufficient. 

If you are an employee and would like to speak with an employment lawyer to discuss your entitlement to fair severance, or an employer who would like to discuss your employment contracts or a change in ownership, please contact us at: 613-238-4430 or info@vwlawyers.ca.

Vey Willetts LLP is an Ottawa-based employment and labour law boutique that provides timely, cost-effective and practical legal advice to help employees and employers resolve workplace issues in Ottawa and across Ontario.