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Short-term high ranking employees who are wrongfully dismissed are recognized to be placed in a more precarious situation when terminated than their lower-ranking counterparts of longer tenures. The decision in Fraser v. Canerector Inc., 2015 O.J. No. 1666, demonstrates how courts award notice in such situations.
The Plaintiff, Stuart Fraser (“Fraser”), began working for Canerector Inc. (“Canerector”) on June 1, 2011. He worked as a “Division Liaison”, a position in which he was responsible for originating and completing Canerector’s acquisitions of smaller companies. Fraser was a middle-aged man, 46 years old, and made an impressive salary of $200,000.00 per year, plus benefits, pension contributions of 4%, and a yearly bonus.
At the time he accepted Canerector’s offer of employment, he had been employed with an automotive company in a senior role for approximately seven years. His employment there provided a greater salary, however, on the recommendations of a personal acquaintance and a prior colleague who was employed by Canerector at the time, Fraser decided to make the switch.
Things went relatively smoothly. In his first year of employment, Fraser made a $50,000.00 bonus; in year two he made a $75,000.00 bonus, and in year three, prior to his termination, Fraser made a $175,000.00 bonus.
However, despite Fraser’s success with the company, he was terminated on June 10, 2014 on a without cause basis. He was provided with three (3) months’ salary at the time of termination but was not provided with compensation for a pro-rated bonus which would have been earned following termination, had he still been employed.
Fraser sued for wrongful dismissal, taking into account allegations of inducement as well as compensation for his bonus which would have been provided to him had he not been terminated. The matter proceeded to a motion for summary judgment on April 7, 2015.
Fraser was fortunate in that he found new employment on August 25, 2014, approximately ten (10) weeks following his termination, again in the automotive industry and at a comparable salary.
1. What pay was Fraser owed in lieu of notice?
2. What compensation, if any, was Fraser entitled to for his bonus and pension contributions throughout the notice period?
3. What compensation, if any, was Fraser entitled to for costs incurred with respect to health care and mitigation expenses following his termination?
Pay in Lieu of Notice
At the time of his dismissal, Fraser was 46 years old and had been working for Canerector for only 34 months. The Court found that certain factors, specifically his age (46), his short tenure and the time of termination (June was recognized to be a difficult month to mitigate given that hiring decisions were typically delayed for high-ranking staff in order to account for the vacation schedules of senior decision makers) served to elongate the period, and that his mitigation efforts served to decrease the amount of notice owed. The court disagreed with Fraser’s assertions of inducement.
With these factors in mind, the learned Justice Dunphy on the motion for summary judgment decided to award the Plaintiff 4.5 months’ notice.
Bonus Entitlement Throughout Notice Period
Justice Dunphy made the decision to not award compensation for the bonus which would have been earned following the Plaintiff’s termination. His reasoning behind this was that a) the bonus was discretionary as per his evidentiary findings; and b) the bonus was contractually dependent upon the recipient being “Actively employed” at the time of the payout.
Pension Contributions Entitlement
Justice Dunphy awarded the Plaintiff 4% of his base salary (the amount of Canerector’s contribution) for the period of June 10, 2014 to August 25, 2014, as well as a continuing renumeration until October 25, 2014, contingent on Fraser providing an account of his pay and compensation with his new employer.
Compensation for Health Costs Following Termination
As there was no dispute regarding these costs incurred by the Plaintiff, Justice Dunphy awarded the Plaintiff the full amount for health costs incurred, being $360.00.
Compensation for Mitigation Costs
The Plaintiff had claimed $2,467.98 in job search costs and related expenses. However, because there were some areas wherein the required evidence for these claims was not provided, and because the Plaintiff was unable to rebut some allegations of claim duplication on the part of the Defendant, Justice Dunphy awarded $2,044.24. Despite the lack of evidence substantiating job search costs and related expenses, the learned judge awarded an amount fairly close to the original amount claimed.
No determination of costs was made at the motion and the parties were invited to make submissions to Justice Dunphy regarding what entitlements may exist.
The Plaintiff decided to appeal the decision with respect to the matters of bonus entitlement throughout his notice period. As he was past the limitation period, of no fault of his own- his lawyer had incorrectly advised him of the deadline- he was forced to apply to the Divisional Court for an extension, and the matter proceeded on November 18, 2015. He was successful in that the extension was granted and he was provided costs for the appeal, being the sum of $7,000.00 (Fraser v. Canerector Inc., 2015 ONSC 7519).
The courts will be more likely to award a high notice period if there are elongating factors present such as a higher age and shorter tenure and can also take specific factors (i.e time of year) into account in awarding notice. However, the courts will not hesitate to make a deduction should a terminated employee find comparable employment quickly. If you have any questions about your employment situation, call Monkhouse Law today for a free consultation.