Multiple Extensions of Termination Date Nullify Termination Notice

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Multiple Extensions of Termination Date Nullify Termination Notice

December 19, 2011

By Chris King, at McInnes Cooper

In a decision with application to Atlantic Canada, the Ontario Court of Appeal found that an employer’s multiple extensions of a terminated employee’s last day of work deprived the termination notice of its requisite “clear and unambiguous” character, and nullifies the original termination notice and the working notice period. The Court of Appeal also laid to rest any lingering presumption that unskilled and lower level workers are automatically entitled to less notice of termination than their “executive” counterparts, and furthermore reconfirmed there is no “artificial cap” on such notice periods.

There had been lingering question about how an employer’s extension(s) of an employee’s final work date after notice of termination of employment would affect the validity of the termination notice and the start date of the notice period. Similarly, a question remained respecting the continued applicability of the long-standing presumption in most Provinces that a senior level or “executive” employee is automatically entitled to a longer notice period than an unskilled or “lower-level” employee, and furthermore, that notice periods are “capped”. In June 2011, the Ontario Court of Appeal issued a decision that goes a long way toward resolving these questions.

In Di Tomaso v. Crown Metal Packaging Canada LP, Crown Metal terminated the employment of Mr.

Di Tomaso, a 62 year old machine operator with more than 33 years of service. However, days before the last date of work specified in his termination notice, Crown Metal informed Di Tomaso it was extending his employment by several weeks. Days before the new termination date, the employer again advised Di Tomaso that it was extending his employment by several more weeks. Over the course of 5 months, Crown Metal gave Di Tomaso five separate notices of termination, extending his termination date four times, each time characterizing the extension as for a “temporary period”. On February 24, 2010, Crown Metal gave Di Tomaso a written notice advising him that his final day of employment was February 26, 2010, and it ended his active employment on that date. The employer provided him with 26 weeks of severance pay, the mandatory minimum required by Ontario’s Employment Standards Act.

Di Tomaso sued Crown Metal for wrongful dismissal. First, he argued that Crown Metal was not entitled to credit for “working notice” between September 9, 2009 when it first advised him it was terminating his employment, and February 26, 2010, when he actually stopped working. Di Tomaso relied on a provision in Ontario’s Termination and Severance of Employment regulation allowing an employer to continue employment for only 13 weeks following a set termination date; Di Tomaso argued that beyond this, the employer must issue a new notice of termination specifying a new termination date. Second, Di Tomaso claimed he was entitled to receive far greater reasonable notice of termination under the common law than just the 26 weeks’ Crown Metal had provided. At trial, the Ontario Superior Court sided with Di Tomaso on both arguments.

On the first issue, the essential question was when the employee’s notice period began: on September 9, 2009 when the company first told him that he would be dismissed, or on February 24, 2010, when it finally confirmed his last day of work? The trial judge held the notice period started on February 24, 2010. She reasoned that under the Termination and Severance of Employment regulation, Crown Metal was required to provide the employee with a “fresh notice” of termination once the extension of termination had exceeded 13 weeks in total. Thus, by pushing Di Tomaso’s actual termination beyond 13 weeks from the original termination date, the original notice was nullified and the company had effectively reset the clock on “working notice”. The company was given no credit for the 5 months of working notice it gave Di Tomaso; his notice of termination was deemed to have been given on February 24, 2010, just two days before his final day of work.

On the second issue, the trial judge rejected the company’s argument that 12 months was reasonable notice given the unskilled nature of Di Tomaso’s work. Instead, she found that 22 months’ notice was appropriate in light of the fact that Di Tomaso was 62 years old, had worked for the company for 33 years, and had made unsuccessful inquiries or applications for work at 22 companies in the area.

Click here to read the trial decision in Di Tomaso v. Crown Metal Packaging Canada LP.

Crown Metal appealed. The Ontario Court of Appeal upheld the trial decision, reiterating that notice of termination must be “clear and unambiguous” and must include a final termination date. The Court agreed that “the cumulative effect of the multiple extensions created uncertainty for [Mr. Di Tomaso] as to when he would no longer have his job.”

The Court of Appeal also affirmed the length of the reasonable notice period (22 months), and clarified an important issue about which there was some uncertainty in reported decisions: there is no “artificial ceiling” on reasonable notice for unskilled or lower level workers. For many years, there was a tendency for many courts to presume that such workers could more easily obtain new employment, thus justifying lower notice period awards, often capped at 12 months for such workers. In Di Tomaso, the Court of Appeal rejected this presumption, reminding lower courts to undertake a full contextual analysis of the factors affecting the reasonable notice period in given circumstances. Based on that analysis, the Court of Appeal upheld a reasonable notice period of 22 months’ in these circumstances.

Click here to read the Ontario Court of Appeal’s decision in Di Tomaso v. Crown Metal Packaging Canada LP.

COMMENT

Although Di Tomaso is an Ontario decision based, in part, on Ontario legislation, it is an important reminder to employers in Atlantic Canada terminating the employment of employees, particularly those with lengthy service.

First, the Ontario Court of Appeal’s conclusion that only “clear and unambiguous” notice of employment termination will pass muster is not based solely on Ontario legislation, but on court decisions interpreting employment contracts. Thus, it applies with equal force in Atlantic Canada. The application of this principle requires employers to be very clear on the final date of employment when giving employees a period of “working notice”. Similarly, employers are cautioned against “creeping” beyond the original termination date, which may reset the clock on the start of the working notice period. Further, each Atlantic Canadian province has employment legislation that, while not identical to that of Ontario, includes a similar provision that nullifies a notice of termination if the employment continues beyond a specified period of time.

Second, the Ontario Court of Appeal’s confirmation that the reasonable notice period is not capped for unskilled or lower level workers has equal application in Atlantic Canada. The notice period for these employees must be determined using the same analysis as for all employees, that is, by considering the entirety of their employment circumstances and their likelihood of securing alternative employment. For example, click here to read the New Brunswick’s Court of Appeal’s 1999 decision in Bramble v. Medis Health and Pharmaceuticals Inc.

Watch for our full analysis of the Supreme Court of Canada’s October 28, 2011 decision stating the Canadian Human Rights Tribunal cannot award legal costs to a successful complainant to be published soon. Click here to read our November 2, 2011 Legal Alert “Canadian Human Rights Commission Does Not Have Power to Compensate Successful Complainant for Legal Costs.”

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