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Howard Levitt: The Case of a “Lifer” Fired in the Pandemic is a Lesson on How to do this Better

posted 2 years ago

“This is no way to treat any employee, much less a long-term loyal employee of over 36 years.”

Some employees, albeit a diminishing breed, are lifers. Tom Russell was one, having spent his entire working career, from age 21 until 57, at The Brick.

He was suddenly fired, like many Canadians, shortly after the onset of COVID-19, in July, 2020. His termination letter set out a purportedly “without prejudice” offer of a severance amount greater than the provisions in the Employment Standards Act, but less than any court would have, and did provide.

Although he was offered continuing benefits, along with salary, for one year, he was not told that The Brick had actually continued his benefitsHe did not learn about the benefits extension until it arose during the course of litigation, long after the benefits had expired, despite having asked about those benefits earlier.

The court awarded Russell 24 months’ pay relying, in part, on the “impact of COVID” causing difficulty for Russell in securing reemployment. Notably, in drawing this conclusion, Justice Susan Vella of the Ontario Superior Court relied upon The Brick`s own termination letter, which stated that the economic downturn caused by COVID was the reason why Russell and others were terminated. It awarded him his benefits (in addition to salary) for the entire 24 months, including the period when the benefits had continued because Russell was unaware of their continuation so could not avail himself of them.

This is a concerning precedent for employers. It makes it dangerous to admit that the impact of COVID caused a layoff or termination, even when that is obviously the case.  An employee in litigation may still be able to prove that, but prove it they must for their severance to be increased.

The law is clear that to obtain an award of severance of more than 24 months, the court must find that there were “exceptional circumstances.” Justice Vella found that, individually or cumulatively, Russell’s age, length of service, limited high school education, the fact that he was a lifetime employee, The Brick not providing a reference when no prospective employer asked for one, along with not providing relocation counselling did not qualify as exceptional circumstances so as to increase the severance period.

The court said that exceptional circumstances that justify an increase in the severance period have traditionally been the employer taking some initiative to make reemployment more difficult, other high-handed employer conduct or situations involving employees with particularly high remuneration.

In addition to increasing the notice-severance period because of COVID’s impact, the court awarded an additional $25,000 because the company’s “without prejudice” offer, although providing more severance than required by the ESA, did not provide Accidental Death and Dismemberment insurance, long-term disability or participation in group RRSP and DPSP plans during the minimum statutory notice period. The ESA requires continuing benefits for eight weeks in this case. The offer also provided that vacation pay would only accrue to the date of dismissal and would not accrue over the statutory ESA notice period of eight weeks.

More significantly, the letter did not state that if the offer was rejected Russell would still receive his statutory entitlements under the ESA. “By failing to include this proviso in the termination letter, The Brick was not being honest and forthright with Russell,” the court said.

Noting that The Brick failed to inform Russell that he would still receive his statutory entitlements if he rejected its offer and that his benefits, to the extent required by the ESA, would continue post-termination, the court concluded: “This is no way to treat any employee, much less a long-term loyal employee of over 36 years.”

The court was also influenced by the fact that The Brick termination letter and offer was a template and therefore that other employees would also not have been informed that if they rejected the offer, they would still receive their statutory entitlements to benefits, termination and severance pay. The inference, of course, is that by this omission, Russell and other employees would assume that they would receive nothing if The Brick’s offer was rejected.

There are lessons for employers in this case. The Brick made errors that are commonplace in Canadian terminations:

  • Do not use a templated termination letter. Every case should be, to some extent, individualized, to ensure statutory compliance and sensitivity to each dismissed employee’s situation;
  • Since length of notice-severance will be increased if there is evidence that the industry is in difficulty and that re-employment is difficult, do not admit to that fact in your termination letter. Although the courts demand candour, sometimes silence can be golden;
  • Understand the impact of the ESA and ensure your offers are compliant in all respects;
  • Ensure that you advise your terminated employees what will be provided to them in salary, benefits and anything else if the offer is rejected and ensure that complies with the ESA;
  • If a reference is requested, and can be honestly provided, do so. Failure to do this can increase damages if there is evidence that its absence increased the period of unemployment;
  • Understand that calling a termination offer “without prejudice” will not protect it from judicial scrutiny.

By Howard Levitt

Got a question about employment law during COVID-19? Write to Howard at [email protected].

THIS ARTICLE ORIGINALLY APPEARED IN THE FINANCIAL POST AND IS REPRODUCED HERE WITH PERMISSION FROM THE AUTHORS: https://financialpost.com/fp-work/howard-levitt-the-case-of-a-lifer-fired-in-the-pandemic-is-a-lesson-on-how-to-do-this-better?video_autoplay=true

PHOTO BY NATIONAL POST

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