The summertime blues: It may cost more to dismiss an employee in June

5 minute read
01 June 2015

Fraser v Canerector Inc., 2015 ONSC 2138 (CanLII)

In yet another summary judgment wrongful dismissal ruling, the Ontario Court of Justice has determined that the time of year when a dismissal occurs, may result in a greater notice period.

Mr. Justice Sean Dunphy’s decision summarizes the party’s positions neatly:

[6]          The plaintiff’s position is that he was induced to leave a secure, long-term position at another firm to accept employment with the defendant and, as such, the period of reasonable notice ought to have regard to that fact.  In addition, he participated in an executive bonus program with the defendant and seeks compensation for the amount of bonus he alleges was accrued to the date of his termination as well as any bonus amounts that might have accrued during a reasonable notice period since bonus entitlement was an integral part of his compensation package.  The plaintiff claims twelve months would be a reasonable notice period in the circumstances.

[7]           The defendant disputes the characterization of the hiring process as constituting inducement of any kind and takes the position that its bonus program was entirely discretionary, payable only to active senior employees at the time of assessment and award of bonus each year (February) and in the circumstances of this case, no amount of bonus would be payable to the plaintiff whether for his period of actual employment in 2014 or for any reasonable notice period thereafter.  The defendant had offered to pay three month’s salary to the plaintiff on termination of his employment in return for a release which proposal was rejected by the plaintiff before the commencement of litigation.

Although the employment agreement was silent on inducement, and therefore vulnerable, the Court held that, on the facts, the employer should not be liable for a notice period inclusive of the plaintiff’s prior work elsewhere.  The employer prevailed also on the question of whether a discretionary bonus – normally not paid where a person left employment before the bonus period ended – had to be included in the notice period:

Neither the discretionary nature of this bonus program, the past history of its application within this company nor Mr. Fraser’s own employment history would have given him any reasonable basis to expect that he was eligible for bonus for a partial year were his employment to be terminated during the year.   There is no basis in the relationship between the parties or the application of the bonus program in the past to infer an understanding that bonus entitlements accrued to the level of a contractual entitlement to any amount prior to the annual review process.

However, after removing inducement and bonus elements from the notice period, the Court then ventured into the interesting question of whether the time of year, when dismissal occurred, could affect what constituted reasonable notice.

Noting that notice is intended to enable an individual to find work, the Court said that being fired at the outset of summer made it much more difficult to land an appropriate job in the weeks immediately following discharge:

I find that for a man of Mr. Fraser’s age and level of responsibility but relatively short years of service, I must also account for the time of year when his employment was terminated in assessing reasonable notice.  Mr. Fraser’s employment was terminated in June and it was quite foreseeable that hiring decisions at his level might have needed to be delayed somewhat due to the summer months in order to account for vacation schedules of key decision-makers.  While his term of service might normally suggest a relatively shorter period of notice, timing plays a bigger role where notice is short.  While timing in fact was no impediment in this case (Mr. Fraser having found new employment by August), that is a conclusion enabled by hindsight.

The Fraser v Canerector case offers useful guidance on the questions of inducement and discretionary bonuses, and novel direction about timing a termination.  

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