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Short Service Executive Awarded Lengthy Notice Period by Ontario Court of Appeal

Posted On: January, 21 2015

A decision recently released by the Court of Appeal for Ontario on February 16, 2011 has clarified a number of important issues in employment law.  You can read the full text of the decision here:  Love v. Acuity Investment Management Inc., 2011 ONCA 130.

In this case, Mr. Love, a high-ranking executive of an accounting firm was terminated from his employment without cause. This executive had a relatively short service period of 2.5 years. He reported directly to the CEO but did not have a staff of people that he managed. He earned an extremely high income averaging about $633,548 per year. He also held a 2% equity stake in the company, which figured prominently in the trial decision and in the Court of Appeal’s decision.

Mr. Love claimed $15.5M in damages at trial. He was awarded $528,000.00 and ordered to pay $278,000.00 in legal costs to his former employer because his employer had offered to settle for more than Mr. Love was awarded in damages. In arriving at his decision, the trial judge considered the traditional factors in assessing wrongful dismissal damages (known as the Bardal factors after a seminal decision of the Ontario High Court). These factors are: the employee’s age, the character of the employment, the employee’s length of service, and the availability of similar employment, having regard to the experience, training and qualifications of the employee.

In the trial judge’s reasons, Mr. Love’s relatively short length of service figured quite prominently, as did the fact that although Mr. Love was a high-ranking employee, he did not have a staff of people reporting to him. The trial judge awarded Mr. Love a notice period of 5 months.

This decision was appealed to the Ontario Court of Appeal by Mr. Love on the issue of what an appropriate notice period would be. The Court of Appeal disagreed with the trial judge’s assessment of the notice period, which is notable because the Court of Appeal is generally quite deferential to trial judges on the question of notice periods. In awarding a 9 month notice period in Mr. Love’s case, the Court of Appeal held that a short length of service is less relevant when dealing with very high-ranking employees. The Court of Appeal also noted that the fact that Mr. Love did not have a staff reporting to him did not detract from the fundamental character of his employment, which was that of a high-ranking executive. In this decision, the Court of Appeal also emphasized that the availability of similar employment is a factor that needs to be clearly assessed along with the other factors, and concluded that it was not sufficiently assessed in the reasons of the trial judge.

This decision will most likely have an impact on the calculation of wrongful dismissal damages, especially in cases of terminated senior managers or executive employees.

 

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