ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: CV-09-391668
DATE: 20120329

BETWEEN:

Jagdesh Jadubir Plaintiff – and – Martinrea International Inc. Defendant

Marvin Gorodensky , for the Plaintiff
Philip Wolfenden , for the Defendant

HEARD: January 9, 10, 11, 12, 2012 and February 27, 2012

reasons for JUDGMENT

Pollak j.

[ 1 ] The Plaintiff, Mr. Jadubir, was employed by Martinrea International Inc. (“Martinrea”), as a Lead Hand toolmaker for approximately 15 years. He was laid off, along with almost all of the other employees on December 18, 2008. Although many employees were recalled to work, Mr. Jadubir was not.

[ 2 ] A record of employment (“ROE”) prepared by Martinrea, was sent to Mr. Jadubir after his counsel sent two letters to Martinrea requesting a copy of the ROE. There is no evidence on the actual date the ROE was prepared by Martinrea.

[ 3 ] The Employment Standards Act , 2000 , S.O. 2000 c. 41, s. 56 and 67 (the “ Act ”) provides that if employment is terminated by virtue of an employee being laid off without recall within a certain period of time, the termination of that employee is deemed to have occurred on the first date of the layoff.

[ 4 ] The parties agree that August 31, 2009 is the date that the Act stipulates Mr. Jadubir must have been recalled in order to prevent a termination of employment occurring pursuant to the Act .

[ 5 ] Although there is evidence that Martinrea made an offer to Mr. Jadubir to return to work from lay off in the position of toolmaker at a reduced wage, the evidence is that Mr. Jadubir did not accept that offer and that Martinrea issued the ROE sometime after August 31, 2009. That evidence leads to the conclusion that Mr. Jadubir’s employment was terminated as a result of the fact that he was not recalled to work within the time specified by the Act. The termination of Mr. Jadubir’s employment was not an independent act of Martinrea, but occurred pursuant to the Act .

[ 6 ] Martinrea submits that Mr. Jadubir’s refusal to accept its alternate job offer was unreasonable and that Mr. Jadubir has therefore breached his obligation to mitigate his damages. There is a dispute in the evidence with respect to when the offer was made to Mr. Jadubir.

[ 7 ] The issue in this case is with respect to the amount of reasonable notice (at common law) that Mr. Jadubir should have been given for his termination of employment. Mr. Jadubir was paid his full entitlement pursuant to the Act in the amount of $33,600.

[ 8 ] Mr Jadubir submits that the notice period at common law starts to run from the date of termination of employment, which is pursuant to the Act , the first day of layoff on December 18, 2009. He relies on the provisions of the Act which provide that where there is a termination of employment arising from the failure to recall within a certain period of time, “employment shall be deemed to be terminated on the first day of the lay-off”.

[ 9 ] Martinrea however submits that the common law notice period should run from the date the termination occurred and not the date it is deemed to have occurred pursuant to the Act . Martinrea relies on the agreement of the parties that the Act also provides that the termination is triggered on August 31, 2009 as a result of the failure to recall within a certain period of time. Martinrea submits that the deeming provision of the Act that the termination is deemed to have occurred on the first day of layoff, is not relevant to determine the start of the running of the common law notice period. The submission is that otherwise, Mr. Jadubir’s failure to mitigate his damages by accepting the offer of work by Martinrea is not properly taken into account. Martinrea argues that as the reasonable alternate offer of employment was made sometime in August of 2009, Mr. Jadubir should be awarded no damages for wrongful dismissal because he has failed to mitigate his damages.

[ 10 ] Mr. Jadubir claims damages against Martinrea for :

(a) Wrongful dismissal - 18 months compensation from December 18, 2009, in lieu of reasonable notice, the amount claimed includes compensation for the overtime that Mr. Jabudir submits he would have worked during the entire notice period;

(b) Bad faith - Mr Jadubir alleges Martinrea had no intention of recalling him to work;

(c) Punitive damages.

Reasonable notice

[ 11 ] Mr Jadubir had approximately 15 years of service with Martinrea. He earned approximately $82,248.50 on average based on his T4s for the last three years of his employment. These earnings include overtime. Mr Jadubir bases his claim that 18 months is the appropriate notice period on the standard Bardal factors, but includes as a new factor, the fact that he was on layoff for 8 months to increase that notice period. He provides no jurisprudence to support that conclusion other than the fact that the jurisprudence supports the submission that the list of Bardal factors is not a conclusive list. He submits that this Court should consider the additional fact that Mr. Jadubir was on lay off for eight months to increase his notice period at common law.

[ 12 ] Martinrea submits that the period of reasonable notice should be 12 months. It relies on comparable jurisprudence to justify that amount. I agree with Martinrea that the jurisprudence supports a finding that based on all of the traditional Bardal factors, a period of 12 months is reasonable in the circumstance of this case.

[ 13 ] I do not agree with Mr. Jadubir that the fact that he was on layoff for 8 months should increase the notice period. That is because I also agree with Mr. Jadubir’s position that the common law notice period starts to run from the first day of the layoff. I base this finding on the jurisprudence relied on by Mr. Jadubir and in particular on the Court of Appeal decision in Elsegood v. Cambridge Spring Service, 2001 Ltd. , [2011] O.J. No. 6095 ; 2011 ONCA 831 .

[ 14 ] In that case, the Ontario Court of Appeal rejected the employer’s argument that the Act did not apply to the common law of wrongful dismissal. The court found that employment at common law did not survive a termination occurring by reason of an employee not being recalled in the time periods specified by the Act. It was also held that the deeming provision of the Act applies to establish what the date of termination of employment is for the employee is at common law.

[ 15 ] Martinrea submits that the Court of Appeal in Elsegood , did not specifically comment on when the common law notice period starts to run in that case. The common law notice period commences after the date of termination of employment. I am of the view that because of the court’s analysis that the termination date pursuant to the Act , is also the termination date for the purposes of the common law, it follows logically that the common law notice period must start to run from that date of termination. I do not accept Martinrea’s argument that it should somehow start to run at another time. The only other possible date in this case is the date the termination is triggered by the provisions of the Act . As an employer Martinrea did not take any action to terminate employment before August 31, 2009 when the provisions of the Act triggered the termination of employment.

[ 16 ] The Court of Appeal also noted in the Elsegood case, that Mr. Jadubir could have started his action in wrongful dismissal against Martinrea on the first day of his lay off, as there is no implied right of an employer to lay off at common law. The Court further analyzes the consequence of an employer attempting to circumvent the provisions of the Act through express terms of an employment contract.

[ 17 ] As I have found that the common law notice period starts to run from the first day of Mr. Jadubir’s layoff (and he is therefore entitled to damages equivalent to pay in lieu of notice during that period of time), it therefore cannot be appropriate, as has been submitted by Mr. Jabudir, that the fact that he was on layoff would also be considered as a factor to otherwise increase his notice period.

Quantum of damages

[ 18 ] I have already found that the appropriate notice period for Mr. Jadubir is 12 months from December 18, 2008 to December 18, 2009. The parties disagree on the amount of Mr. Jadubir’s earnings for this period, particularly the amount of overtime that he should have earned and they disagree on whether Mr. Jadubir should have mitigated his damages by accepting the job offer of Martinrea.

Potential overtime earnings

[ 19 ] Mr. Jadubir calculates the potential overtime opportunities he would have had over the notice period by using his T4s which include vacation, wages and overtime. As the evidence was that all vacation time was used by Mr. Jadubir, it is submitted that all earnings in excess of regular wages have to be attributed to overtime. On the assumption that Mr. Jadubir worked 40 hours per week in 2008 up to the date of his lay off he calculated his overtime pay as $9,054. Mr. Jadubir submits that using Martinrea’s records for the actual hours he worked (not the 40 assumed hours per week), his overtime pay would be $13,423 per year.

[ 20 ] Mr Jadubir however goes further and submits that the Martinrea's records show that overtime hours increased in total by 285% starting on August 30, 2009. He therefore submits that his overtime potential should therefore be grossed up for the period after August 30, 2009 to account for the increased overtime working opportunities at Martinrea. I have found the notice period runs for one year after December 18, 2008 to end on December 18, 2009. Mr Jadubir’s overtime potential, it is submitted, should therefore be grossed up for the months of September, October, November and December 1 to 18, 2009.

[ 21 ] Martinrea submits Mr. Jadubir’s submission on overtime should not be accepted. Mr. Jadubir worked only 46.25 overtime hours in 2008, based on Martinrea’s payroll records. Martinrea therefore submits that Mr. Jadubir’s estimation of the overtime he would have worked during the notice period is excessive.

[ 22 ] I prefer Mr. Jadubir’s submissions on the calculation of potential overtime opportunities as they are based, in my view, on the most persuasive evidence (the T4s). There was no explanation given by Martinrea for the disparity in the amount of overtime worked by Mr. Jadubir based on his T4s and Martinrea’s records, which it relies on. Martinrea could have challenged Mr. Jadubir’s evidence by providing evidence on what the excess earnings were in his T4s, but it did not.

Bad Faith and Punitive Damages

[ 23 ] Mr. Jadubir has the burden of proving that in addition to payment in lieu of reasonable notice, aggravated damages are also warranted. Mr. Jadubir must prove that Martinrea’s conduct during the course of the layoff constituted a display of unfair dealing or bad faith: Honda v. Keays , 2008 SCC 39 , [2008] 2 S.C.R. 362 at paras. 56-58 ; Wallace v. United Grain Growers Ltd. , [1997] 3 S.C.R. 701 at para. 98 .

[ 24 ] In Honda , the Supreme Court rejected the practice of extension of the notice period as a consequence of an employer engaging in bad faith in the manner of dismissal (the “ Wallace extension”). It was held that to be entitled to aggravated damages, the employee must prove that the employer’s conduct with respect to the dismissal was unfair or in bad faith, but also that the conduct resulted in actual harm substantiated by evidence of such harm. As Bastarache J. stated at para. 59, “if the employee can prove that the manner of dismissal caused mental distress that was in the contemplation of the parties, those damages will be awarded not through an arbitrary extension of the notice period, but through an award that reflects the actual damages.”

[ 25 ] Mr. Jadubir has the burden of proving that Martinrea’s conduct in not recalling him to work was in bad faith and that he suffered actual damages as a result.

[ 26 ] Mr. Jadubir has submitted no evidence of damages which would justify an award of damages for bad faith or for punitive damages. Mr. Jadubir’s claim for bad faith or punitive damages is therefore dismissed.

Mitigation

Did Mr. Jadubir fail to mitigate his damages by refusing to accept the alternate offer of employment made to him by Martinrea?

[ 27 ] Martinrea submits that Mr. Jadubir failed to mitigate his damages by refusing to accept the position offered to him of returning to work as a toolmaker at a reduced wage.

[ 28 ] The relevant test is to determine whether it would have been objectively reasonable for Mr. Jadubir to accept the offer of Martinrea. It is agreed by the parties that Mr. Jadubir was not required to accept a position with Martinrea in “an atmosphere of hostility, embarrassment or humiliation.”

[ 29 ] Martinrea argues that Mr. Jadubir should have accepted the position offered while he looked for alternative employment to satisfy his obligations to mitigate his damages. It relies on the Supreme Court of Canada case in Evans v. Teamsters, Local 31 , 2008 SCC 20 , [2008] 1 S.C.R. 661. In that case, the Supreme Court of Canada stated at paragraph 30:

“In my view, the foregoing elements all underline the importance of a multi-factored and contextual analysis. The critical element is that an employee “not [be] obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation” ( Farquhar , at p. 94), and it is that factor which must be at the forefront of the inquiry into what is reasonable. Thus, although an objective standard must be used to evaluate whether a reasonable person in the employee’s position would have accepted the employer’s offer ( Reibl v. Hughes , [1980] 2 S.C.R. 880 ), it is extremely important that the non-tangible elements of the situation – including work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment, the tangible elements – be included in the evaluation.

[ 30 ] The court further held at paragraph 33 that:

“In sum, I believe that although both constructively dismissed and wrongfully dismissed employees may be required to mitigate their damages by returning to work for the dismissing employer, they are only required to do so where the conditions discussed in para. 30 above are met and the factors mentioned in Cox are considered. This kind of mitigation requires “a situation of mutual understanding and respect, and a situation where neither the employer nor the employee is likely to put the other’s interests in jeopardy” ( Farquhar , at p. 95). Further, the reasonableness of an employee’s decision not to mitigate will be assessed on an objective standard.”

[ 31 ] In the Evans case, the Supreme Court of Canada held that the union had demonstrated to the plaintiff that they wanted him to continue to work with the organization. It found that although the fears expressed by the plaintiff may have been subjectively justified, there was no evidence of acrimony between the plaintiff and his superiors.

[ 32 ] Martinrea submits that Mr. Jadubir’s wages would have been slightly decreased and that no one in the tool and die room would view it negatively as all Lead Hand positions had been eliminated.

[ 33 ] It is argued that the analysis is contextual, and requires consideration of the following factors:

(a) Is the salary offered the same?
(b) Are the working conditions substantially different?
(c) Is the work demeaning?
(d) What is the history and nature of the employment?
(e) Are the personal relationships involved acrimonious?
(f) Is a similar position available in the marketplace?
(g) Was the offer of re-employment made before or after the employee left?
(h) Has the employee commenced litigation?

[ 34 ] Martinrea submits that Mr. Jadubir would not have been subjected to “an atmosphere of hostility, embarrassment or humiliation” had he accepted the position.

[ 35 ] Mr. Jadubir argues that the position would have been humiliating and that they never had the intent of calling him back to work because he had “pissed someone off”.

[ 36 ] Martinrea submits that the evidence does not support the conclusion that Mr. Jadubir would have been subjected to demeaning working conditions and acrimonious relationships.

[ 37 ] Mr. Jadubir was laid off as part of a plant-wide layoff in December 2008 as a result of a global recession affecting the auto industry including Martinrea.

[ 38 ] Mr. Frenkel testified that Mr. Jadubir’s working relationship with his immediate supervisors was fine.

[ 39 ] Mr. Frenkel testified that employees were recalled in order of ability to perform the work available but preference was given to more junior employees who were paid less.

[ 40 ] He stated that the department managers decided to eliminate the position Lead Hand throughout the plant.

[ 41 ] The evidence was that other Lead Hands accepted positions as machine operators in lesser positions.

[ 42 ] Mr. Frenkel testified that he had hoped until mid‑2009 that the volume of work might increase enough to offer Mr. Jadubir the position of Lead Hand.

[ 43 ] When Mr. Frenkel realized in June or July 2009 that work would not increase, he met with Mr. Jadubir and offered him the toolmaker position.

[ 44 ] The offered wage was $28 per hour, approximately $7 less than before.

[ 45 ] Martinrea submits that the change in title would not have been noticed by most workers.

[ 46 ] Evidence was given that other Lead Hands accepted reduced titles and salaries.

[ 47 ] Mr. Jadubir later obtained work as a toolmaker in 2011 for $24 per hour.

[ 48 ] He testified that he was surprised to hear that he had “pissed people off” at the plant.

[ 49 ] Martinrea relies on jurisprudence supporting the principle that a wage reduction alone does not eliminate the duty to mitigate where no hostility exists.

[ 50 ] I agree with Martinrea that Mr. Jadubir had the obligation to accept the job offer to mitigate his damages. I do not find that the evidence establishes a work environment of hostility, embarrassment or humiliation. I therefore find that Mr. Jadubir failed to mitigate his damages as of the date that offer was made to him, August 31, 2009.

[ 51 ] I also do not accept Mr. Jadubir’s submission that Martinrea gave him a choice between termination or the alternate job offer. Termination was the consequence of his refusal to accept the offer.

[ 52 ] I therefore find that Mr. Jadubir has failed to mitigate his damages from August 31, 2009. He is entitled to damages from December 18, 2008 to August 31, 2009 and a wage differential thereafter.

Calculation of Mr. Jadubir’s damages

[ 53 ] On the basis of the above, I award damages to be calculated as follows:

(i) Wages and overtime lost for the period of December 18, 2008 to August 30, 2009 based on Mr. Jadubir’s earnings as set out in his T4s;

(ii) plus the wage differential for the months of September, October, and November, up to December 18, 2009;

(iii) less ESA payments received in the amount of $33,600.

[ 54 ] The parties should be able to agree on the calculation of the amount of these damages. Mr. Jadubir is also awarded pre and post judgment interest.

Costs

[ 55 ] The parties have agreed on costs in the amount of $55,000.

Pollak J.

Released: March 29, 2012