SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO: CV-08-367470
DATE: 20120118
RE: Washington Olivares
Plaintiff
- and -
Canac Kitchens, A Division of Kohler Ltd.
Defendant
BEFORE: The Honourable Mr. Justice Sidney N. Lederman
COUNSEL:
Allison Greene & Kumail Karimjee,
for the Plaintiff
Geoff Moysa,
for the Defendant
HEARD: January 9, 2012
E N D O R S E M E N T
[ 1 ] This is yet another in a long list of wrongful dismissal actions against the defendant (“Canac”) by former employees arising from the cessation of Canac’s manufacturing operations in Canada in 2008.
[ 2 ] At the time of termination, the defendant paid the plaintiff a lump sum of 32 weeks pay, which was his entitled notice and severance pursuant to the Ontario Employments Standard Act, 2000 (the “ESA”).
[ 3 ] The plaintiff’s benefits were continued for a period of 8 weeks following his termination.
[ 4 ] The plaintiff seeks summary judgment for damages in lieu of reasonable notice of
24 months based on his average past earnings and compensation for the loss of benefits.
[ 5 ] The parties have agreed to have this claim determined by summary judgment motion and that there is no genuine issue requiring a trial.
[ 6 ] The issues to be determined on the summary judgment motion are:
a) what is the appropriate period of reasonable notice;
b) whether damages should be calculated based on the plaintiff’s annual base pay, without reference to any overtime pay that he may have earned in past years;
c) whether damages should include the cost of lost employee benefits; and
d) whether the plaintiff’s mitigation earnings during the statutory notice period under the ESA should be deducted from damages awarded to the plaintiff above and beyond his ESA minimums.
Appropriate Reasonable Notice Period
[ 7 ] Reasonable notice must be decided in reference to the particular facts of the case and having regard to the factors set out in Bardal v. Globe & Mail Ltd ., [1960] 24 DLR (2d) 140 (H.C.J.) , namely, the character of the employment in issue, the length of service of the employee, the age of the employee, and the availability of similar employment having regard to the experience, training and qualifications of the employee.
[ 8 ] In this case, the plaintiff had been employed by Canac for 24 years. At the time of his termination on May 27, 2008 he held the position of shipping supervisor and oversaw a team of loaders and coordinators in the shipping department. He was receiving average earnings of approximately $93,000 per annum including overtime pay, as well as insurance benefits. He was 48 years old when his employment was terminated. He had emigrated from Chile to Canada when he was 24 years old and almost immediately began working for the defendant. He spent his entire Canadian working life with the defendant, communicating almost exclusively in Spanish while there. As a result, he spoke little English at the time of his termination. He has limited education. The plaintiff was faced with finding alternative employment when many other former Canac employees were looking for work in the kitchen manufacturing business at the same time. Counsel submits that these factors significantly disadvantaged the plaintiff in attempting to re-enter the job market.
[ 9 ] The plaintiff points to other decisions involving Canac as the defendant as providing some guidelines for the applicable period of reasonable notice. In particular, reference is made to Brito v. Canac Kitchens 2011 ONSC 1011 (S.C.J.) where the court found the appropriate notice to be 22 months for an employee who held the position of Team Leader which is acknowledged to be a position less than supervisor, with 23 years of experience and was 60 years old at the time of termination; and, Cardenas et al v. Canac Kitchens 2009, 17976 (Ont. S.C.J.) wherein one of the plaintiffs, Jose Silva, who also held the position of Team Leader, was 43 years old, had 24 years of service, was awarded compensation based on 26 months’ notice.
[ 10 ] The defendant submits that an employee holding a non-managerial position is generally entitled to less notice than a senior manager or specialized employee holding a high rank in the organization. It submits that notice in the 18-24 month range is generally reserved for senior and executive level employees and argues that the 32 weeks for which the plaintiff received notice and severance constituted sufficient pay in lieu of notice in the circumstances of this case. In the alternative, the defendant submits that the appropriate range of reasonable notice should be 12-15 months.
[ 11 ] It is clear from DiTomaso v. Crown Metal Packaging Canada LP 2011 ONCA 469 at paras. 22-23 that there is no upper limit cap in respect of the notice period for non-managerial employees.
[ 12 ] Having regard to all of the Bardal factors, the circumstances of this case, and comparable jurisprudence, I find that the appropriate notice period is 20 months.
Appropriate Basis for Calculating the Plaintiff’s Damages
(a) Overtime
[ 13 ] The plaintiff submits that he received a significant amount of overtime in the 2.4 years prior to his termination and this played an important role in his overall compensation. Accordingly, his damages must be assessed based on his total average earnings including overtime.
[ 14 ] The defendant submits that although the plaintiff worked overtime in some past years, he had limited opportunity to work overtime in 2008. He argued that the plaintiff’s overtime hours have, in fact, declined by approximately 25% between 2006 and the termination of his employment in 2008. Canac, therefore, submits that damages should be calculated on the basis of the plaintiff’s annual base pay, without reference to any overtime paid since such a matter was discretionary and the employer was not contractually bound to confer such a benefit upon the employee. Alternatively, the defendant submits that where there is evidence of a decrease in the employer’s business, the court can take such evidence into account and determine what, if any, entitlement the employee would have had to overtime during the notice period.
[ 15 ] The parties have a dispute whether the plaintiff’s base pay was $52,000 annually or $65,000 annually. Nevertheless, they are in agreement that the plaintiff’s total earnings which includes overtime for the years 2006, 2007 and 2008 are as follows:
The Plaintiff’s Earnings 2006, 2007 and 2008
Gross Earnings
Annual Total
Monthly Average
2006
$96,703.34
$8,058.61
2007
$91,794.61
$7,649.55
January 1, 2008- May 27, 2008
$38,115.95
$7,623.19
AVERAGE
$93,325.41
$7,777.10
[ 16 ] The 2008 annual total income pro-rated would have been $91,478.00.
[ 17 ] Overtime pay had become an integral part of the anticipated income of the terminated employee and should be considered as compensable damages. If overtime has been paid in years immediately preceding the termination, it is appropriate to take that overtime into account when assessing damages for wrongful dismissal (see Guitierriz v. Canac Kitchens Ltd. 2009 593 (Ont. S.C.J.) at paragraphs 12-14 ; Munoz v. Canac Kitchens, 2008 63151 (Ont. S.C.J.) at page 23).
[ 18 ] Calculation of damages in wrongful dismissal actions is based on the global compensation that the plaintiff was receiving. That is what is determinative in this case and the fact that his overtime hours were declining is irrelevant.
[ 19 ] These annual totals included overtime pay, and notwithstanding that he worked less overtime hours from 2006 to May 2008, his total compensation over the years remained relatively constant.
[ 20 ] Accordingly, damages should be based on the plaintiff’s annual compensation of $91,478.
(b) Benefits
[ 21 ] Wrongful dismissal awards in Ontario traditionally compensate wrongfully dismissed plaintiffs for the loss of employment related health benefits over the period of reasonable notice, and are not limited to actual losses or expenses incurred during the notice period. The plaintiff is, therefore, entitled to the pecuniary value of lost benefits flowing from the dismissal.
[ 22 ] The defendant continued the plaintiff’s benefits for 8 weeks, but the plaintiff is entitled to compensation for the benefits over the balance of the whole common law notice period.
[ 23 ] In both Gutierrez, supra, and Cardinas, supra, cases involving Canac, the courts determined that the replacement value for such benefits is $250 per month. Counsel for the defendant conceded that the same package of benefits was available to the plaintiff in this case, as in those other Canac cases.
[ 24 ] In the instant case, the plaintiff, however, had waived dental and medical because his wife had coverage from her own employment. Nevertheless, the full comprehensive insurance plan is still lost value to the plaintiff because it does provide peace of mind in the event, for example, that his wife left her employment.
[ 25 ] Based on these other Canac cases with respect to the same package of benefits for other dismissed employees, the plaintiff in this case is entitled to an amount of $250 per month during the notice period, except for 8 weeks that were covered by the defendant.
(c) Mitigation
[ 26 ] The defendant does not take issue with the mitigation efforts made by the plaintiff to find alternative employment. It does, however, submit that any income that the plaintiff earned during his statutory notice period should be deducted from any common law damages awarded to the plaintiff above and beyond his ESA minimums. The plaintiff did earn income as a dry-waller during the ESA notice and severance period in the amount of $26,600.
[ 27 ] This issue was raised by Canac in the Moldovanyi v. Canac Kitchens Ltd . 2009 7094 (Ont. S.C.J.). Justice D. Brown refused to deduct from the plaintiff’s damages any income from other employment earned during the notional period covered by the plaintiff’s statutory entitlements. He determined that the only income that should be deducted from the plaintiff’s damages was income that was earned after the notional period covered by the plaintiff’s statutory entitlements. In reaching his decision on this issue, Justice Brown followed the Divisional Court decision in Boland v. APV Canada Inc . 2005 3384 (Ont Div. Ct.) which held that an employee’s entitlements under the ESA are minimum sums to be paid by the employer and are not subject to mitigation regardless of whether they are sought in a civil action or through the administrative route. Significantly, the Divisional Court held that ESA entitlements are not damages and are not based on any actual loss suffered by the employee, nor are they linked to criteria established in Bardal , supra . Rather, they are payable even if the employee finds new employment the day after termination. There is no statutory provision for repayment if an employee finds new employment within the notice period.
[ 28 ] Both before Brown J. and on this motion, the defendant relied on Yanez v. Canac Kitchens 2004 48176 (Ont. S.C.J.) wherein Justice Echlin deducted full mitigation earnings, including some earnings during the period for which the plaintiff received statutory entitlements. The Yanez case was decided shortly before the decision in Boland , supra. Brown J. concluded that he was bound to follow Boland, supra, and refused to deduct the amounts earned by the plaintiff during the statutory notice period.
[ 29 ] Canac now says that Brown J. was wrong and misapplied the Boland decision. However, Canac never appealed that decision. As it argued this issue fully before Brown J. it would be an abuse of process to allow Canac to re-litigate this issue and raise in this case the very same arguments that it did before Justice Brown.
[ 30 ] In any event, Boland, supra, should not be given the narrow reading advanced by Canac. It would directly undermine the purpose of the ESA payments if the defendant was allowed to deduct mitigation income during that notice period from other damages relating to the notice period beyond the ESA time frame.
Conclusion
[ 31 ] By way of summary, the plaintiff is entitled to a notice period of 20 months. In lieu of such notice, he is entitled to damages calculated based on annual earnings of $91,478 which includes an overtime component. In addition he is entitled to a further $250 per month, representing the replacement value of insurance benefits. From that amount should be deducted the ESA payment made by the defendant and only those mitigation earnings received by the plaintiff after the ESA notice period (i.e. $39,681.75 earned after January 27, 2009). There is to be no deduction for mitigation earnings during the ESA period.
[ 32 ] The parties are to calculate the total amount based on these Reasons. If they are unable to agree, they may arrange to make further submissions to me on this issue.
[ 33 ] It is hoped that the parties will be able to agree on the costs of the action. If unable to do so they may make written submissions within 30 days.
LEDERMAN, J.
DATE: January 18, 2012