ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 10-2127-SR
DATE: 2013/02/06
B E T W E E N:
PATRICK BANNON
Stephen Roth, for the Plaintiff
- and -
SCHAEFFLER CANADA INC./FAG AEROSPACE INC.
John M. Skinner Q.C., for the Defendant
Heard: January 14 and 15, 2013
Haines J.
REASONS FOR JUDGMENT
[1] The plaintiff was born June 2, 1953. On September 13, 1972 he went to work for the defendant, a manufacturer of bearings for the automotive industry. He started as a machine operator and then became a setter. A setter makes the necessary adjustments to the set-up of a machine to accommodate the production of different parts. In 1991, the plaintiff was selected to participate in a pilot project to reduce set-up times and, in 1996, became one of a four-member team that was established to improve manufacturing efficiency. In 2001 the plaintiff was assigned the position of Set-up Time Reduction Coordinator. His duties in that position included writing procedures for set-up; conducting workshops on set-up time reduction; and instructing setters on honing theory and set-up. His physical activity in this position was limited. He estimates that 60 percent of his time was spent sitting and 40 percent walking or standing. His responsibilities involved few physical demands and required no significant lifting.
[2] The auto industry fell victim to the economic calamity of 2008 and the defendant experienced a precipitous decline in its business. This resulted in the elimination of certain jobs within the company and extensive layoffs. On April 29, 2009, the plaintiff was invited to a meeting with Emma Goldsworthy, Plant Manager, Rick Rose, Vice President of Manufacturing, and Tricia McCarthy, Manager of Human Resources. At that meeting the plaintiff was advised that his job had been eliminated but he was entitled to exercise his seniority rights and take a setter position pursuant to the defendant’s Lay Off and Recall Policy which provides in part:
2.2.3. An employee displaced from an occupational group shall be permitted to exercise seniority in the following manner:
2.2.3.1. s/he will be permitted to exercise seniority over the person with the least seniority in a different occupational group provided s/he has previous working experience within the group and, sufficient skills to perform the necessary functions of the assigned position without training and at the normal level of production and, provided a) a period of 8 years has not passed, or b) significant technological change has not occurred such that s/he would not be able to perform the job without training, or c) s/he was not moved from the previous occupational group as a result of inability to perform the necessary functions of the job for reasons such as physical ability, mechanical aptitude, demotion etc.
[3] In this new position the plaintiff’s hourly rate would be reduced from $28.54 to $25.15 and he would be required to work three shifts once the plant returned to full production.
[4] Although the defendant’s representatives thought they were delivering good news, the plaintiff was less than enthusiastic. He did not think that he had either the technical knowledge or physical ability to do the job being offered. He explained that a great deal had changed since he had worked as a setter and that he did not know how to operate the machines that were now in use. He was 56 years old, 5’ 8” tall and weighed 242 lbs. He had problems with his back when he stood for a long time and did not believe he had the strength or agility required for the job. The plaintiff claims that he was told that he had to take the job or quit.
[5] When the meeting ended, the plaintiff returned to his office where he was joined by two of the management team with whom he had met. They asked him to take some time to think about their proposal and to talk to someone about it. He spoke to a member of the Employee’s Committee and, as a result of that conversation, believed the defendant would be offering him a severance package. However, on April 30, 2009, Jeffrey Galloway, an Assistant Manager with the defendant, spoke to the plaintiff and encouraged him to accept the setter job. The plaintiff reiterated his concerns that he would not be able to meet either the physical or technical requirements of the job. He told Mr. Galloway that it would be best for the defendant to terminate him and give him severance. Later that day the plaintiff attended a further meeting with Ms. Goldsworthy, Mr. Rose and Ms. McCarthy. At that meeting the plaintiff was given correspondence, signed by Ms. McCarthy, advising him that his employment with the defendant “in your present position is terminated effective today”. That document set out the terms of his severance which included a lump sum payment of 34 weeks at his current hourly rate. The letter made it clear that the decision to terminate the plaintiff’s employment was not a reflection on his job performance, offered to provide him with a letter of reference, and emphasized how appreciative the defendant was of the plaintiff’s past services.
[6] It was evident, from the testimony of all the defence witnesses at trial that the plaintiff was a valued and respected employee.
[7] The plaintiff takes the position in this action that he was entitled to 18 to 24 months notice of termination. Given the plaintiff’s age, length of service, and the difficult labour market, the defendant does not take serious issue with the suggested notice period but contends the plaintiff failed to mitigate his damages when he refused the offer of employment as a setter.
[8] The plaintiff contends, firstly, that his duty to mitigate only arose after his termination and, since there was no job offer made after he was presented with the termination letter, the defendant cannot rely on his refusal to accept the alternative position to support its contention that he failed to mitigate his damages. In the alternative, the plaintiff maintains that the evidence supports his position that his refusal to take the setter job was reasonable in the circumstances.
[9] The plaintiff relies on Russo v. Kerr Brothers Ltd., 2010 ONSC 6053, 326 D.L.R. (4th) 341; Hill v. Peter Gorman Ltd. (1957), 1957 393 (ON CA), 9 D.L.R. (2d) 124 (Ont. C.A.); and Wronko v. Western Inventory Service Ltd. (2008), 2008 ONCA 327, 90 O.R. (3d) 547 (C.A.) to support his first submission. In Russo and Hill the plaintiff employees continued to work for the defendant employers after those employers unilaterally altered the terms of their employment but then sued their employer to enforce the terms of their original employment contracts. The employers defended those actions on the basis that the employees’ choice to continue working in the same job on different terms indicated acquiescence and agreement to those terms.
[10] In Wronko the employer attempted to unilaterally change the termination provision of the employee’s written employment agreement which provided for a payment of two years’ salary upon termination. The employee rejected the change but continued to work. After a period of two years, the employer emailed the employee saying: “If you do not wish to accept the new terms and conditions of employment outlined then we do not have a job for you.” The employee responded the following day indicating that he understood his employment was terminated. The employer took the position that the employee had been given two years’ notice of the employer’s intention to change the terms of the contract and accordingly was now working under his existing contract as amended pursuant to that notice. The employee chose not to return to work and commenced an action for two years’ severance pay as provided for in the original agreement. In Hill MacKay J.A. identified three options that are available to an employee when an employer attempts a unilateral amendment to a fundamental term of an employment contract. They are summarized by Winkler C.J.O. in Wronko, at paras. 34 - 36:
First, the employee may accept the change in the terms of employment, either expressly or implicitly through apparent acquiescence, in which case the employment will continue under the altered terms.
Second, the employee may reject the change and sue for damages if the employer persists in treating the relationship as subject to the varied term. This course of action would now be termed a “constructive dismissal”, as discussed in Farber, although this term was not in use when Hill was decided.
Third, the employee may make it clear to the employer that he or she is rejecting the new term. The employer may respond to this rejection by terminating the employee with proper notice and offering re-employment on the new terms. If the employer does not take this course and permits the employee to continue to fulfill his or her job requirements, then the employee is entitled to insist on adherence to the terms of the original contract. In other words, if the employer permits the employee to discharge his obligations under the original employment contract, then – unless proper notice of termination is given – the employer is regarded as acquiescing to the employee’s position.
[11] The plaintiff contends that, since he made it clear he was rejecting the new terms of employment, the defendant could have responded by terminating him with proper notice. However, it is the plaintiff’s position that, in order for the defendant to rely on the offer of the other job in claiming he has failed in his duty to mitigate, the defendant would have had to make such an offer after the plaintiff’s termination as provided for in the third alternative set out by Winkler C.J.O. in Wronko.
[12] I do not accept this submission. Russo, Hill and Wronko all support the propositions that (a) an employer does not have a unilateral right to change an employment contract, and (b) an employer, by attempting to make such a change, cannot force an employee to either accept it or quit. Those cases address an employee’s right to sue on the original terms of the contract but do not address the issue of mitigation upon termination. In Hill and Russo the employees did in fact mitigate by continuing to work, but sued to recover the difference between the amount they would have earned under the original terms and that which they were actually paid pursuant to the altered terms.
[13] The facts here are very different. The defendant did not permit the plaintiff to discharge his obligations under the existing contract. There was no opportunity for him to continue working as the Setup Time Reduction Coordinator. His contract was effectively repudiated when that job was eliminated. Although it may not have been initially characterized as such, he was terminated from one job and offered another. In the circumstances of this case the plaintiff had three choices: accept the new job, accept the new job but sue for damages resulting from the reduction in his hourly rate, or reject the new job offer and sue for damages for wrongful dismissal.
[14] The plaintiff chose the third and sued for wrongful dismissal. This engages the issue of mitigation as identified by Bastarache, J. in Evans v. Teamsters, Local 31 2008 SCC 20, [2008] 1 S.C.R. 661, at para.30:
Where the employer offers the employee a chance to mitigate damages by returning to work for him or her, the central issue is whether a reasonable person would accept such an opportunity.
The reasonableness of an employee’s decision not to accept re-employment is assessed on an objective standard. What should a reasonable person in the plaintiff’s circumstances have done? In Evans, at para. 30, the Supreme Court accepted the view of the Ontario Court of Appeal in Mifsud v. MacMillan Bathurst Inc. (1989), 1989 260 (ON CA), 70 O.R. (2d) 701 (C.A.), at p. 710, that a reasonable person should be expected to accept re-employment “where the salary offered is the same, where the working conditions are not substantially different or the work demeaning, and where the personal relationships are not acrimonious.” The court in Evans also held that other relevant factors could include the history and nature of the employment, whether or not the employee has commenced litigation, and whether or not the offer of re-employment was made while the employee was still working for the employer or only after he or she had already left.
[15] There was no acrimony in this case; the plaintiff was a valued employee and had enjoyed his work with the defendant. Acceptance of the setter job would not have required the plaintiff to work in an atmosphere of hostility, embarrassment or humiliation. Layoffs had been extensive and the adjustment of positions through seniority was the reality of the day.
[16] The factor that does require consideration in this case is whether the working conditions were substantially different and, attendant to that, whether the plaintiff was capable of performing the job. The new job paid $3.39 per hour less that the plaintiff’s former position and he would have been expected to work all three shifts as opposed to the day shift that he had been working. His current job was largely sedentary and involved clerical and instructional work. The setter job would have required him to be on his feet much of the time and involved lifting up to 50 pounds. The plaintiff considered himself over-weight at 242 pounds and had back problems associated with standing.
[17] When the plaintiff met with the management team to hear their proposal for his future with the defendant, he expressed his concerns about his current technical and physical capabilities. These concerns came as a surprise to management. They had assumed he could resume his former position as a setter notwithstanding acknowledged changes in the equipment and the passage of time since the plaintiff had been active in that line of work.
[18] Jeffrey Galloway had worked with the plaintiff and, in his words, “held Pat in the highest regard.” He was anxious to have the plaintiff accept the setter position. Mr. Galloway acknowledged the plaintiff’s concerns about technical changes and agreed the plaintiff would need training on certain equipment. Mr. Galloway also explained the physical demands of the job. In setting up a machine for a new run the setter would have to make all necessary adjustments which included removal and replacement of tooling, installation of different grinding wheels, and adjustments to trackwork to accommodate the size of the new part being produced. Once complete the setter initiates the run to ensure the set up is proper before leaving the machine to the operator.
[19] Mr. Galloway explained that these functions require standing, lifting and climbing. Climbing is involved in adjusting the tracks and lifting is required in changing components on each machine for the different runs. He testified that there were 12 to 16 such manoeuvres related to a typical set up and many of the components weighed between 30 and 50 pounds. A changeover usually takes approximately 4 hours but can take up to 16 hours.
[20] Although Mr. Galloway expressed the opinion that he believed the plaintiff could do the job, he indicated that he was not completely surprised when the plaintiff declined the offer.
[21] I am satisfied that the defendant has been entirely candid in presenting its position but I am not satisfied that the defendant has discharged the onus that rests with it, of demonstrating that the plaintiff failed to mitigate his damages when he chose not to accept re-employment as a setter. It is my opinion, that given his age, physical limitations, the different nature of the work, the changes in working conditions and the many years that had passed since he had done such work, that the plaintiff’s decision not to accept the new job was reasonable.
[22] As noted earlier, the parties are not far apart on their submissions with respect to the appropriate notice period. Considering the plaintiff’s age, length of service (36 years) and the difficult employment environment to which he was exposed upon his dismissal I have concluded that proper notice is 20 months. It is acknowledged that the plaintiff has been paid the equivalent of 34 weeks. I calculate the balance owing to be $60,124.26.
[23] It is also agreed that the plaintiff is entitled to damages for the loss of pension contributions and medical expenses. The medical expenses are $2,188.19, but although entitlement is conceded, I am unsure, from counsel’s submissions, of the extent of the pension loss. I will, accordingly, leave that calculation to counsel but I may be spoken to if they cannot agree.
[24] In the result, there will be judgment for the plaintiff in accordance with my findings in these reasons. The parties may make written submissions with respect to costs within 30 days.
Justice R. J. Haines
Released: February 6, 2013
COURT FILE NO.: 10-2127-SR
ONTARIO
SUPERIOR COURT OF JUSTICE
PATRICK BANNON
Plaintiff
- and –
SCHAEFFLER CANADA INC. / FAG AEROSPACE INC.
Defendant
REASONS FOR JUDGMENT
HAINES J.
Released: February 6, 2013