CITATION: Leeming v. IBM Canada Ltd., 2015 ONSC 1447

COURT FILE NO.: CV-13-490470

DATE: 20150304

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

SUSAN JANE LEEMING

Plaintiff

– and –

IBM CANADA LTD.

Defendant

Jonquille Pak for the Plaintiff

Jennifer Dolman for the Defendant

HEARD: February 24, 2015

PERELL, J.

REASONS FOR DECISION

A. INTRODUCTION

[1] The Plaintiff Susan Jane Leeming brings a summary judgment motion in her wrongful dismissal action against the Defendant IBM Canada Ltd.

[2] There was no dispute between the parties that this case is appropriate for a summary judgment.

[3] For the reasons that follow, I grant Ms. Leeming judgment for $64,650.45.

B. FACTUAL BACKGROUND

1. Introduction

[4] The general factual background to Ms. Leeming’s wrongful dismissal action is set out in this section of my Reasons for Decision. I shall address the factual background to several particular issues, such as whether or not Ms. Leeming contracted out of her common law right to reasonable notice, later in the Discussion and Analysis portion of these Reasons.

2. Ms. Leeming’s Employment Contract

[5] On April 25, 2005, Ms. Leeming received an offer of employment from DWL Incorporated, which was accepted on April 26, 2005. The DWL Employment Offer contained a termination clause which stated:

... If DWL terminates my employment without cause, and I have been employed with DWL for more than 3 months and less than 5 years, I will receive two weeks’ notice or payment in lieu of notice per completed year of service with DWL, or what I am entitled to under the Employment Standards Act, 2000 (Ontario), whichever is greater. If DWL terminates my employment without cause, and I have been employed with DWL for 5 years or greater I will receive three weeks’ notice or payment in lieu of notice per completed year of service with DWL or what I am entitled to under the Employment Standards Act, 2000 (Ontario), whichever is greater up to a maximum of 12 months’ notice.

[6] Relatively soon after Ms. Leeming joined DWL, it was acquired by IBM, and in August 2005, she was given a written offer of employment dated August 15, 2005. The IBM Employment Offer stated:

We intend to effect a smooth changeover of your employment from DWL to IBM, should the contemplated sale of the shares occur as planned. If you accept the terms and conditions of employment set out in this letter, you will be employed with us, continuing in your present position with your current duties and responsibilities. It is anticipated that there will be no interruption of your employment due to this transaction. The specific terms of remuneration, benefits and other provisions which are specifically proposed to you are outlined below.

[7] On August 16, 2005, Ms. Leeming accepted the offer. She was employed by IBM until September 13, 2013, approximately eight years.

[8] Pursuant to s. 3 of the IBM Employment Offer, Ms. Leeming agreed to be governed by the terms and conditions of IBM’s Policies and Practices for Employees and to be bound by the terms and conditions of IBM’s Business Conduct Guidelines.

[9] IBM has a policy that governs the termination of employees. The so-called Separation Policy, which is posted on the employer’s intranet, but which is not set out in the Employment Offer, states:

Separation can also be initiated by management without cause. In these situations notice or a separation allowance payment in lieu of notice equivalent to one week’s salary for each fully completed six months of service up to a maximum of 52 weeks of salary may be payable in the event of a management initiated separation.

[10] Ms. Leeming was never provided with a copy of the Separation Policy, and it was not specifically brought to her attention at the time she accepted the Employment Offer nor at any time during her employment with IBM. Although quite capable of doing so, she did not take the occasion to review the posting on the intranet.

[11] Ms. Lemming’s most recent position at IBM was as a Senior Managing Consultant. She earned a base salary of $113,484.00 per annum. Her T4 income in 2012 was $116,844.46 (excluding bonus and benefits). Under IBM’s GDP Plan, she had received bonuses of: $3,708.00 in 2010; $1702.00 in 2012; and $2,270.00 in 2013. There were no bonuses in 2011.

[12] As a Senior Managing Consultant, she was responsible for, among other things, various project management duties, including project scheduling, tracking budgets, and inter-phasing with clients to ensure deliverables were met.

[13] As a full-time active employee of IBM, Ms. Lemming was entitled to participate in IBM’s comprehensive flexible life insurance, extended health benefits, dental benefits, and prescription drug benefit plans (collectively the “Benefits Plans”) as elected by her. Some types of insurance within the Benefits Plans require co-payment from the employee and employer. For certain types of insurance, she was required to contribute to the cost of her coverage by payroll deduction.

[14] Ms. Lemming was not entitled to participate in IBM’s post-retirement benefits plan. Her contributions to the Benefits Plans in 2013 amounted to $8.29 biweekly, which represented the following: (a) dental, $2.57; (b) Employee AD&D, $1.24; (c) Employee Life Insurance, $0.63; (d) Personal Emergency Travel Assistance, $1.85; and (e) Supplemental Health, $2.00.

[15] During her tenure at IBM, Ms. Lemming was entitled to participate in the IBM Defined Contribution Pension Plan of the IBM Retirement Plan (“DCP Plan”). Her rate of contribution was 3.75% of pensionable earnings, and the IBM pension contributions were $3,976, $4,241, $4,304 and $3,184 for the years 2010, 2011, 2012 and 2013 respectively. The account balance as of August 1, 2013 was approximately $35,056.59.

[16] Before her termination, Ms. Lemming was eligible under the terms of the 2013 Growth Driven Profit (“GDP”) Program for a discretionary GDP payment provided, among other things, that she achieved a PBC rating of at least “2”, was an active employee on December 31, 2013, and IBM made its profit targets for the year.

[17] Ms. Lemming was not eligible to receive a payment under the 2013 GDP Program as she was not an active employee on December 31, 2013 and because IBM did not pay a GDP payment to its employees for 2013 as the company profit threshold to trigger such payments was not met.

3. Ms. Leeming’s Termination

[18] In 2013, IBM decided to eliminate Ms. Leeming’s position, and they dismissed her from employment. She was 60 years old at the time of her dismissal.

[19] Ms. Leeming received a Termination Letter dated July 16, 2013.

[20] In the Letter, she was told that:

• her employment would end on August 16, 2013; i.e. one month of working notice;

• she would be considered to have retired from IBM on September 13, 2013;

• she was offered a separation payment of $42,213.82 (less required deductions) conditional on her remaining with IBM until August 16, 2013 and signing the Termination Letter and a general release contained in the Termination Package;

• the Offer was made available without any requirement to seek or account for new employment;

• if she did not accept the separation offer by the end of the Working Notice Period, IBM would proceed to provide her with a payment under the Employment Standards Act, 2000, S.O. 2000, c. 41.

[21] Ms. Leeming refused the offer, and on August 27, 2013, IBM paid her $26,881.15 comprised of $8,699.40 (4 weeks) termination pay in lieu of notice and $18,181.75 (8.36 weeks) severance pay.

[22] Additionally, on August 27, 2013, IBM paid her $3,044.72 comprised of seven days accrued and unused 2013 vacation days.

[23] Ms. Lemming’s pension contributions to the DCP Plan and benefits coverage under the Benefits Plans were continued until September 13, 2013.

[24] At the end of the Working Notice Period, Ms. Lemming’s eligibility for Short Term Disability Plan and Long Term Disability Plan (“STD Plan” and “LTD Plan”, respectively) were discontinued.

[25] IBM did not provide Ms. Leeming with a letter of reference. It provided her with a two sentence letter verifying her employment with IBM.

4. Ms. Leeming’s Efforts to Mitigate

[26] In the four-month period following the date she received notice of termination, Ms. Leeming did not secure full-time comparable employment. During this period, she applied for 20 positions in various industries and job types. She searched job search websites and spoke to recruiters. She tried to find jobs through outplacement counselling, by networking with friends and business contacts and through any leads that those people provided to her. She created a profile on LinkedIn through which she was approached about potential job opportunities.

[27] Ms. Leeming had two job interviews but she was not offered a position.

[28] Ms. Leeming did obtain a small part-time independent contractor retainer with VisionWare Solutions from July to October 25, 2013, however, it did not lead to any full-time work. She earned $9,643.00 through her work with VisionWare Solutions.

[29] When her efforts to find a new position failed, Ms. Leeming decided to start her own business, specializing in digital marketing solutions for small and medium-sized companies. Marketing was not an area in which she had experience or training. She applied for and obtained a WSI Franchise Licence on November 22, 2013.

[30] So far, Ms. Leeming’s franchise business has not been profitable even including the money she earned with VisionWare Solutions. The business, so far, has been a losing proposition.

5. IBM’s Position

[31] IBM submits that Ms. Leeming contracted out of her common law entitlement to reasonable notice of termination and that the offer originally extended to the her constitutes reasonable notice.

[32] In the alternative, IBM submits that the reasonable notice period in this case is six to nine months of salary in lieu of notice starting on July 16, 2013.

[33] IBM submits that Ms. Leeming failed to mitigate and is not entitled to any damages for wrongful dismissal.

6. Ms. Leeming’s Position

[34] Ms. Leeming submits that she is entitled to, at least, 16 months’ pay in lieu of reasonable notice, given her position (Senior Managing Consultant), her tenure (approx. 8 yrs.), her age at termination (60 yrs.) and the unavailability of comparable employment. She submits that she made reasonable efforts to mitigate.

[35] In support of her argument that there should be a 16-month notice period, Ms. Leeming relied on: Dunlop v. BC Hydro & Power Authority, [1988] B.C.J. No. 1963 (B.C.C.A.); Smith v. British Columbia (British Columbia Hydro and Power Authority), [1986] B.C.J. No. 2453 (B.C.S.C.); Belzberg v. Pollock, 2001 BCSC 1478; Kolaczynski v. Benz Sewing Machines, [2002] O.J. No. 1117 (S.C.J.); Smith v. UndercoverWear Ltd., [1993] O.J. No. 2180 (Gen. Div.); Matusiak v. IBM Canada Ltd., 2012 BCSC 1784, [2012] B.C.J. No. 2506 (B.C.S.C.); Malacek v. Service Maintenance, [1999] O.J. No. 3972 (S.C.J.); Forshaw v. Aluminex Extrusions Ltd., [1988] B.C.J. No. 1538 (BCSC), aff’d [1989] B.C.J. No. 1527 (B.C.C.A.); Ballard v. Alberni Valley Chamber of Commerce, [1992] B.C.J. No. 434 (B.C.S.C.).

C. DISCUSSION AND ANALYSIS

1. Compensation for Wrongful Dismissal

[36] An employee who is dismissed without reasonable advance notice of termination is entitled to damages for breach of contract based on the employment income the employee would have earned during the reasonable notice period, less any amounts received in mitigation of the loss: Sylvester v. British Columbia, 1997 CanLII 353 (SCC), [1997] 2 S.C.R. 315.

[37] In determining the length of notice, the court should consider: (a) the character of employment; (b) the length of service; (c) the age of the employee; and (d) the availability of similar employment having regard to the experience, training, and qualifications of the employee: Machinter v. HOJ Industries Ltd., 1992 CanLII 102 (SCC), [1992] 1 S.C.R. 986; Cronk v. Canadian General Insurance Co. (1995), 1995 CanLII 814 (ON CA), 25 O.R. (3d) 505 (C.A.); Bardal v. Globe & Mail, 1960 CanLII 294 (ON SC), [1960] O.W.N. 253 (H.C.J.).

[38] The approach to determining a reasonable notice period is flexible, and each case will turn on its own particular facts. The weight to be given each factor will vary according to the circumstances of each case, and the judge in a wrongful dismissal case is required to exercise judgment in determining what factors are of particular importance.

[39] The character of employment factor tends to justify a longer notice period for senior management level employees and a shorter notice period for lower ranked or unspecialized employees: Bullen v. Proctor & Redfern Ltd., 1996 CanLII 8135 (ON SC), [1996] O.J. No. 340 at paras. 7-10 (Gen. Div.); Cronk v. Canadian General Insurance Co., supra.

[40] Generally speaking, the longer the length of employment the longer the reasonable notice period: Bullen v. Proctor & Redfern Ltd., supra at para. 21.

[41] Economic factors such as a downturn in the economy generally or in a particular industry that indicate that the employee may have difficulty finding other work may justify a longer notice period: Bullen v. Proctor & Redfern Ltd., supra at paras. 24-29; Thomson v. Bechtel Canada (1983), 3 C.C.E.L. 16 (Ont. H.C.J.).

[42] An employee who is wrongfully dismissed is entitled to recover the value of all losses arising from the failure to have been given reasonable notice of the termination of his or her employment: Koor v. Metropolitan Trust Co. of Canada, [1993] O.J. No. 1476 (Gen. Div.); Earl v. Northern Purification Services (Eastern) Ltd., [1980] O.J. No. 160 (H.C.J.); Davidson v. Allelix Inc. (1991), 1991 CanLII 7091 (ON CA), 86 D.L.R. (4th) 542 (Ont. C.A.); Locke v. Avco Financial Services Can. Ltd. (1987), 1987 CanLII 7330 (NB QB), 85 N.B.R. (2d) 93 (Q.B.).

[43] A wrongfully entitled employee is entitled to be compensated for the value of the employment-related health benefits that the employee held when employed, and when the wrongfully dismissed employee is forced to secure replacement coverage, the Courts have awarded compensation for the cost of replacement coverage for the reasonable notice period: Zaman v. Canac Kitchens Ltd. (Kohler Ltd.), [2009] O.J. No. 872 (S.C.J.) at para 19.

[44] Wrongful dismissal is a breach of contract claim, and the normal principles of damages assessment apply to the determination of the quantum of damages including the principle that a plaintiff cannot recover for avoidable loss; i.e., the mitigation principle. See: Zaman v. Canac Kitchens Ltd, a division of Kohler Ltd., supra; British Westinghouse Electric & Mfg. Co. Ltd. v. Underground Electric R. Co. of London, Ltd., [1912] A.C 673 (H.L.); Karas v. Rowlett, 1943 CanLII 53 (SCC), [1944] S.C.R. 1; Apeco of Canada Ltd. v. Windmill Place, 1978 CanLII 186 (SCC), [1978] 2 S.C.R. 385.

[45] It is corollary to the mitigation principle that an innocent party must take into account the benefits received from actually mitigating his or her loss: Cockburn v. Trusts and Guarantee Co. (1917), 1917 CanLII 10 (SCC), 37 D.L.R. 701 (S.C.C.).

[46] In assessing the innocent party’s efforts at mitigation, the courts are tolerant, and the innocent party need only be reasonable, not perfect: Banco de Portugal v. Waterlow & Sons Ltd., [1932] A.C. 452 (H.L.).

[47] The onus is on the defendant to establish a failure to mitigate: Michaels v. Red Deer College, 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324; Dobson v. Winton & Robbins Ltd., [1959] S.C.R. 755.

2. Did Ms. Leeming Contract-out of her Common Law Entitlements?

[48] An employee may contract-out of his or her common law entitlements upon a wrongful dismissal, but this can only occur by clear, express and unambiguous language in the employment contract that rebuts the common law presumption that an employee can only be terminated on reasonable notice: Christensen v. Family Counselling Centre of Sault Ste. Marie and District, 2001 CanLII 4698 (ON CA), [2001] O.J. No. 4418 (C.A.); Machtinger v. HOJ Industries Ltd. (1992), 1988 CanLII 4645 (ON CA), 66 O.R. (2d) 545 (S.C.C.).

[49] Further, in order for a termination provision in an employment contract to be binding, there must be evidence that the provision was accepted by both the employer and the employee as a term of the employment contract, and the onus rests on the person seeking to enforce the provision that it was a part of the employment contract: Starcevich v Woodward's Ltd, [1991] B.C.J. No. 2182 (B.C.S.C.).

[50] In the case at bar, IBM does not rely on the terms of the DWL contract that Ms. Leeming signed before signing the IBM Employment Offer, and I find that neither the Employment Offer nor the IBM Separation Policy are sufficiently clear, express, or unambiguous to deny Ms. Leeming her common law entitlements.

[51] It may be noted that the language of the policy is permissive and that IBM itself did not purport to follow its own Separation Policy. The ultimatum-like separation offer which IBM initially made to Ms. Leeming - but retracted - was slightly more generous than its Policy and the ultimate separation payment that it made was less generous than the Policy.

3. What is the Reasonable Notice Period?

[52] While not an unrestricted, unregulated, or arbitrary determination, deciding what is a reasonable notice period is perhaps more legal art than legal science. The exercise was described by both parties as holistic, which means that the court assesses and weighs all the suggested criteria to come to an overall balanced decision about what is reasonable in Ms. Leeming’s particular circumstances.

[53] In regard to the factors, I was provided with no information about the availability of comparable employment or information about the state of the job market or the economy apart from the fact that IBM itself was downsizing its workforce. IBM did not suggest that it would be easy for Ms. Leeming to find another job. Rather, it submitted that she did not test the job market long enough before deciding to go into business for herself.

[54] During the time that Ms. Leeming was pursuing employment, it does appear that her prospects were not particularly bright. She had worked at IBM for approximately eight years at what appears to me to be a middle managerial administrative position but not a job that would give her any special training, expertise, or qualifications that would leave her with any sort of advantage in obtaining similar employment. She finds herself at 60 years of age competing with younger, more recently trained, and likely less expensive talent. She was hired by IBM in her 50s and if she had of looked at IBM’s Separation Policy, which I find she did not, she would have had paltry expectations of employer generosity.

[55] I have looked at the case law provided by the parties, and it would be to no useful purpose to compare and contrast the various cases and to apply or distinguish them from the case at bar. Ms. Leeming reads those cases to support a 16-month notice period and IBM reads them to support a six to nine month period.

[56] Having read the case law and having considered the facts of the immediate case, it is my view that a 16-month notice period is not reasonable in the circumstances of this case and not what Ms. Leeming could reasonably have expected as compensation for a dismissal without cause for her time at IBM. In my opinion, the appropriate notice period in the immediate case is 10 months.

4. Was there Avoidable Loss; i.e. Did Ms. Leeming Fail to Mitigate?

[57] In this case, I am satisfied that Ms. Leeming did not fail to mitigate. I accept her evidence that she made reasonable and diligent efforts to find new employment and then made a reasonable decision to become, in effect, her own employer by training herself for her new career as a franchisee. It is easy enough for IBM to say that Ms. Leeming should have stayed in the labour market longer but, in my opinion, she tested the market long enough to make a reasonable decision to retrain for a new career. So far, her franchise has not been a success, but had it quickly proven to be a success, I have no doubt that it would have counted as mitigatory of her damage claim.

[58] In Peet v. Babcock & Wilcox Industries Inc. (2001), 2001 CanLII 24077 (ON CA), 53 O.R. (3d) 321 (C.A.), the employer argued that an employee had failed to mitigate when he established a new business. Justice Finlayson, rejected this argument and at para. 8 of his judgment for the Court of Appeal stated:

The respondent's establishment of a new consulting business was clearly a means of mitigation. The fact that the early years of the respondent's self-employment did not live up to his monetary expectations does not mean that this was an unreasonable attempt at mitigation. An employee who has been terminated is entitled to consider his or her own long-term interests when seeking another way of earning a living. The respondent's efforts at mitigation cannot be classified as unreasonable simply because his actions did not neglect all other interests while focussing exclusively on his short-term obligation to mitigate damages for the sake of his former employer.

See also Ward v. Royal Trust Corporation of Canada, [1993] B.C.J. No. 656 (B.C.S.C.); Graceffo v. Atlitalia (Linee Aeree Italiane, S.p.A.), [1994] M.J. No. 685 (Q.B.); Wychopen v. Northwestern Utilities Ltd., [2003] A.J. No. 891 (Q.B.); Bradley v. Brains II, Inc., 2000 BCSC 1629.

[59] I am satisfied that Ms. Leeming did not fail to avoid avoidable loss.

5. Calculation of Damages

[60] I have concluded that Ms. Leeming is entitled to a reasonable notice period of 10 months.

[61] Ms. Leeming is entitled to her base monthly salary, which is $9,457 monthly for the duration of the notice period; i.e. $94,570.00.

[62] Ms. Leeming is entitled to compensation for the loss of her employer’s contribution to her pension plan for the duration of the notice period, which is $354.64 monthly for the duration of the notice period; i.e. $3,546.40.

[63] Ms. Leeming is entitled to compensation for the monthly replacement cost of her Benefits Plans for the duration of the notice period which is $211.46 monthly for the duration of the notice period; i.e. $2,114.60.

[64] Ms. Leeming is not entitled to any bonus because the evidence establishes that no bonus was actually paid during the duration of the reasonable notice period.

[65] Ms. Leeming’s total claim amounts to $100,231.00.

[66] As I have found above, Ms. Leeming did not fail to mitigate, but she must give credit for the sums already paid by IBM; namely $35,580.55.

[67] Ms. Leeming is, therefore, entitled to a judgment of $64,650.45 to be paid in accordance with IBM’s obligations, if any, to deduct withholding tax, etc.

D. CONCLUSION

[68] For the above reasons, I grant Ms. Leeming judgment as aforesaid.

[69] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Ms. Leeming’s submissions within 20 days of the release of these Reasons for Decision followed by IBM’s submissions with a further 20 days.

Perell, J.

Released: March 4, 2015

CITATION: Leeming v. IBM Canada Ltd., 2015 ONSC 1447

COURT FILE NO.: CV-13-490470

DATE: 2015030_

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

SUSAN JANE LEEMING

Plaintiff

– and –

IBM CANADA LTD.

Defendant

REASONS FOR DECISION

PERELL J.

Released: March 4, 2015