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How can Breaks in Employment Service Affect your Reasonable Notice Period?

The Ontario Divisional Court’s Decision in Vist v. Best Theratronics Ltd., 2015 ONSC 2619.

Background

The appellant, Best Theratronics Ltd. (“Best”) terminated the respondent, Margus Vist (“Mr. Vist”) without cause. Prior to his termination, Mr. Vist had worked as a general manager of Best earning approximately $115,000 per annum, plus benefits.  Mr. Vist was forty-nine (49) years old at the time of his termination.


Almost two (2) months after Mr. Vist’s termination from Best, he obtained alternative employment in engineering and product management making approximately $85,000 per annum. 

Mr. Vist’s employment with Best had been continuous for two and a half (2.5) years prior to termination. However, Mr. Vist had fourteen (14) years of past service with Best and its predecessors, with a four (4) year break in his service. Mr. Vist’s employment contract did not speak to notice or severance upon termination without cause, but conversely acknowledged Mr. Vist’s tenure as starting in 1993 with respect to the purposes of service milestones and vacation. The employment contract also indicated that he would be treated on the basis of his period of “accrued continuous service.” (para 3).

Mr. Vist brought an action against Best for wrongful dismissal. The trial judge found that Mr. Vist should have the status of a long-term employee in determining what would be a reasonable notice period; however she did not give full weight to the sixteen (16) years of service. The trial judge held that Mr. Vist was entitled to six (6) months’ pay in lieu of notice, deducting for mitigation earned during this six (6) months period.

Issues

Best brought the appeal on the following three issues:
 
  1. the trial judge erred in placing weight on Mr. Vist’s pervious employment with Best rather than finding Mr. Vist had been working for best for two and a half (2.5) years;
  2. the trial judge erred in finding that Mr. Vist had discharged his duty to mitigate, despite seeking work at the less remunerative level of engineering and product management instead of the General Manager level; and
  3. the trial judge erred in her finding with respect to costs and damages. Please Note: this issue will not be discussed for the purposes of this blog.

The Ontario Divisional Court’s Decision

Issue 1

Assessing the trial judge’s interpretation of Mr. Vist’s contract (i.e. what was meant by “accrued continuous service” in the context) was a question of fact. Although, questions of fact require a standard of review of deference, the Court still assessed the trial judge’s path of reasoning with respect to the employment contract. The Court found that there was an allowance to consider Mr. Vist’s total period of service, however, from the trial judge’s reasons it is clear that she did not give Mr. Vist full credit for his entire tenure with Best and its predecessors. The Court explained that had the trial judge considered Mr. Vist’s over sixteen (16) years of total service a reasonable notice period would likely be in the range of twelve (12) to (18) months as opposed to six (6) months. Further, the Court noted that in their view, the minimum reasonable notice period for Mr. Vist, assuming two and a half (2.5) years of employment would be three (3) months and a maximum of between five (5) and six (6) months. With the trial judge fixing Mr. Vist’s reasonable notice period at six (6) months, the Court did not consider a reversible error on the part of the trial judge for this issue.  

Issue 2

With respect to the mitigation issue, the Court stated that “the duty on the employee is not to obtain the highest paying job he can find, no matter how poorly it suits his history, training, or personality.” (para 12). Further, the Court noted that if Mr. Vist had insisted on a more senior general management position it would have been very likely that it would have taken him longer to find work and mitigate his losses. The Court found that the trial judge did not err in finding that Mr. Vist had discharged his duty to mitigate in a suitable manner. The Court went further to state that they “consider it tendentious of the employer to have pursued this issue at all.” (para 12).

Our Thoughts

The above case leaves us in a bit of a grey area. Although Mr. Vist was given the long-service employee status he was not given the full benefits if his length of service was otherwise continuous. Whether a break in service will have an effect on an employee’s rights will depend on a number of factors such as the length of the break, the period of employment before and after the break and whether the employee and employer intended to regard the service as continuous. It may be advisable that when an employee returns to service a clear contractual acknowledgement of past service will or will not be recognized.

The above article is for general information purposes only and does not constitute legal advice. If you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere.