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Dec 18, 2012

Ontario court rejects, then applies ‘rule of thumb’ and cap for wrongful dismissal damages

One month per year of service placed too much emphasis on length of service, but was reasonable in this case: Court
    
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The “rule of thumb” that employees dismissed without cause are entitled to one month’s pay for every year of service has been rejected by the Ontario Superior Court of Justice. But in the process of making that decision, the court awarded a group of dismissed employees just that amount.

Thirty-four employees of Avon Sportswear Limited were laid off when the company was sold to another organization, Shain Sportswear. None of them were recalled to their unskilled, low-paying jobs, so their layoffs became terminations of employment. However, the employees were given little or no notice and no termination or severance pay.

The employees filed a joint statement of claim for wrongful dismissal damages, which included a request for damages equivalent to one month’s pay for each year of service for each employee, with a cap of 24 months.

The court found the rule of thumb dictating one months’ pay for every year wasn’t appropriate in determining reasonable notice, because it placed too much emphasis one of the “Bardal” factors — length of service — at the expense of others, such as character of employment, age, the job market and the likelihood of finding similar employment.

The court also rejected the suggested cap of 24 months for damages, because it placed an arbitrary limit on the factors of length of service and age.

However, after stating the problems it had with the rule of thumb and cap on damages, the court proceeded to apply those very things in determining the amount of damages to which the employees were entitled.

The court found the amount of damages requested for each employee — which worked out to one month’s pay for each year of service — was a reasonable amount. The court also indicated for some of the employees who had particularly lengthy terms of service — two had worked for the companies for at least 35 years and were over 63 years old — it might have awarded more than 24 months’ pay, but since their claim included a proposed cap of 24 months, the court accepted that as the maximum.

For more information see:

Abrahim v. Sliwin, 2012 CarswellOnt 13870 (Ont. S.C.J.).
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