Heavy-duty mechanic, kept on payroll beyond working notice period, wins wrongful dismissal

A heavy duty mechanic works on a piece of machinery. Photo: HR Law Canada/Canva

What happens if you give an employee working notice, and then keep the worker on the payroll past the termination date?

For one Alberta employer, it meant the working notice was null and it was ordered to pay the worker 24 months’ notice. And the Court of Appeal for Alberta weighed in on the issue of the deductibility of the Canada Emergency Response Benefit (CERB) from notice periods.

Background

Steven Oostlander was a long-term employee at Cervus Equipment Corporation — logging 36 years with the company as a heavy-duty mechanic. He serviced agricultural equipment in Bassano, Alta., throughout his tenure with Cervus.

The company made a decision to convert the Bassano location to a retail branch only, and move servicing to the town of Brooks, which was about 50 kilometres away. In May 2018, it gave working notice to Oostlander that his employment would terminate about 16 months’ later on Sept. 11, 2019.

That did not happen. As the termination date approached, Oostlander asked about the status of his employment and was told he was being kept on.

He continued to work, with no further discussion of his termination, until June 3, 2020. At that point, Cervus relied on its earlier working notice and gave Oostlander one months’ notice. It also offered him a job in Brooks, but he refused that position.

Oostlander sued for wrongful dismissal.

The first trial

The court ruled in favour of the worker in this case, and ruled he had been wrongfully terminated by Cervus.

It awarded 24 months’ pay in lieu of notice — $134,904 plus vacation pay of $14,196. He received CERB, which the court deducted from the notice along with income he earned from a new job.

Cervus appealed that ruling, and Oostlander cross-appealed.

The employer’s mitigation appeal

Cervus focused in on the duty to mitigate, as the trial judge found his refusal to accept the employment offered to him at its location in Brooks, Alta., was reasonable. It would have required him to commute, round trip, about 100 kilometres — including in winter road conditions.

Relocation wasn’t an option because he had lived in Bassano most of his life, and his wife worked at a school in the town.

“The trial judge found that Oostlander had done a perfectly reasonable job of finding ways to support himself post termination and while the jobs he found have not paid him the same amount of money, the fact that he was re-employed relatively quickly speaks to a reasonable level of diligence in his job search,” the Court of Appeal of Alberta said in the ruling.

It rejected the appeal, though did correct a math error that awarded 25 months’ notice instead of 24.

The worker’s CERB appeal

Oostlander’s appeal focused on the deduction of CERB benefits from the notice period.

“The trial judge noted that CERB payments have been treated inconsistently by Canadian courts in the context of wrongful dismissal damages, and that most trial courts have focussed on whether the CERB benefit will ultimately be repayable by the employee to the government,” it said.

The court pointed to the British Columbia ruling in Yates v Langley Motor Sport Centre Ltd, 2022 BCCA 398 (CanLIII). Yates, though, dealt with a ruling where the worker was laid off due to the pandemic.

“Oostlander’s dismissal, on the other hand, was not related to the pandemic,” the court said.

It found the B.C. ruling on the issue “compelling.”

“The (B.C.) court noted that ‘it seems wrong for a defendant employer who has breached the employment contract with the plaintiff to enjoy, effectively, a windfall from an income support program designed to benefit workers impacted by the COVID-19 pandemic. If a windfall is to result, it seems to better reflect the intention of Parliament that it go to the worker,'” it said.

“We conclude that broader policy considerations militate against the deductibility of CERB from damages for wrongful dismissal,” the Court of Appeal for Alberta said.

It allowed Oostlander’s appeal and said the CERB benefits he received are not to be deducted from the damages award. It also awarded him costs.

For more information, see Oostlander v Cervus Equipment Corporation, 2023 ABCA 13 (CanLII).

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