Ontario court awards 24 months’ notice to long-term employee with outdated contract who was terminated without cause

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A 58-year-old employee at Ciena Canada has been awarded 24 months’ notice by an Ontario court after he was terminated without cause after 22 years of service.

The worker, MG, had transitioned from a technical engineering role to a non-managerial senior director position within the company’s chief strategy office. He did not have an up-to-date employment contract and was “well paid” at the time of termination with an annual salary of $229,163.26.

The Ontario Superior Court of Justice noted that Ciena Canada did produce an employment contract entered into in 1999, but it did not accurately reflect his position, his remuneration package, or his bonus entitlement.

Termination

MG was given notice of termination on Nov. 10, 2021. On that date, he was told his employment would end on Feb. 4, 2022, and he continued to work until that date.

In addition to those 12 weeks of working notice, he was also paid 26 statutory severance weeks, calculated using his base salary. He was also paid for 15 days of unused vacation and his employee benefits were terminated on Feb. 4, 2022.

The court was asked to consider the appropriate length of notice for termination, damages related to bonus payments, the value of a comprehensive benefits package, employer pension contributions, vacation entitlement, and the plaintiff’s efforts to mitigate his losses.

MG sought 27 to 30 months’ notice, while Ciena Canada argued the appropriate range was 18 to 22 months. The court settled on 24 months as the appropriate period, noting that the case was not “exceptional” and didn’t justify going beyond that period.

It cited his 22 years of unbroken employment, his age, and the specialized nature of the position he held in calculating the notice period. It also took into account the fact he was terminated during the pandemic.

It also noted that the employer agreed that damages in lieu of notice should include matching pension contributions up to 4% of his salary — or $9,167 per year.

Bonus payments

Despite the employer’s argument that bonuses were discretionary, the court found that the plaintiff was entitled to compensation for lost bonus payments, as these had formed an integral part of his compensation.

MG received bonuses for the financial year ending Oct. 31 each year as follows:

  • 2019: $128,487
  • 2020: $72,186
  • 2021: $118,706.66

However, the court agreed with the defendants that the bonus should be calculated based on actual company performance during the notice period, rather than an average of past bonuses. It noted that for the fiscal year 2022, the corporate performance percentage was 50% — “no doubt a reflection of the pandemic,” the court said.

It chose the amount submitted by Ciena — $40,103.40 for 2022 and $80,206.80 for 2023 — to be appropriate.

Benefits

Benefits compensation was another critical issue, with the court finding the plaintiff should be compensated for the loss of benefits, albeit at a rate lower than he sought.

MG argued the value of his benefits package was nearly $46,000 a year, or 20% of his base salary.

The court, though, awarded $25,000 per year, calling 20% or even 15% of base salary “excessive.”

Mitigation

Throughout the case, the court dismissed the defendants’ arguments that the plaintiff had failed to mitigate his damages, highlighting his extensive efforts to find new employment.

“In total, he has applied for over 120 jobs, including work physically located in the Ottawa area, remote work and hybrid employment,” it said.

It also called it “notable” that Ciena did not offer MG outplacement services when he was initially terminated. “They did, eventually, provide him with an offer of three months of outplacement services, which he took them up on,” it said.

It noted that MG does not have business or IT qualifications — but he did take numerous courses online to try and “upgrade his marketability.” It also said that the 24 month notice period is already over and MG remains unemployed.

It awarded costs to MG on a partial indemnity basis, “subject to any adjustments warranted by offers to settle.” It left it to the parties to agree but left the door open to provide further directions.

For more information, see Gazier v. Ciena Canada, ULC, 2024 ONSC 865 (CanLII).

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