Financial situation not a factor in deciding notice period: court

An Ontario Court of Appeal ruling says an employer’s financial circumstances shouldn’t be a factor in deciding what is a reasonable notice period for a wrongfully dismissed employee.

In Michela v. St. Thomas of Villanova Catholic School released yesterday, the appeal court found three teachers were entitled to a 12-month notice period, not a reduced period of six months because of a perceived financial hardship on the part of the school they worked for — in one case for up to 13 years.

Three schoolteachers brought the complaint in response to a Jan. 7 summary judgment in their wrongful dismissal action against the private school.

Motions Judge Thomas R. Ledere had found that teachers Domenica Michela, Sergio Gomes, and Catherine Carnovale were wrongfully dismissed and awarded pay in lieu of 12 months’ notice he found they should have received. However, he decreased the notice period by half for each of the teachers after considering the school’s financial situation.

The teachers argued the damages should not be reduced. In addition to challenging the notice period on appeal, they also argued the motions judge was wrong in his assumption they could secure other jobs within six months of being let go.

The appeal court also sided with the teachers on that matter.

“There was no factual basis for that — it was speculation,” says Wright.

The teachers worked for the school on a series of one-year contracts over a number of years. Gomes was employed for 13 years, Michela for 11, and Carnovale for eight. In May 2013, they each received a letter from the school indicating their contracts would not be renewed for the upcoming year because enrolment was expected to be lower than the previous year.

Michela and Carnovale received a second termination letter in June 2013, and Gomes received an e-mail on June 30 stating the school was not in a position to offer him a position at that time.

The school had argued the teachers were not entitled to notice because they were employed on fixed-term contracts. However, the motion judge found they were employed for indefinite periods and were entitled to reasonable notice.

The teachers raised three issues on appeal.
•    First they argued the motion judge erred in relying on the school’s alleged financial difficulties to reduce the notice period.
•    Second, they said the judge erred in presuming there would be positions they could secure six months following their termination.
•    Third, that the motion judge made a palpable and overriding error of fact in finding that enrolment issues constituted a financial problem permitting a reduction in the notice period to six months.

The motion judge emphasized the “character of the employment” in determining that the 12-month notice period sought by the appellants should be reduced to six.

“It should be self-evident that, by its nature, the School could not provide the security of employment offered by larger, more established and better-funded institutions. The teachers must be taken to have understood the circumstances of their employer. Every year, they had to wait until June before the School could be sure of its requirements for the upcoming year. . . ”

Writing for the panel, Justice Grant Huscroft wrote: “In my view, the motion judge erred in considering an employer’s financial circumstances as part of the ‘character of the employment.’

The ruling went on to say: “There is no evidentiary basis for the motion judge’s presumption concerning the future availability of teaching positions.”

Michael Wright and Stephen Moreau, of Cavalluzzo Shilton McIntyre & Cornish LLP, represented the teachers.

The motion for summary judgment was argued by Moreau who established that although the teachers were working on one-year fixed contracts, given the amount of time the teachers had been employed by the school it was appropriate they be considered indefinite, and therefore entitled to common law notice.

“It was an important hurdle to overcome or we would not have got to the rest of it,” says Wright.

Wright says he sees a lot of employers trying to claim financial hardship when it comes to settling matters as part of the statement of defence. The appeal court made it clear in this case that it’s “not appropriate to do so.”

“It is rare to see a judge accept it as a rationale for reducing a notice period,” he says. “When you’re negotiating at the outset if a lawyer says, ‘My client has significant hardship,’ that’s just a reality you have to deal with as part of the negotiation.”

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