Law Times

Law Times • June 3, 2013 Page 7 COMMENT Reasonable notice damages should account for vacation pay T he issue of whether compensation for lost vacation pay accruing after dismissal and during the period of reasonable notice should be a component of damages for wrongful dismissal continues to vex employers, judges, and the bar. There are conflicting authorities in Ontario concerning the recovery of this head of damages. A survey of cases illustrates that an award of vacation pay doesn't fall outside the scope of damages in lieu of reasonable notice. In 1995 in Cronk v. Canadian General Insurance Co., the Ontario Court of Appeal decided that vacation pay within the reasonable notice period wasn't recoverable. However, seven years earlier the same court made the opposing ruling in Oxman v. Dustbane Enterprises Ltd. Surprisingly, the Court of Appeal didn't refer to Oxman in Cronk. On this ground, in a 1996 decision in Dunning v. Royal Bank, counsel for the plaintiff urged Justice Frances Kiteley not to follow Cronk and instead accept Oxman. Having discussed the competing authorities, Kiteley preferred to follow Cronk simply because Oxman lacked reasons for awarding vacation pay. As such, it would appear the court had confirmed Cronk as an authority on the recoverability of vacation pay during the reasonable notice period. However, subsequent courts didn't heed Cronk. In 2004, Justice Thea Herman ignored Cronk in Dubey v. CDA Industries Inc., preferring instead to follow the Ontario Court of Justice (general division)'s reasoning in Kwasnycia v. Goldcorp. Inc., a case released nine months prior to Cronk. In awarding a 57-year old foreman with 21 years of service damages based on 18 months' notice, Herman also granted him damages for lost vacation pay. She qualified it as "a reasonable measure of what he might have expected to receive had he served out his period of notice." I Similarly in 2009, SupeHaving found that just cause rior Court Justice George Labour didn't exist, Superior Court Strathy recognized the disJustice Bonnie Wein awarded Pains missed employee's entitlement the dismissed employee 14 to vacation pay during the nomonths' salary in lieu of notice tice period in Munoz v. Canac but refused to factor in comKitchens. pensation for lost vacation pay. In doing so, Strathy also In coming to her conclupreferred to follow the lead of sion in that matter, Wein folKwasnycia. In Kwasnycia, the lowed Lim v. Delrina (Canada) judge Ferrier ably explained: Corp., in which Justice Harry "In my view, the rationale for LaForme, in turn, referenced Nikolay entitlement to vacation pay can a theory advanced in an unreChsherbinin be expressed in the following ported case that "the employer way: absent cause for dismissal, an em- could require the employee to take her ployee is entitled to reasonable notice of vacation during the period of notice and termination of employment. If an em- therefore there should be no vacation ployee is summarily dismissed without pay entitlement added to the pay for the cause, he or she is entitled to be compen- notice period." sated in damages measured by the salary, The foregoing cases illustrate that wages, and benefits that would have been compensation for lost vacation pay durafforded to the employee during the no- ing the reasonable notice period is retice period; that is to say, while employed coverable in Ontario. The modern jurisfor the period of the notice. prudence has overshadowed Cronk and "In the case of so-called 'vacation pay,' rendered it a remnant of an abandoned the plaintiff has not lost vacation pay per principle. This proposition finds support se; rather, he has lost, in effect, the benefit in a very recent case, Plester, in which of a paid vacation. Vacation pay in the Wein made no reference to Cronk in supcase at bar is agreed to be equivalent to port of her decision to deny damages for 10 per cent of the plaintiff 's salary. This is vacation pay during the reasonable nothe amount that the plaintiff would have tice period. been entitled to if he did not take a vaGiven that the entitlement to vacation cation while employed during the notice pay arises in the context of a terminaperiod. This figure, in my view, is the best tion without cause and in breach of an measure of the value of the paid vacation implied term of an employment contract entitlement and is the best measure of the to give reasonable notice, it doesn't seem damages suffered when the defendant logical to penalize the dismissed emdeprived the plaintiff of this benefit by ployee by withholding vacation pay but dismissing him summarily. Accordingly, paying salary in lieu of it. Nevertheless, in my view, the plaintiff 's entitlement is employers often argue that to provide equivalent to two years of vacation pay at additional compensation with respect to the 10 per cent rate." vacation pay to an employee who hasn't In contrast, consider the Ontario Su- in fact had to provide services would perior Court's 2011 decision in Plester amount to double recovery. v. Polyone Canada Inc. In this case, the In my view, this argument is flawed company summarily dismissed a super- because it involves an opportunistic visor with 17 years of employment for a segregation of the dismissed employee's serious mistake at work. entitlement to salary and vacation pay in lieu of notice. It's helpful to keep in mind that reasonable notice is nothing more than a legal fiction used to measure damages. It doesn't purport to replicate actual employment. Therefore, during the reasonable notice estimated by the court in fixing damages, there's no ongoing relationship with mutual contractual obligations of providing services in exchange for pay. It's thus artificial to speak in terms of not having to provide services in order to disentitle employees of their vacation pay during the reasonable notice period. This proposition arose in the British Columbia Court of Appeal's decision in Bavaro v. North American Tea, Coffee & Herbs Trading Co. Inc., in which the court had no problem with the notion that vacation pay within the notice period would amount to double recovery. "With deference, I do not think that in the great majority of cases a discharged employee sees the notice period as anything like a vacation," wrote Justice Ian Donald. "Either the employee is looking for a new job or has found one and must report to work. The prospect of taking a vacation is likely not even a consideration." In light of British Columbia Court of Appeal's thoughtful rationale, perhaps future courts considering the issue should factor in the effect of a spoiled vacation that the dismissed employee took during the notice period — but without gratification due to the emotional distress caused by the dismissal — when assessing an award of vacation pay in lieu of reasonable notice. LT uNikolay Chsherbinin is an employment lawyer at Chsherbinin Litigation in Toronto and author of The Law of Inducement in Canadian Employment Law published by Carswell, a Thomson Reuters business. He's available at 416-907-2587, nc@nclaw. ca or nclaw.ca. Don't encourage self-represented litigants Family law is in fact law. The practice and process t seems to me that access to proper dental care is require a working knowledge of numerous statutes, just as important as access to justice. Poor dental case law, and related fields such as tax, corporate, health can lead to more serious medical issues, property, and, at times, bankruptcy matters. Rather yet rarely do I hear public discourse over the high than encourage self-represented litigants, even the cost of dental care, the absence of government assismost educated of whom cannot navigate this difficult tance for those who wish to perform it themselves within the world of oral hygiene or criticism of the 4.Mediation offices in many courthouses offering field, we should lobby for increased legal aid funding LETTERS.indd 1 3/1/12 4:39 PM for family law; advocate for a unified family court low-cost services to family law litigants. rabble of greedy dentists unwilling to perform pro 5. A duty counsel system at most courthouses pro- system provincewide; seek an immediate technolbono services. ogy upgrade to bring the court system into the 21st viding free advice and assistance. Interestingly, the opposite is true for our justice system and, in particular, access to our family courts 6. A dispute resolution system staffed mostly by vol- century as the wasted time involved in paper filings, unteer family lawyers assisting parties with early lost files, and copying briefs adds layers of unnecesby self-represented litigants. Contrary to recent resary costs to the process; institute a triage system to resolution in a low-key, non-adversarial setting. ports and your editorial of May 13, 2013, (see "Making legal services by web, phone more useful") during 7.Family Law Rules that punish those who do not identify and stream high-conflict cases early on; start make early and serious offers to settle through costs. an immediate review of some of the regulatory demy lengthy career as a family lawyer I have seen nuWe as family lawyers, along with many members mands upon lawyers that tend to drive up the cost of merous efforts from the bench and the bar attempting to address the public concerns over the family law of the judiciary, have contributed greatly to improved operating a law office; and permit and encourage the access to the family law system but we should not be unbundling of legal services in the family law field. system. There are several examples of such efforts: We do a disservice to the public and our justice 1.The passage of the Family Law Rules with new actively encouraging self-represented litigants. I have previously written about what I consider system by tacitly encouraging self-represented litiforms dubbed by many as permitting check-box justice.  After eliminating most of the archaic de- to be the serious adverse consequences to our justice gants. The long-term result is the destruction of the mands of pleadings, it's now easier to institute pro- system of the self-represented litigant. The absence of legal system as we know it. We must work diligently legal knowledge and regard for the legal process and to improve the system and the quality of services we ceedings. 2. Family law information sessions provided for free the rules of evidence, the elimination of respect for provide to the public but we should never abandon to all new litigants in the family law system dur- stare decisis, the bending of the traditional judicial the field to self-represented litigants or untrained ing which volunteer lawyers, social workers, and role to accommodate those who do not know what family law professionals who continue to appear with court staff deliver seminars. They clearly explain to do or how to do it in court, and, finally, the enor- ever-greater frequency. mous waste of court resources in trying to tutor the the process. Gary Joseph, 3. A new and more extensive conference system to untrained in a complex process are problems caused MacDonald & Partners LLP facilitate early settlement and the creation of a less by self-represented litigants that we should not be Toronto encouraging. adversarial environment. u Letter to the editor www.lawtimesnews.com

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