Law Times

Page 12 February 29, 2016 • Law Times www.lawtimesnews.com Trail of confused jurisprudence over which information is legally relevant Many factors involved in assessing notice periods BY JUDY VAN RHIJN For Law Times W hen an employer and an employee come to court over a termina- tion, there are three economic realities in the case — the em- ployer's financial circumstances, the employee's financial circum- stances, and the state of the job market. There has been a trail of con- fused jurisprudence over which information is legally relevant to the assessment of a suitable no- tice period. Since the Court of Appeal's decision in November 2015 of Michela v. St. Thomas of Villa- nova Catholic School, lawyers have been reviewing their strat- egies for which economic evi- dence to lead. In Michela, three teachers at the St. Thomas of Villanova Catholic School were terminated due to lower enrolment at the school, an independent, not-for- profit enterprise. In his ruling in early 2015, trial judge Justice Thomas Leder- er said it was self-evident that, by its nature, the school could not provide the teachers with the se- curity of employment of a larger institution. Lederer also noted in his ruling that the teachers at the school were aware of the poor financial circumstances and that this went to the "character of their employment" — a relevant factor when assessing notice periods. However, the Court of Ap- peal found that the employer's circumstances are not part of the "character of employment" and should not be taken into account when determining the appropri- ate notice period. This decision clearly overrules previous judgments that said oth- erwise. But, despite the decision, lawyers say the practical question of when to raise economic factors remains a question of strategy. Phil White of Grosman Gros- man & Gale LLP in Toronto, who represents both employers and employees, says the decision emphasizes the fundamental un- fairness in employment law. "You can look at the market from the employee's point of view but not the employer's. The market can potentially result in longer notice, but it can't reduce it," says White. "That's not the way employment law works." However, from a practical point of view, White believes that the decision in Michela should stand. "It's probably better that it stays this way. If the economic circumstances of the employer really become a factor, think of the effect on trials. Now the em- ployer's business is a component of a trial. What if the employer is doing very well?" says White. "I can see plaintiff 's counsel want- ing production of financial re- cords, profit sheets, and balance sheets. If they have good fortune and excellent circumstances, that could be used as a factor to lengthen the notice." Jeffrey Robles of Reilly and Partners PC, an employment law- yer in the Durham Region, recalls noticing that for a period of time around 2008, during the reces- sion, the economic climate was taken into account and affected notice periods, although modestly. "It was not a significant jump of four or five months," he says. "It was a subtle factor." Since then, there have been a number of cases that appeared to be taking into account the em- ployer's financial circumstances, including from the Court of Appeal. This was the issue ad- dressed in Michela. "The Court of Appeal has now said 'that's not what we meant,'" says Arthur Zeilikman of Zeilikman Law PC in Rich- mond Hill, Ont. "The employer's financial cir- cumstances are not a relevant factor, when before it was be- lieved to be, due to the confusion in the case law," he says. "Some earlier decisions stated that if the employer breaches the employment contract, who cares what its circumstances are? Oth- er decisions took the employer's financial circumstances into account. When you are talking about the common law in On- tario, it's now a moot point." Dan Palayew of Borden Lad- ner Gervais LLP in Ottawa says the dichotomy in the court's ap- proach leads to the irony that, at a time when the employer wants to save money, it has to pay out a lot of money. "Most employers aren't doing terminations when they are do- ing very well. It happens when they're downsizing," he says. "When they ask me how much it will cost to let people go, they have to pick themselves up off the f loor." Palayew finds this is particu- larly the case with in-house coun- sel of U.S. parent companies that are used to at-will employment. "They have no concept of reasonable notice," he says. "The price tag is a shock." While he accepts the direc- tions given in the Michela deci- sion, Palayew says he will still lead evidence of the employer's financial circumstances to dem- onstrate good faith where there is an allegation that the termina- tion was motivated by discrimi- nation or favouritism. "It shows they were not moti- vated by anything other than fi- nancial circumstances. That evi- dence can attract the sympathy of the judge and level the playing field," says Palayew. "It's always a case of David and Goliath. The employer is always Goliath, even when it's a very small family business losing money." LT FOCUS THE MOST COMPLETE DIRECTORY OF ONTARIO LAWYERS, LAW FIRMS, JUDGES NEW EDITION Perfectbound Published December each year On subscription $80 One time purchase $83 L88804-764 Multiple copy discounts available Plus applicable taxes and shipping & handling. 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Untitled-3 1 2016-01-25 12:43 PM Jeffrey Robles says during the recession in 2008 judges took the economic climate into account in their decisions. SAVE 10% Register before April 1, 2016 May 16, 2016 - Toronto | Webinar To register and learn more visit Powered by INFORMATION TECHNOLOGY LAW SPRING FORUM 2016 CHAIRED BY Lisa R. Lifshitz, Partner, Torkin Manes LLP Cory Freed, Senior Legal Counsel, Microsoft Canada Inc. WWW.IT-CONFERENCE.CA THIS PROGRAM CONTAINS 3 PROFESSIONALISM HOURS Untitled-4 1 2016-02-24 1:27 PM

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