Earlier this year, our team blogged about a Saskatchewan court decision (Hetherington) which considered whether an earlier period of employment with the same employer counted for severance purposes.
In the case of Currie v Nylene Canada Inc., 2021 ONSC 1922, the Ontario Supreme Court considered a “break in service” argument, but in different circumstances. Significantly, the court also awarded 26 months’ pay in lieu of notice.
Ms. Currie was originally employed by Badische Canada Limited for many years, and after the company changed hands multiple times, she became employed by Nylene Canada Inc. (“Nylene”) executing the exact same duties. In 2017, Nylene advised Ms. Currie that she was eligible to receive her pension income on the condition that she terminate her current employment agreement and sign a subsequent agreement.
Ms. Currie agreed to sign the new employment agreement in June 2017, which terminated her prior agreement. In December 2018, Nylene made the business decision to discontinue its fiber operation. As a result, Ms. Currie’s employment with Nylene was terminated.
Ms. Currie argued that she was entitled to receive pay in lieu of notice based on her 39 years of employment.
Nylene argued that Ms. Currie was only employed for 18 months for the purposes of determining her entitlement to reasonable notice at common law. Nylene relied on the case of Theberge-Lindsay v. 3395022 Canada Inc., 2019 ONCA 469 where the Ontario Court of Appeal found a break in service meant that earlier years of service did not count for calculating the applicable notice period.
The first issue is whether the termination of the first agreement amounted to a retirement, which could be considered a break in the employment relationship. On this issue, the court determined that this was not a break in the employment relationship. Ms. Currie relied on representations made to her that her employment conditions would remain the same, and she signed it to receive her pension income.
The second issue was regarding the period of notice Ms. Currie was entitled to upon the termination her employment. Given the finding that there was no break in service, the court held that Ms. Currie was entitled to reasonable notice based on 39 years of service.
Based on exceptional circumstances, the court held that Ms. Currie was entitled to more than the usual limit of 24 months’ payment in lieu of notice. Ms. Currie was entitled to 26 months. The court relied on factors, including: Ms. Currie had never held another job, she had no blemishes on her employment record, and the prospect of finding new employment would be difficult given her age (58) and long history with one employer in one industry.
There may be situations where a voluntary termination of a contract may signal a break in the employment relationship. However, if employers intend or expect to discount earlier years of service in these situations, they would be well advised to get advice about how to best document these intentions.
Also, this case is a reminder that long-term employees may be entitled to substantial notice periods if they do not have an enforceable written employment agreement and termination clause.
This update was authored by Harper Grey lawyer, Scott Marcinkow and summer student, Arjun Dhaliwal. Have questions regarding the topic discussed? Contact Scott at firstname.lastname@example.org or anyone else listed on the authors page.