Two recent decisions of the Ontario Superior Court send a clear message that employees who work into their 70s and even their 80s may be entitled to large damage awards if they are wrongfully dismissed.
This applies regardless of whether the employees are highly-paid former owners who expected to continue working after the business was sold or a modestly-paid machine operator.
Paul and Shirley Filiatrault were both over 80 in 2009 when they sold Tri-County Welding Supplies Ltd. to Air Liquide Canada Inc., and were subsequently fired. The Filiatraults took Air Liquide to court and in May, recovered $1.16 million in damages as severance pay.
Paul Filiatrault founded Tri-County in 1967 following a career with Air Liquide in Quebec where he started working at age 18. Tri-County was distributor for Air Liquide in the Kitchener area, where the Filiatraults moved.
An agreement signed in 1996 gave the Filiatraults the right to trigger a purchase of Tri-County’s shares by Air Liquide when they were ready to sell, at a price set by a share purchase formula.
The agreement also said that when Tri-Country was sold, the Filiatraults’ three sons — company executives — could keep their jobs for at least three years. There were no similar provision for Paul and Shirley. The sale was completed in mid-September 2009 and four days later the senior Filiatraults were fired.
At the time, Paul was president and CEO and Shirley was vice president of Human Resources. Both were still very active in running the business.
Justice Beth Allen did not accept Air Liquide’s argument that the owners could be fired without notice because the agreement did not specifically cover their terms of future employment.
She ruled that the $11 million the Filiatraults received did not mean they had to resign or retire if the company was sold.
In spite of their 42 years of service, the Filiatraults agreed that damages be capped at 18 months. Using a five-year average of each of their salaries for 18 months, the judge awarded $898,950 to Paul and $262,500 to Shirley.
In contrast, Niranjan Kotecha worked as a machine operator for 20 years at auto parts company Affinia Canada ULC. In, 2010 he earned $44,000 and when he was fired a year later at the age of 70, the company gave him severance of $14,657.
Kotecha subsequently applied to over 225 companies for work, but was not granted a single interview. He sued his former employer, seeking 22 months of pay in lieu of notice (24 months minus two months of working notice.)
Affinia admitted that Kotecha was fired without cause and the only issue before the court was the appropriate amount of damages he should have received.
Based on 22 months of pay at an average annual salary of $44,000, in late July Justice Peter Hambly awarded him $83,795 minus the $14,657 he already received.
These cases illustrate that with the elimination of mandatory retirement, long service employees over 65 who are fired without cause can expect to receive damages for up to two years or more, even if they were not employed in professional or senior management positions.
In order to limit liability in wrongful dismissal cases, many companies now require employees to enter into employment contracts that clarify the rights and obligations of both parties beyond legislated minimum notice periods in the event of a dismissal. In unionized workplaces, these issues are typically covered in the collective agreement.
