Pound v. iWave, 2017 PECA 17, a recent decision by the Prince Edward Island Court of Appeal, is a cautionary tale for employers about the legal issues that may arise when standard form employment policies are adopted without management fully understanding their obligations to employees in practice.read more
Beware of the One Month Per Year of Service “Rule”: Part 5
There is no shortage of cases which confirm the perils of assuming that an employer’s liability for reasonable notice of termination will be capped at one month per year of employment.
In Rodgers v CEVA, 2014 ONSC 6583, a 55 year-old Country Manager for an international freight and logistics company was dismissed after less than 3 years of service. As Country Manager, the plaintiff was responsible for the defendant’s business operations in Canada which included over 500 employees and revenues in excess of $140 million annually. The employer provided him with 2 weeks’ pay in lieu of notice (totaling approximately $11,000) and severance pay in the amount of approximately $5,000.
The Court determined that the plaintiff was entitled to a notice period of 14 months based on the following factors:
- The plaintiff’s position had considerable responsibilities, and he was the most senior employee in Canada
- There were limited opportunities for comparable positions
- The Plaintiff was 55 years old
- The Plaintiff’s entire career had been in the trucking and logistics industry
- The trucking and logistics industry was in a downturn
- The employer had induced the employee to leave his previous employment
- The plaintiff was required by the employer to invest more than $100,000 in company shares at the time he was hired, which the court concluded evinced an intention that the Plaintiff would have a degree of job security beyond what is typically anticipated.
In this case, the Plaintiff received more than 4 months per year of service and total damages of $345,000 (more than 21 times the amount of pay in lieu of notice originally provided by the employer). The decision serves as a strong reminder to employers that an employee’s particular circumstances can significantly increase the notice period beyond one month per year of service.