Such a dialogue arises regularly in my practice and reflects several misapprehensions.
There is no such thing as “half cause.” Either an employee’s performance or conduct is so horrid, after warnings, that they are entirely irremediable so that the court will agree that there is cause for dismissal (and no entitlement to any severance) or the conduct does not reach that level of incompetence/misconduct.
Once upon a time, there was a doctrine of “near cause,” whereby the courts would award less severance to a poorly performing employee whose conduct was not quite egregious or desultory enough to be cause. But the Supreme Court of Canada eliminated near cause years ago, and as result, whether an employee is a spectacular performer or a near but not quite disastrous one, the severance is the same.
Poor performance or misconduct does not provide license for an employer to dismiss with less severance than if they had performed satisfactorily. That is why, once an employee obtains an admission that they are being terminated “without cause,” they have accomplished their legal mission and are entitled to full wrongful dismissal damages.
Similarly, many employees, chafed at having been dismissed, ask us to delineate in their demand letter all the ways that their performance was spectacular. Although such a demand letter may be restorative to their ego, it does not matter a whit in advancing their wrongful dismissal claim, and they had better conserve their energy for the real issues in the case.
When a court determines how much, or little, wrongful dismissal damages an employee is entitled to, they generally review only a few factors. Most lawyers and mediators who do much of this work know instantly what a case is worth and find employee demand letters citing tens of cases sophomoric, at best. They add nothing to a demand letter or mediation and, if put into a Statement of Claim, permit the employer to raise what would otherwise be irrelevant factual issues — which bog down the case, elongate the proceedings and delay settlement or judgment.
The most important factor in determining severance is how long it should take the employee to find work. Since there are fewer executive positions than junior ones available, the more senior the position, the more months of severance. Employees are entitled to hold off in their job search for a comparable position to the one that they were dismissed from. That is why it is only that last position that the court considers, even if the employee had only been in that position for a short time.
When determining re-employability, courts look at factors such as whether their age makes them less marketable and whether the employee is in an industry, type of job and/or geographical region where similar jobs are easier or more difficult to secure.
Of course, length of service is an important factor in determining severance, but it is the total length of service with an employer, not the amount of time in the last position.
Still, service is not as dispositive as many believe, with the courts providing many months’ severance to very short service employees and not as long of a severance to very long service ones, depending on the other circumstances.
If an employee is sought and lured away from other employment and then dismissed, the courts, while not quite adding the lengths of the employments together, will treat the employee as having been employed longer than they actually were.
Some employers and lawyers believe that the factor of inducement only matters if the employee is terminated after a short time in the new job. However, this is not the law as, in the leading case on inducement — that of the Supreme Court of Canada in Wallace — Mr. Wallace worked for United Grain Growers for 14 years after being induced from a competitor where he had worked for 25 years.
So, it is not just the factors in determining severance that count, but how they are applied and how they interplay that makes calculating severance as much an art as a science.
