There is no cap on the severance you can be paid
There has been a long-held belief that the maximum severance that lower-level workers could be awarded was 12 months. However, a recent decision by the Ontario Court of Appeal seems to have dispelled that notion. That there was a limit of a year’s pay in lieu of notice for some employees terminated without cause was largely theoretical to begin with.
Employment lawyers have debated for years whether or not there actually was an agreed upon cap for notice periods involving lower level or clerical employees – with lawyers for the terminated employees and those who represent the companies obviously taking opposite views.
This recent appellate court decision certainly casts further doubt upon the idea that there is such a payment limit or ceiling. In the decision of Di Tomaso v. Crown Metal Packaging LP, a 62 year old two-piece mechanic and press maintainer, with 33 years of service, was awarded 22 months compensation in lieu of notice by the trial judge. The employer took the position that there was a 12-month cap for notice periods in this particular employee’s job category.
In deciding the notice period applicable to Mr. Di Tomaso, the appellate court specifically rejected the notion that 12 months is a cap for every clerical and unskilled employee, regardless of the traditional factors applicable to determining notice periods. The Court of Appeal went on to comment:
The proposition that junior employees have an easier time finding suitable alternate employment is no longer, if it ever was, a matter of common knowledge. Indeed it is an empirically challenged proposition that cannot be confirmed by resort to sources of indisputable accuracy.
In the end, the Court of Appeal upheld the 22-month notice period assessed by the original trial judge, while acknowledging that it was at the “upper end of the range” of the applicable or appropriate notice period for Mr. Di Tomaso. And so, with that pronouncement, the hard cap of 12 months’ notice for lower level employees seems to have disappeared.
Although the courts attempt to bring consistency to legal principles, over time the landscape often shifts. Employers may no longer safely view low level or clerical employees as limited to a maximum of 12 month’s pay in lieu of notice of termination. The judicial bar has, apparently, been recalibrated.
Norman Grosman tackles your employment law dilemmas regularly on Workopolis.
More information about him and his legal services can be found on his website grosman.com