Canadian Employment Law Today

CELT Sept 18 2013:celt 467.qxd 13-09-13 10:58 AM Page 5 CANADIAN EMPLOYMENT LAW TODAY CASE IN POINT: WRONGFUL DISMISSAL Agreement didn't include founders; purchaser assumed they would retire ...continued from page 4 Air Liquide argued it didn't consider that Paul and Shirley Filiatrault would want to stay on after operating TriCounty for more than 30 years and not being able to anymore, particularly at their age. It was implied in the agreement that Paul and Shirley Filiatrault intended to resign or retire when they exercised the option to sell Tri-County's shares to Air Liquide, and the absence of a specific agreement of continued employment while negotiated arrangements for their sons would make this a reasonable assumption, Air Liquide said. The court found the distributorship relationship Tri-County had with Air Liquide put the Filiatraults in the category of "dependent contractors," which were treated much like regular employees by the law. The court also noted that selling a company's shares was "merely a change of shareholders which does not affect the company's assets and as such the company continues to exist as it did prior to the share sale." Selling a company's shares did not mean any employment was terminated, which would require "a further step," said the court. The court found the 1996 agreement failed to address severance or termination for Paul and Shirley Filiatrault and, despite the fact they received "a lucrative sum" on the sales of Tri-County to Air Liquide, they weren't any less entitled to reasonable notice. "(Air Liquide) had the benefit of legal representation during the 1996 negotiations," said the court. "It does not stretch expectation that when employment considerations were being discussed in relation to other employees, some thought might have been given to the senior Filiatraults' employment futures given their long dedicated service with Air Liquide." The court found the Filiatraults were entitled to reasonable notice of termination. Though Air Liquide seemed to suggest they should have indicated during negotiations of the 1996 agreement they were interested in continuing their employment after the sale of TriCounty's shares, but the court found it was "a longstanding principle of contract formation" that no such duty was required on party to a contract where there was no misrepresentation or fraud. In addition, the 1996 agreement was not strictly a commercial contract, but rather it fell within the definition of an employment contract and thus implied a term of reasonable notice on dismissal without cause, said the court. As far as the reasonable notice calculation, Air Liquide argued the Filiatraults' income with Tri-County should not be used as a basis because, as founders of a family business, their incomes weren't commensurate with their actual functions and responsibilities with Tri-County by 2009. However, the court found this argument could lead to other claims where employers claimed employees were overpaid and employees could claim they were underpaid with no resolution on what should be used to calculate reasonable notice. "The law requires the length of reasonable notice and the calculation of severance pay on a corporate share sale be based on the employee's actual income and their history of employment with their previous employer," said the court. "I have no reason to depart from the law as it stands." The court noted that both of the Filiatraults, though in their 80s, were "spirited, clear minded and enthusiastic individuals" who wanted to continue to work. They sent out resumes to a combined 44 companies following their terminations, but were unsuccessful. This amounted to reasonable mitigation of their damages, the court said. Though both Paul and Shirley Filiatrault had terms of service with TriCounty that spanned four decades and were in their 80s, they decided to limit their claim during trial to 18 months' notice with no claims to extra damages or benefits. Accordingly, the court used a five-year average of their salaries calculated over 18 months. For Paul Filiatrault, reasonable notice amounted to $898,950 and for Shirley Filiatrault, $262,500, for a total award of $1,161,450 to the couple. "I do not think there is a place in this social reality for an automatic presumption that persons should or would naturally retire on reaching senior age," said the court. "What this means is that employers should be disinclined to ask a court, where there is no express agreement, to imply such a term in an employment contract based simply on that now time-worn presumption." CELT For more information see: ■Filiatrault v. Tri-County Welding Supplies Ltd., 2013 CarswellOnt 7649 (Ont. S.C.J.). Employment law blog Canadian Employment Law Today invites you to check out its employment law blog, where editor Jeffrey R. Smith discusses recent cases and developments in employment law. The blog includes a tool for readers to offer their comments, so discussion is welcome and encouraged. Recent topics include bereavement leave, misconduct of long-term employees, false discrimination claims, accommodating employee child care needs, and overzealous policy enforcement. You can view the blog on www.employmentlawtoday.com. Published by Canadian HR Reporter, a Thomson Reuters business 2013 5

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