Canadian Employment Law Today

CELT Sept 18 2013:celt 467.qxd 13-09-13 10:58 AM Page 4 September 18, 2013 CASE IN POINT: WRONGFUL DISMISSAL Family business owners get more than $1.1 million for wrongful dismissal Distribution and share-purchase agreement with supplier covered continued employment of sons but not founders BACKGROUND The risk of assuming retirement THE NEW REALITY is a world without mandatory retirement and an aging workforce is that one should never assume when someone wants to retire, regardless of their age. This doesn't only apply to employers with older employees in a regular employment relationship, but also to companies who buy a smaller company from its owners, who may want to continue their employment with the company following the purchase. Even if the former owners are in their 80s. | BY JEFFREY R. SMITH | A QUEBEC company must pay a couple in their 80s more than $1.1 million after dismissing them following the purchase of the couple's business that distributed the company's products in Ontario. Paul Filiatrault, who is in his mid80s, began working with Air Liquide Canada, a Montreal-based supplier of gases and related products, when he was 18. In 1967, Filiatrault left Air Liquide and moved with his family to Kitchener, Ont., where he founded TriCounty Welding Supplies as an authorized distributor for Air Liquide in the Kitchener area. Filiatrault's wife, Shirley, joined TriCounty and their three sons eventually took jobs with the company as well. When Tri-County was founded, Filiatrault entered into an agreement for distribution of Air Liquide's products that gave Air Liquide a right of first refusal to purchase Tri-County's shares and assets. This agreement lasted until a new one was drawn up in 1996. Agreement allowed for sons to remain employed following company buyout 4 The two companies reached a new distributorship agreement in 1996, allowing Tri-County to have the capacity to fill their own gas cylinders rather than buying pre-filled cylinders from Air Liquide. The agreement included a provision where the Filiatraults would notify Air Liquide when they wanted to sell Tri-County and Air Liquide would be obliged to purchase Tri-County's shares according to a share-purchase formula. In addition, the agreement included a provision that in the event of such a sale, Filiatrault's three sons would be given employment with Air Liquide through a three-year management agreement with each of them. There was no mention in the agreement of either the continued employment or termination of Paul and Shirley Filiatrault. Paul Filiatrault was president, CEO and chairman of the board for TriCounty until 2008, when his oldest son Robert took over. The other two sons were vic-presidents and Shirley Filiatrault was vice-president of human resources. On Sept. 15, 2009, the companies completed a deal in which Air Liquide purchased Tri-County's shares. The same day, Air Liquide issued letters of termination to Filiatrault and his wife, effective Sept. 19. The letters referred to the agreement that named their three sons but did not require Air Liquide to negotiate an employment agreement with them. Air Liquide stated this meant the intention of the parties when entering the agreement was "clear and unambiguous — the parties only intended that your three sons remain with Tri-County upon ALC's acquisition of the shares…" Paul and Shirley Filiatrault commenced a wrongful dismissal action against Air Liquide, arguing that they held key positions with Tri-County and their intention was not to end their employment with the company once Air Liquide purchased it. They said TriCounty business was the centre of the family's life and, despite their ages, they were still active until their termination. They also claimed that at the time the 1996 agreement was drawn up, they were assured by their lawyer that their termination rights would be taken care of by "statutory protections and the reasonable notice requirements at common law," making any provisions for them unnecessary in the agreement. In addition, the Filiatraults argued that if they had expected to be terminated upon Air Liquide's acquisition of Tri-County, they would have started to wrap up their work earlier. As it was, they stayed on for about a week after their dismissal to help with the transition. No consideration for couple's continued employment: Company Published by Canadian HR Reporter, a Thomson Reuters business 2013 Continued on page 5

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