Canadian Employment Law Today

Canadian Employment Law Today | 3 Canadian HR Reporter, a Thomson Reuters business 2018 Cases and Trends Worker recruited from long-time employer, then fired after 2-and-one-half years Lengthy service with previous employer a factor in notice entitlement, but not simply added to short service with new employer BY JEFFREY R. SMITH AN ALBERTA oil and gas engineer is en- titled to 10 months' damages in lieu of no- tice for less than two years of employment after he was recruited from a long-term job with another company, the Alberta Court of Queen's Bench has ruled. Michael Toole, 49, worked as a senior exploitation engineer with Devon Canada Corporation, an oil and natural gas explo- ration company based in Oklahoma City in the U.S. with operations in Alberta. Toole was first hired in 1993 by a company later acquired by Devon Canada. In early 2014, a recruiter for Northern Blizzard Resources, a Calgary-based crude oil production and development company, approached Toole. e job description in- dicated Northern Blizzard was looking for someone with Toole's skills and at least 10 years of experience. Once the recruiter told Northern Blizzard management about Toole, they considered him their first choice. Company gets its man After several interviews, Northern Blizzard offered Toole a position as senior develop- ment engineer. Toole accepted the offer, giv- ing up his deferred restricted share unit plan at Devon, which he estimated to be worth more than $185,000. He started work with Northern Blizzard on May 25, 2014. Toole worked with Northern Blizzard for about two-and-one-half years until late 2016, when Northern Blizzard underwent a corporate reorganization. As a result of the reorganization, Toole's employment was terminated on Dec. 5, 2016. Northern Bliz- zard provided Toole with a continuance of his base pay from Dec. 6 to Dec. 31 — 19 working days — plus two months of contin- ued benefits. Toole sued for wrongful dismissal dam- ages and applied for summary judgment, suggesting there was no material factual is- sue for trial. He also argued that he was in- duced from secure employment with Devon Canada, and his total service with the two companies — 24 years — should be taken into account when calculating his damages. He also claimed his damages should include an annual bonus for 2016, which was based on corporate targets and individual perfor- mance for the year. Annual bonuses were paid in March to current employees for the previous calendar year, so he didn't receive the 2016 bonus in March 2017 as he was no longer a current employee. e court noted that Toole was aware at the time he was offered the position with Northern Blizzard that he would be giving up secure employment and his deferred restricted share unit plan and there was a risk, but it also pointed out that by using a recruiter and specifying the level of experi- ence and skill required, Northern Blizzard intended to recruit someone who already had employment. When Northern Blizzard made Toole its first choice for the position, it knew he had 21 years of service with Devon Canada and its precursor, said the court. e court found that Toole held a rela- tively senior position at Northern Blizzard and though he had no direct subordinates, he filled a "relatively niche position in the up- stream exploration and development subset of the oil and gas industry." His unique skills and experience is why Northern Blizzard hired Toole, said the court. e court also found the nature of Toole's work was stable, not project-based — as evi- denced by his 21 years with Devon Canada in a similar position. It made sense that at the time of his hiring, both Toole and Northern Blizzard would expect stability and long ser- vice in the position. e court determined that Toole's lengthy service with Devon Canada should be taken into account because of the "mutual under- standing" that it was a skilled, unique posi- tion requiring experience, but not to the point where his service with Devon should simply be added to his time with Northern Blizzard for calculating reasonable notice. e court also felt that Toole was young enough at 48 that companies with similar positions available would consider him, es- pecially with his skills and experience. As a result, it shouldn't take him too long to find similar employment. Worker entitled to bonus, but bonus was zero e court determined that Toole was enti- tled to damages equal to 10 months' notice. It also found that Toole was entitled to dam- ages for the annual bonus for 2016, since Northern Blizzard's breach of his employ- ment contract cost him the opportunity to receive the bonus, which was paid out dur- ing the reasonable notice period. e wrinkle in the bonus calculation, which Northern Blizzard argued, was that the company didn't meet its targets in 2016 and therefore no bonus was awarded in March 2017. So, if Toole remained employed with Northern Blizzard and kept the oppor- tunity to receive something from the bonus pool, he would have received nothing in the end anyway. Toole and other employees un- derstood that the bonus was tied to company performance and changed every year, and Toole would have known 2016 wasn't a good year and the bonus, if any, would be smaller. As a result, it wouldn't be appropriate to award damages based on previous years' bo- nuses, said the court. e court found Toole should be compen- sated for 10 months' salary and benefits, and no damages for the loss of an opportunity to earn a bonus that was zero anyway. It or- dered counsel for Toole and Northern Bliz- zard to work out the details of the amount of damages, with the caveat that it would re- solve the matter if they couldn't. For more information see: • Toole v. Northern Blizzard Resources Inc., 2017 CarswellAlta 2692 (Alta. Q.B.). ABOUT THE AUTHOR JEFFREY R. SMITH Jeffrey R. Smith is the editor of Canadian Employment Law Today. He can be reached at jeffrey.r.smith@thomsonreuters.com, or visit www.employmentlawtoday.com for more information.

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