Canadian Employment Law Today

Canadian HR Reporter, a Thomson Reuters business 2018 Sale of business not a smooth transition No notice of termination until long-term employees rejected employment offers from new employer; both entitled to 26 months' notice BY JEFFREY R. SMITH AN ONTARIO court has awarded two long-time Imperial Oil retail managers 26 months' notice each after they were termi- nated following a refusal to accept employ- ment offers from a new employer who was buying the company's retail outlets. Donald Dussault, 65, began working for petroleum company Imperial Oil in 1976 while still a university student. After he graduated in 1978, he became a full- time employee and held several different positions including business analyst, service station automation manager and Eastern Canada merchandising co-ordinator. In 1990, he became the manager of real estate development in Ontario. In this last position, Dussault was heav- ily involved in developing and redeveloping service stations in Ontario. He was respon- sible for identifying potential retail sites, acquiring land and obtaining government approvals for new service stations, and man- aging Ontario Municipal Board hearings on the company's behalf. Dussault helped Im- perial Oil acquire about 80 service stations between 1990 and 2016. Maryann Pugliese, 59, was hired by Imperial Oil in 1980. She mostly worked in technical positions until 1999, when she moved to managerial positions on the retail side of things, such as national car wash manager and national category manager. She was eventually appointed territory manager where she oversaw 24 retail sites. She didn't manage anyone directly, but worked on special projects, trained new retailers, monitored sales performances, and ensured safety compliance. In January 2015, Imperial Oil met with all of its employees who worked in the 497 retail sites that it operated under the Esso brand and told them it was looking into possibly selling the retail sites. Over the next year, it kept employees up to date on any developments. Sale of retail business would include job offers from new owner On March 8, 2016, the company informed its retail employees — including Dussault and Pugliese — that it had a conditional agreement to sell its retail business in On- tario to Mac's, with Mac's offering employ- ment to many of them. Dussault and Pug- liese were both told they would be offered employment with Mac's and an informa- tion meeting was coming. Imperial Oil also told the employees that anyone who accepted offers from Mac's would receive a "gratuitous lump sum payment" to make up for the difference between the Mac's benefits plan and Imperial Oil's for a period of 18 months. Any employees who didn't accept offers from Mac's would receive termination pay under employment standards legislation but severance pay would be reduced because they passed up an opportunity for continued employment with Mac's. Employees were also told they would be accepted immediately into the Mac's pension plan. Dussault and Pugliese tried to get more information about how their employment would be affected and how much the lump sum payment would be for accepting employment with Mac's, but their efforts were unsuccessful. Imperial Oil claimed the exact amount of the lump sum required calculations relating to length of service and membership in Mac's pension plan. In addition, they were told Mac's was committed to paying them the same base salary as at Imperial for 18 months, but not how much they would be paid after that. In June 2016, both Dussault and Pugliese received offers of employment from Mac's conditional on the sale of the retail sites. ey were expected to sign releases precluding any further entitlement from Imperial Oil in order to receive the lump sum payment. e releases also stated Mac's would not recognize their service time with Imperial Oil and, after 18 months, their salaries would be reduced to comparable positions at Mac's. e Mac's salary ranges were roughly half of Dussault's Imperial Oil salary and less than half of Pugliese's Imperial Oil salary. Employees didn't like terms of new employment offer Dussault and Pugliese both rejected their offers of employment from Mac's, feeling the terms of employment with the company were less favourable that their terms with Imperial Oil. Pugliese also had concerns over Mac's business model, opportunities for advancement, while Dussault didn't like the fact his new role would be more junior. Neither liked the reduction in salary and va- cation after 18 months, the lack of carryover of their years of service, or they were expect- ed to pay for leasing a company vehicle. On Aug. 12, 2016, Imperial Oil provided Pugliese with notice of termination effective Oct. 7 and gave her a statutory severance payment of $78,100. e company notified Dussault on Sept. 2 of his termination effective Oct. 31 and provided him with a $94,800 statutory severance payment — eight weeks' statutory notice, according to Imperial Oil. ey both retired at the end of their employment to received pension benefits, but sued for wrongful dismissal. e court noted that up until their notices of termination, all of the information they received from Imperial and Mac's indicated nothing was final — including the offer of employment from Mac's which was conditional upon the sale being completed. As a result, there was no definite notice provided and their actual termination wasn't clear until after they rejected the offers from Mac's, said the court. e court found that both Dussault and Pugliese had long terms of employment with Imperial Oil — 39 years for Dussault and 36 for Pugliese — and they both held positions with "significant levels of responsibility." eir ages were close to retirement — as evi- denced by their retirement decisions after termination — and similar employment was difficult to find — evidenced by the salary differential for similar positions with Mac's. Given these factors, the court found each of them was entitled to 26 months' notice from the point they received their termination let- ters from Imperial Oil. e court also found mitigation of their dismissal damages wasn't possible since their actual termination dates weren't speci- fied until they received their termination letters on Aug. 12 and Sept. 2, respectively. It wasn't possible to look for other employ- ment if they didn't know when theirs would end. In addition, the court found it was rea- sonable for them to turn down the Mac's offers because they included a release nec- essary to get their lump sum payment from Imperial Oil — accepting the Mac's offers would "renounce their right to sue Imperial Oil for any shortfall in their entitlement to damages in lieu of notice." "e message from Imperial to the (em- ployees) was not that their employment would be terminated and they should look for new work, but rather that they would be given an opportunity for similar employ- ment with Mac's," said the court. "Under those circumstances, it would not be rea- sonable to expect the (employees) to start looking for alternative employment until they had a chance to consider the offer of employment from Mac's." For more information see: • Dussault v. Imperial Oil Limited, 2018 CarswellOnt 2504 (Ont. S.C.J.). Canadian Employment Law Today | 7 More Cases

• Cover