This case deals with the wrongful dismissal of the plaintiff, Timothy Hansen. The action was decided by Summary Trial on the basis of Affidavit evidence. The evidence before the Court consisted of the Affidavit of Mr. Hansen and the Affidavit of L. Stowkowy, President and Chief Operating Officer of Altus Energy Services Partnership (“Altus”).
By way of background, the facts are as follows:
- Hansen’s contract of employment with Altus Energy Services Partnership was terminated in February of 2010 after a period of employment of 23 years. Hansen was a professional engineer. Throughout his employment with Altus, Hansen had worked in various engineering and managerial roles, including as the Engineering Manager of the company’s Nisku Facility. At the time of his termination, Hansen was 50 years old.
- During 2009, Altus experienced some periods of slow activity and, as a result, the working hours at the facility overseen by Hansen were reduced by 20%.
- In addition, the pay of all employees working at those plants, including Hansen, were reduced an equivalent amount. The reduction in working hours and employee pay was seen as a method by which Altus could avoid dismissing a large number of employees throughout the period of slow activity. Throughout this period, Hansen’s salary was reduced from $13,333 per month to $10,666 per month.
- In October of 2009, the staff of Altus returned to full time work. In late October, Hansen discovered that his pay had not been reinstated to the previous level of $13,333 per month. Around the same time, Hansen was transferred to an alternate role in which he would assist the Vice President of Altus, Mr. Denoon. Shortly thereafter, Mr. Denoon’s employment was terminated. From that point forward, Mr. Hansen’s role with Altus was unclear.
- At the time of his termination, Mr. Hansen’s salary had not been reinstated to the levels he enjoyed prior to the 2009 period of reduced activity. However, Hansen’s termination letter had indicated that his severance would be calculated on the basis of a salary of $160,000, equivalent to $13,333 per month.
Hansen brought a wrongful dismissal claim against Altus, claiming $11,692 in underpayment of base salary. This claim arose because of the reduction in salary from the period of October 2009 to February 2010. The Court agreed that Hansen’s base salary of $160,000 remained the same from the period of October, 2009 to February, 2010, awarding Hansen the amount claimed in that regard.
The second issue before the Court was the appropriate notice period in this case. While Hanson claimed for 24 months, the defendant argued that such a period would be inappropriate in these circumstances. The defendant’s position was that Hansen could successfully re-enter the employment market as he was an educated individual with highly transferable skills. In contrast, the Hansen argued that it would be difficult to find similar employment in light of his extensive years of service with Altus and his age. The Court applied the factors enunciated in Bardal v. Globe & Mail Ltd., [1960 ] O.J. No. 149, (“Bardal”), concluding that Hansen was entitled to a notice period of 24 months.
The remaining question before the Court was whether Hansen was entitled to compensation for the annual bonus that he would have likely received during the notice period. At the time of his termination, Hansen was entitled to earn up to 50% of his salary in bonus per annum. During the notice period, Hansen’s bonus would have been calculated in a similar fashion as in previous years. The Court examined Mr. Hansen’s salary for the 3 years prior to his termination, finding that the average bonus received by Mr. Hansen was 21.73% of his salary over 3 years, or $34,768.
The defendants argued that the plaintiff should not be entitled to a 2011 bonus as bonuses were typically awarded at the end of the calendar year. The Court agreed with the defendants in this regard, stating:
“The measure of damages is the loss of income and benefits that the employee would have received from the employer during the notice period. I am satisfied that the historical pattern was that bonuses were paid at the end of the year for that year. There is no evidence that bonuses were paid for a partial year.
Accordingly, I agree with the defendants that a bonus would not be reasonably expected and therefore should not be awarded for a partial year.”
Accordingly, a bonus was not awarded for the portion of Hanson’s notice period which fell within 2011, as Hanson’s notice period only extended into part of that year.
In their final determination of Hansen’s entitlement, the Court reduced the award on two grounds: the amounts that Hansen had actually earned as employment income throughout the notice period, and because of the future contingency that Hansen would actually find employment within the notice period awarded by the Court. The Court reduced the award by the amounts actually earned by Hansen and applied a 5% contingency deduction for post trial mitigation.
This decision is significant for two reasons:
First, the decision represents a significant departure from the calculation of bonus awards previously articulated by Canadian Courts. Typically, bonus periods are calculated in accordance with the entire notice period without consideration for when the bonus becomes due. Adopting the rationale accounts for an employee’s actual entitlement within the notice period. This rationale represents a significant step forward for employers who have traditionally been prejudiced by the Court’s failure to account for the practical realities of the work environment. Based on this decision, savvy employers could reduce their liability arising from wrongful dismissal awards by planning to dismiss employees earlier in the calendar year.
Second, this decision adopts the British Columbia decision of Smith v. Pacific National Exhibition (1991), 34 C.C.E.L. (“Smith”), a decision which had not previously been followed. Smith states that contingencies should be taken into account when determining the appropriate notice period following a wrongful dismissal claim. The Honourable Justice Goss relies upon Smith in contemplation of the future contingency that Hansen would find work within the notice period since 9 months had elapsed since the termination. Although other jurisdictions have declined to apply the rationale from Smith, the Court’s recognition of this case indicates that Courts may now be willing to take a more active role in appropriately tailoring wrongful dismissal awards to the particular circumstances of each case.