For employers shutting down operations, providing working notice is often the best way to reduce severance amounts owed. However, in McLeod v 1274458 Ontario Inc an Ontario court confirmed that working notice is appropriate only for employees capable of working during the notice period.

Facts

The employer sold furniture and appliances. The employee, KM, had worked as a mover for the employer for 18 years.

On September 18 2015 KM was involved in a non-work-related car accident. He was unable to attend work and began an unpaid leave of absence. On January 29 2016 KM provided a doctor's note stating that he would be unable to work until March 15 2016. Two days later, while KM was off work, the employer sent its employees notice of termination. The employer advised that it was shutting down operations on July 31 2016 and the period from January 31 2016 to July 31 2016 would constitute working notice.

On March 15 2016 – the date that KM was originally scheduled to return to work – KM provided a note from a new doctor stating that he was unable to work. Over the following months, the employer requested further medical information supporting KM's continued absence. KM provided medical information indicating he could not return to work in any capacity.

On July 21 2016 KM's doctor cleared him for light duties on a part-time basis. He returned to work on July 27 and 29 2016. As planned, on July 31 2016 the employer closed down operations. On October 31 2016 KM started a new job for comparable pay.

Decision

Working notice In April 2017 KM filed a claim alleging wrongful dismissal. The key issue for the court was whether working notice was appropriate when KM was unable to work.

The employer argued that working notice was appropriate and that KM had been capable of working. The employer questioned the integrity of the doctors' notes, alleging that KM had "shopped around" for a doctor that would opine that he was incapable of working. The court summarily dismissed this argument, finding no evidence to support the employer's position.

The court held that when KM received notice of termination he was incapable of working. Accordingly, working notice was inappropriate and KM was entitled to damages representing the salary that he would have earned had he worked during the notice period. In coming to this conclusion, the court confirmed that employers should not issue working notice to employees who are incapable of working during the notice period.

Further, the court commented that if the employer believed that the doctors' notes were false, it could have rejected them at the time and terminated KM for cause. The court stated that the employer was not entitled to accept the doctors' notes when offered, then question their validity at trial.

Notice awarded In order to determine the appropriate notice period, the courts will consider:

  • the character of employment;
  • the length of service;
  • the employee's age;
  • availability of similar employment; and
  • the employee's experience, training and qualifications.

In this case, KM had been a driver and mover for the employer for 18 years and was 43 when his employment was terminated. The court determined that KM was entitled to 12 months' notice, which was reduced by three months as he had mitigated his losses by finding a new position. KM was therefore awarded nine months' base salary as pay in lieu of notice – representing his salary from January 31 2016, when he received notice of termination, to October 31 2016, when he began his new job.

Lessons for employers

Two key lessons may be gleaned from this decision:

  • Do not give working notice to employees who cannot work during that period. Had the employer waited until KM was capable of returning to work, it would have been liable for only three months' notice, as KM mitigated his damages within three months of the operation's closing.
  • Employers cannot accept doctors' notes stating that an employee is incapable of working at the time, then question the notes after the fact. If an employer is suspicious about the validity of a doctor's note, the issue should be addressed immediately. Waiting until trial to question whether the employee was actually capable of working will find no favour with the court.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.

For further information on this topic please contact Jacqueline Gant at Fasken Martineau DuMoulin LLP by telephone (+1 604 631 3131) or email (jgant@fasken.com). The Fasken Martineau DuMoulin LLP website can be accessed at www.fasken.com.