Client Win: Employee Wins 17-Month Severance After Unfair Demotion Offer

Fillmore v. Hercules SLR

Samfiru Tumarkin LLP secured a favorable decision for our client, Fillmore, in the case of Fillmore v. Hercules SLR, heard at the Ontario Court of Appeal.

Our team successfully demonstrated that Fillmore’s refusal to accept a demotion and a significant salary reduction did not constitute a failure to mitigate his damages. The court ruled that our client was entitled to 17 months of severance.

Facts of the Case

• Fillmore’s career at Hercules SLR: Fillmore worked for Hercules SLR for 19 years and 3 months, holding the role of Director of Purchasing.
• Termination and options provided: On August 20, 2015, Fillmore was informed that his position was being eliminated. He was offered two options:
  • Termination letter: Included 20 weeks of pay in lieu of notice (8 weeks under the ESA and 12 weeks as Ontario severance) in exchange for a full and final release.
  • Demotion offer: Proposed a new role as Supervisor with a salary reduction of more than 20%, though his Director-level salary would be maintained for 6 months to ease the transition.
• Employee’s response: Fillmore declined both options and contacted Hercules on August 25, 2015, to confirm his termination. Hercules reiterated the offers but did not formally re-extend them.
• Wrongful dismissal claim: Fillmore treated the situation as a wrongful dismissal and pursued legal action with the assistance of Samfiru Tumarkin LLP.

What was at stake?

• How much severance was Fillmore owed? The court needed to decide how much notice or compensation Fillmore should receive under common law based on his long service and role.
• Did Fillmore have to take the demotion? Hercules argued that Fillmore failed to minimize his losses by refusing the new position, and this should reduce the amount owed to him.

The Court’s Decision

Severance Pay: Based on a number of factors, including Fillmore’s age (51), tenure (19 years), and role (Director of Purchasing), Justice James Diamond awarded Fillmore 17 months of severance.

Duty to Mitigate: The court ruled that Hercules failed to provide a clear opportunity for Fillmore to mitigate his damages after his termination. The demotion offer was deemed insufficient because:

• It required Fillmore to accept a permanent salary reduction.
• Acceptance could have jeopardized his right to claim additional compensation.
• Hercules did not formally re-extend the offer after the initial termination

Justice Diamond emphasized: “There is no obligation on the plaintiff to effectively risk handing the defendant a Full and Final Release through the back door and under the guise of mitigation efforts.”

Key Takeaways for Employees

• Demotion offers aren’t always reasonable: If a new position involves a significant salary cut or diminished responsibilities, you may not be obligated to accept it as part of your duty to mitigate. This
• Severance rights remain intact: Even when employers offer alternatives to termination, you’re still entitled to full severance based on your circumstances.
• Clear re-extensions matter: Employers must formally re-extend mitigation opportunities after termination to trigger the duty to mitigate.

Watch: What to know when changes are made to your job, with employment lawyer Lior Samfiru on the Employment Law Show.

SEE ALSO
• Can employers in Ontario demote staff?
• Job changes in Ontario: Employee rights

Key Takeaways for Employers

• Re-extend offers after termination: To fulfill your legal obligations, ensure that mitigation opportunities are clearly presented and renewed if necessary.
• Consult legal advice before offering demotions: Significant changes to roles or pay can lead to constructive dismissal claims if not handled properly.

Workplace issue? Contact our team

Since 2007, Samfiru Tumarkin LLP has helped thousands of non-unionized employees resolve workplace issues. If you’ve been offered a demotion or unfair severance package, our experienced lawyers can help you understand your rights and secure fair compensation.

Whether you’re in Ontario, Alberta, or B.C., we can review your situation, enforce your rights, and ensure that you receive the compensation you deserve.