Ontario court awards employee 24 months of severance, employer required to pay additional $28,000

Sandham v Diamond Estates Wines & Spirits

Russell Sandham, a 64-year-old employee in Ontario, worked for Diamond Estates Wines & Spirits for over 22 years. After his termination, he was awarded a severance package of 24 months, an award totalling $208,448.64. In coming to this conclusion, the court considered his lengthy service, his age, and his disability.

Facts

• Over his 22-year career span with Diamond Estates Wines, Sandham worked in various positions including “Sales Manager”, “National Business Development”, and “Director of Marketing – Wines/New Business Development”.
• At the time of termination, Sandham was working in the position of National Brands Manager. Despite being a manager in title, Sandham did not have any employees that reported to him although the court recognized that Sandham exercised a moderate level of authority in his position.
• At the time of termination, Sandham was also visually impaired and could no longer drive as a result of his visual disability.
• Diamond Estates Wines terminated Sandham and offered him a severance package totalling 16 months of salary. Sandham sued in court seeking a larger severance package.

The Court’s Decision

When someone is terminated without cause from their job, their employer should be providing them with a reasonable notice period, which is commonly referred to as termination pay or severance package. If the employee is not provided with adequate compensation, they may pursue a wrongful dismissal claim. The court looks at four main factors to determine the reasonableness of the severance package. These factors, among others, include:

• Length of employment
• Age of the employee at the time of termination
• Position of employment
• Availability of similar employment in the job market

In this instance, the court considered that Sandham was near the end of his working career, prompting them to give a longer notice period. The court also recognized that Sandham has been employed for 22 years with the same employer working in a fairly specialized position. Aside from the factors above, the court also considered Sandham’s disability. Sandham had become visually impaired and no longer had a driver’s license. This meant that he was limited in the jobs he could apply for after his termination. The judge found that his visual impairment made it more difficult for Sandham to find similar employment as driving makes it easier to find new employment.

There is a general principle that a reasonable notice period in Ontario will not exceed 24 months. In this instance, and considering all the facts above, the court found that Sandham was entitled to a severance package of 24 months.

Lesson for Employees

• There is no deadline to accept a severance package: On termination, your employer should be giving you a fair severance package. While employers usually put deadlines on their severance offers, please do note that those deadlines are arbitrary and your right to pursue your severance package does not expire when their deadline expires.
• How to calculate your severance entitlements: It is also important to note that your severance package does not just include your base salary, but it should include your health and dental benefits, bonuses, pension contributions, car allowance and any other compensation you may have received during your employment. If you are unsure whether your severance package is far, talk to an employment lawyer at Samfiru Tumarkin LLP. We can review your unique situation and carefully walk you through your options.

Lesson for Employers

• Pay your employees the severance they are owed: Employers are required to pay employees a fair severance package when they are terminated. In this case, Diamond Estates Wines had to pay $28,000 in costs to Sandham as a result of not being successful in defending the case.