Ontario exec awarded full severance, $30K in punitive damages after COVID layoffs

Chalmers v. Airways Transit Service Ltd. and Badder Capital Group Ltd.

In a recent summary judgement decision, the Ontario Superior Court of Justice (ONSC) ruled that Michael Chalmers, the former vice-president of Airways Transit Service Limited (Airways Transit), had been constructively dismissed after he was temporarily laid off during the COVID-19 pandemic and never recalled.

As a result, Chalmers was awarded 25 months of severance pay and $30,000 in punitive damages.

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Facts of the case

• In 1992, Chalmers begins working for Airways Transit. He was originally hired in the position of Manager of Accounting.
• In May 2018, Chalmers is promoted to Vice-President of Airways Transit — the third-highest position at the company.
• In March 2020, Airways Transit temporarily lays off all of its employees due to the COVID-19 pandemic, including Chalmers. The company relied on the province’s Infectious Disease Emergency Leave (IDEL).
• Following the layoff, Chalmers continues to perform unpaid work for the company. He also encourages the CEO of Airways Transit to apply for the Canada emergency wage subsidy (CEWS).
• In June 2020, Chalmers finds out that many employees have been recalled to full-time work at Airways Transit, including two operations managers, two mechanics, the director of operations and marketing, the manager of accounting, and several drivers.
• On July 3, 2020, Chalmers emails the CEO of Airways Transit about a variety of things, including when he will be recalled.
• On July 14, 2020, the CEO of Airways Transit responds to the email, but doesn’t address Chalmers’ return to work.
• In August 2020, the CEO of Airways Transit asks Chalmers to provide the login information for all of the company’s accounts.
• From June to December 2020, Airways Transit recalls 51 employees back to work.
• In February 2021, Airways Transit doesn’t provide Chalmers with the $6,000 contribution to his registered retirement savings plan (RRSP).
• On February 8, 2021, Chalmers emails the CEO of Airways Transit about his outstanding vacation pay, group RRSP contributions, and what measurement would determine when he would be called back to work.
• Not receiving a response to his email, Chalmers retains legal counsel who sends a demand letter to Airways Transit on May 21, 2021 — requesting that he be paid his statutory termination pay, among other things.
• Around June 2021, Airways Transit makes a request through legal counsel for Chalmers to return the company vehicle that he had in his possession.
• On August 26, 2021, Chalmers commences his legal claim in court.

The court’s decision

After reviewing arguments from both sides, the ONSC ruled that Chalmers had been constructively dismissed.

The court found that the termination occurred when Airways Transit asked for his login information while he was temporarily laid off — eliminating the need for the company to contact him further.

Entitled to more severance

When determining how much severance pay Chalmers was owed, the ONSC considered a variety of factors, including:

• His senior position at Airways Transit
• His 28 years of service at the company
• Him being 53-years-old at the time of the termination
• His ability to find comparable employment in the travel industry during the COVID-19 pandemic

After taking all of this information into consideration, the court determined that Chalmers was entitled to 25 months of severance.

In these types of cases, individuals often receive 24 months of compensation. However, the ONSC found that a bump was appropriate due to COVID-19’s impact on the travel industry.

LEARN MORE
• Severance pay for provincially regulated employees
• Rights to severance for federally regulated workers
• Severance packages during a recession

Employer didn’t act in good faith

While Chalmers didn’t receive additional damages for the mental anguish he claimed he’d suffered due to his termination, the court did find that Airways Transit failed in its duty of good faith by “stringing” him along — making it very difficult for him without pay or benefits.

In addition to 25 months of severance pay, Chalmers was awarded $30,000 in punitive damages.

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Key takeaways for employees

• Don’t agree to a layoff: If you are temporarily laid off, don’t accept it in writing or continue to do unpaid work for your employer. Immediately after you are laid off, contact an experienced Ontario employment lawyer at Samfiru Tumarkin LLP. We can review your situation, assess your legal options, and help you secure the compensation you deserve.
• Seniority affects severance: If you are a non-unionized employee in a senior role, and you are older at the time of termination, there is a very good chance that you could be entitled to more severance pay.

Key takeaways for employers

• The timing of the termination can affect severance: If you fire or lay off staff when it’s hard for them to find comparable employment (i.e. during a pandemic or recession), you might have to provide more severance pay.
• Consult an employment lawyer before firing non-unionized workers: Employers in Ontario should always speak with an experienced employment lawyer at Samfiru Tumarkin LLP before terminating a non-unionized employee without cause or for cause. Since each employment matter is unique, a thorough review by our team will ensure laws aren’t being broken and that the employee’s rights have been taken into account.

Lost your job? Speak with an employment lawyer

If you are fired or let go for any reason, or believe that your human rights have been violated, contact the experienced employment law team at Samfiru Tumarkin LLP.

Our lawyers in Ontario, Alberta, and B.C. have helped tens of thousands of non-unionized individuals resolve their workplace issues.

We can review your situation, enforce your rights, and ensure that you receive the compensation you are legally entitled to.