Tuesday, April 12, 2011

Canac Kitchens Takes Another Hit in Court

Over the past several years, Kohler Ltd., also known as Canac Kitchens, has shown up more than a few times in employment law jurisprudence, defending against various wrongful dismissal suits. Many of these cases are notable for their own reasons.

(One particularly interesting example was Correia v. Canac Kitchens, 2008 ONCA 506 (CanLII), an Ontario Court of Appeal decision involving a fact pattern in which Canac hired a private investigator to look into a series of thefts. The investigator determined that a Portuguese fellow named Joe in his mid 20s was a suspect, and later submitted a report accordingly implicating Joao Correiro. Canac acted on the report, called the police and terminated the employee...except somehow along the line, they'd gotten their wires crossed, and ended up accusing and firing 62-year-old Joao Correia instead of Joao Correiro.)

One recent case was the subject of a column in the Toronto Sun this past week: The Brito v. Canac Kitchens, 2011 ONSC 1011 (CanLII) decision involved Mr. Olguin, who was terminated in 2003 after almost 24 years of service. He was paid his statutory minimum termination and severance payment of almost 32 weeks, and nothing further. He found a new job two weeks later, albeit at a lower rate of pay. The reasonable notice period would have been 22 months.

The problem, it turns out, is that Mr. Olguin's disability insurance was terminated, and he began cancer treatments 15 months after his termination. It isn't uncommon for employers to insist on terminating disability benefits at the end of the statutory notice period, even if they've negotiated an additional package. But there's risk in doing so.

It is extremely common for employers to pay only the statutory minimum at first instance, and then negotiate and/or litigate for a determination as to what additional entitlements might exist, and get a release in exchange for any additional payment in settlement.

Justice Echlin, a well-respected jurist in the employment law field, characterized the recognition of only the statutory minimum as a 'hardball tactic', and awarded $15,000.00 in damages relating to Canac's "cavalier, harsh, malicious, reckless, outrageous and high-handed treatment" of the plaintiff. After all, it never took - nor could it reasonably have taken - the position that the appropriate notice period was only 32 weeks. At trial, Canac argued for a notice period of 16-19 months.

That, in and of itself, could shake the ground for employers. A substantive damages award for only meeting statutory obligations. Justice Echlin is telling employers that they must make a payment towards the employee's reasonable notice unilaterally, without requiring a release in exchange.

But the bigger hit is that the Court ordered Canac to compensate the plaintiff for what he would have received from his disability coverage - to the tune of nearly $200,000. Employers be warned: Terminate disability coverage at your own peril.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

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