Monday, June 2, 2014

Vist v. Best Theratronics Ltd.: Non-continuous service and reasonable notice

One question that periodically arises in employment law is the impact of non-continuous service.  For example, let's say you're employed by a given company for ten years, and then you resign to pursue other opportunities, but come back a couple years later.

For non-union employees, 'length of service' only has a meaningful impact at law on termination entitlements.  Other typical seniority-based benefits (such as position on a compensation grid, amount of vacation time, etc.) are simply matters of contract and/or employer policy.  If your new employer agrees to return you to your old 4 weeks of vacation instead of starting you back at 2, great.  If not...well, you don't have to take the job.

And in large part because of the lack of other meaningful legal consequences to non-union seniority, termination entitlements can often be a bit grey.  If you're fired five years after returning to work, are you a 5-year employee, a 15-year employee, or a 17-year employee?  Or none of the above?  This is an issue raised in the recent Superior Court of Justice case of Vist v. Best Theratronics Ltd.

The Facts

There were a number of changes in the employer's corporate existence (name changes, acquisitions, asset sales, etc.) over the relevant time period, but that's not really the issue.

Mr. Vist is 54 years old, with a Masters Degree in biophysics.  He first started working for the company AECL Medical in 1988.  In September 1992, he accepted a different job in California, but didn't stay there long - in June, 1993, he accepted an offer with AECL (by then known as "Theratronics International" again, and returned in September of that year.  ( year off.)

TI was acquired by MDS Nordion in 1998, and Vist stayed.  MDS Nordion then sold the assets of his division to another company, Delft, at arm's length, in February 2003, and so off Vist went to Delft.  He left Delft at the end of May, 2004.  He started doing contract work for MDS Nordion in October of that year.  His next employment position (as described by the court) was for another company, Dinmar, for a few months in 2006, after which he left (when Dinmar was acquired by another company) and continued his consulting work, including for MDS Nordion.  MDS Nordion hired him to begin a new employment position in January 2007, on a roughly 11 month contract.  After six months, they made his position permanent, making an offer that included a service date (for the purpose of calculating vacation and service milestones) of January 1, 1993.

Then MDS Nordion sold Vist's division to Best Theratronics, and Best formally offered him employment in a similar role on February 13, 2008, including a guarantee that "[y]our terms and conditions of employment will continue on terms no less favourable than your employment terms with MDS Nordion immediately prior to closing."

In May, 2008, Vist was asked to act as General Manager of Best.  (The Court found that he started in the role immediately, though wasn't formally promoted until January 1, 2009.)

It appears that Vist performed well as GM, but it wasn't really what he wanted to do.  In May 2009 he wrote to the president of the company asking to return to an engineering role.  He received no response to his letter, and a little under a month later was dismissed.

So the major question is how long the period of reasonable notice runs.  And to answer that, length of service is important.

For the purposes of Vist's employment, Best is clearly the successor to MDS Nordion, and Nordion is clearly the successor to AECL/TI.  So he worked at these companies from 1988 to 2009, with a break of 1 year in 1993/4, and a break of just under 4 years from 2003 to 2007.  So he'd worked there for sixteen of the past 21 years.

The Court's Ruling

The trial judge found that the 'service date' agreement was ambiguous - that the parties had not turned their minds to whether or not it past service would impact termination entitlements.  (She relied on evidence from Best's HR Director as to her "understanding" of the agreement relating to the 1993 service date, which seems rather strange in light of the fact that it was actually negotiated with Nordion.  As well, while the HR Director's evidence was that they used January 17, 2007 "to count his years of accrued continuous service", it is not at all clear for what purpose "accrued continuous service" was used during the employment relationship, given that it wasn't being used for vacation or service milestones.)  Therefore, Justice Blishen concluded that Vist should be given "some credit for his past services", and "treated as a long term employee having given sixteen years of service to the defendant and its predecessors."

However, while they impacted the reasonable notice period, Justice Blishen did not consider the years of service to be "cumulative".  The end result is that she gave "some weight" to the earlier years of service - i.e. awarded more than she would have for a 2.5-year employee, but did not regard him as a 16-year employee.  She awarded him six months pay in lieu of notice.


I can't say I'm particularly enthused about the approach, that he was regarded as a long-service employee, but his years were not treated 'cumulatively'.  This is a distinction drawn by a 1989 case from the Alberta Court of Queen's Bench.  It's a rather unclear distinction in the first place, and when the best precedent for it is a 25-year-old decision from another jurisdiction, I query its persuasive value.  Perhaps more importantly, this is not a very frequent issue, but it isn't so infrequent that we need to look so far afield for relevant law.  Consider Gibara v. ABN-Amro Bank, a 2003 decision from the Ontario Superior Court finding:
In my view the authorities establish that where an employee has quit and later returns, the earlier period will not be considered in determining reasonable notice unless there is agreement to that effect or circumstances such as inducement to leave a secure position.
It's a little oversimplified - there's a lot of case law establishing that it's a far more contextual question, looking at matters such as the overall length of service relative to the length of the interruption, or conduct by the employer evincing an intention to recognize the prior service, but there's little question that an agreement as to length of service - subject to statutory compliance - will suffice for an employee.  On these facts, either there was an agreement recognizing his prior service, or there wasn't.  It's a question of contractual interpretation, and the ambiguity found by Justice Blishen needs to be resolved, one way or another.  If the agreement doesn't speak to termination entitlements, then there are other questions to consider.  But Justice Blishen's compromise approach seems to simply avoid all the principled legal questions surrounding this issue.

Then there's the issue of the notice period itself.  While notice periods for short-service employees are notoriously unpredictable, it's probably a fair estimate that 6 months would have been within or near the reasonable range (for a 50-year-old General Manager) even if he only had 2.5 years of service.  If he's getting partial credit, so to speak, for his long service, it isn't clear why the overall notice period would still be that low.

Then again, for reasons unclear to me, Vist was only seeking a 9-month notice period.  If taking the position that he should be regarded as a 15- or 16-year employee, at age 50, in a very senior role, the resulting notice period would be far more substantial.  So there's likely something going on here that isn't clear to me on reading the decision.


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.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation. If you need legal assistance, please contact him for information on available services and billing.

No comments:

Post a Comment