Severance for Short Tenured Employee: The Case of Grimaldi v. CF+D Custom Fireplace Design Inc.
The length of an employee’s service is a factor that goes into the assessment of how much notice of termination or pay in lieu of notice (ie. ‘severance’) an employee is entitled to under the common law. Generally, the longer an employee’s tenure, the greater their severance entitlement.
However, in the recent case of Grimaldi v. CF+D Custom Fireplace Design Inc., 2023 ONSC 6708, a short-tenured employee was awarded a lengthy severance period. In fact, the employee in this case was awarded more severance (5.5 months) than they had in service (4 months)!
Notice periods that exceed the length of the employment relationship are both remarkable and rare. Whether or not this decision signals a change in the tides of employment law jurisprudence remains to be seen. However, with a looming recession and consequential uptick in terminations, it is prudent that employers and employees remain apprised of these types of decisions.
Below is a high-level overview of this notable case.
Facts
Joseph Grimaldi worked for CF+D Custom Fireplace Design Inc. (“CF+D” or the “Company”) for only 4 months and 23 days before he was fired without cause. Mr. Grimaldi was the Company’s Senior Project Manager, earning a salary of $90,000, benefits, car allowance, and equity. Upon termination, the Company provided him with two weeks’ salary in lieu of notice. Mr. Grimaldi brought a wrongful dismissal action against the Company for 12 months’ pay in lieu of notice.
Decision
The Court ultimately determined that Mr. Grimaldi was entitled to 5.5 months’ notice. Despite having only worked for the Company for 4 months and 23 days, the Court indicated that the short duration of Mr. Grimaldi’s employment “likely affected how long it took him to find a new job”. Given Mr. Grimaldi’s age and past experiences in project management, the Court reasoned that Mr. Grimaldi would have been required to explain to prospective employers why he was dismissed so soon after being hired, which would have hindered is re-employment prospects. This factor lengthened his notice period.
The Court also noted Mr. Grimaldi’s advanced age (he was 50 years old at the time of termination) and the seniority of his role. The Court determined that Mr. Grimaldi held a senior role because he was expected to behave like an owner of the Company, managed 5-7 employees, oversaw the production of the Company, and was the highest paid employee of the Company at the time of his dismissal. These factors also lengthened the notice period.
Takeaways
Employees should be encouraged by this decision. It not only legitimizes the struggles that short-service employees face when seeking alternative employment, but effectively bases an unprecedentedly large award off such struggles. While short-service employment is unfortunately becoming more common, this decision provides an optimistic outcome for individuals who must navigate this challenging terrain.
For employers, this decision underscores the increasing risks associated with termination as Ontario courts continue to rule in a favorable manner towards employees. A valid termination provision remains a crucial element of any employment agreement and should always be reviewed by legal counsel to ensure compliance with the latest jurisprudence.
If you are an employer or employee with questions about this decision or any other workplace law matter, please contact a lawyer at Turnpenney Milne LLP.
Written by: Carolyn Denault