We should ignore severance formulas or calculators. Determining severance is as much an art as a science

Or about three-year employees receiving severance for eight or nine months or more. How does that reconcile with the old saw of one month per year of service? Or the older one about two weeks per year?

The fact is that the paradigm linking service to wrongful dismissal damages was never the law. Length of service is but one of 150 factors determining notice/severance in my book, The Law of Dismissal in Canada. And most of them seldom factor into the majority of dismissal cases.

The ones that invariably do are re-employability, position, compensation, age, and yes — length of service.

If a 60-plus year chief executive is dismissed, even after a few months, in a market with virtually no available jobs, it is unlikely that he or she will receive less than nine months’ pay. If an employee’s compensation is particularly high or if they are older, they also will receive far more than one month per year. And if they work in a geographical area or industry (or there is some other factor) that makes comparable re-employment particularly difficult — then their wrongful dismissal damages will be much greater and the old canard, one month per year, will not apply.

But most of the time, when a short-service employee is held by our courts to be entitled to considerably more than their service might otherwise command, it is because they had been happily and securely employed, only to be lured away by another employer who then fired them. After all, the courts deduce, but for being swayed to take that job, they would still be receiving a pretty paycheque and could go home at night knowing they were financially secure.

As well, the courts reckon, if an employer woos an employee away from a secure job, they have a moral obligation not to quickly show them the door.

For that reason, inducement is a more pronounced factor when an employee has been at their new job for a relatively short time.

That is not always so, however. In the leading case on inducement, Wallace v. United Grain Growers Ltd., which went to the Supreme Court of Canada, the court emphasized the inducement despite Wallace having been at UGG for 14 years — in part because UGG had solicited him from a company he had been with for 25 years.

In the recent Ontario case of Miller v. Alaya Care Inc., in which the court awarded the 62-year-old employee 14 months’ pay after only seven months of service, the plaintiff had been induced from a position she had held for 12 years. The court noted that the employer, Alaya Care, reached out to Miller first, made inquiries as to her remuneration in order to “lure” her and even indemnified her in the event that she was sued by her previous employer for leaving.

The court noted the following factors in determining the significance of an inducement:

1. the reasonable expectations of both parties;
2. whether the employee sought out work with the prospective employer;
3. whether there were assurances of long-term employment;
4. whether the employee did due diligence before accepting the position by conducting their own inquiry into the company;
5. whether the discussions between the employer and prospective employee amounted to more than the persuasion or the normal “courtship” that occurs between an employer and a prospective employee;
6. the length of time the employee remained in the new position, the element of inducement tending to lessen with the longevity of the employment; and
7. the age of the employee at termination and the length of employment with the previous employer.

In a decision released just last week by the B.C. Court of Appeal, Mercer Celgar v. Ferweda, a 56-year-old chemical engineer was induced from a 27-year job and dismissed after two and a half years. The court increased the notice awarded from five to 12 months because of the inducement. The court held that inducement does not require ‘aggressive luring” and “tacit persuasion and implicit assurances of job security and higher compensation” could be sufficient.

Inducement is not all or nothing, but a spectrum.

The point of all of this is that we should ignore severance formulas or calculators. Determining severance is as much an art as a science and can only be ascertained with any precision by reading thousands of cases and understanding how the courts view all the potentially relevant factors. The lawyer’s job is to then weave those factors into a compelling narrative, whichever side of the case they are on.