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Employment & Labour

Latest IBM notice case sets clear rules on calculating damages

By Barry B. Fisher

In Patterson v. IBM (2017 CarswellOnt 2625) Justice Dunphy determined the appropriate notice period for a 67-year-old Band 6 IT specialist with 22 years’ service making $62,388 per year. He awarded a notice period of 18 months.

Dunphy J. made some interesting and helpful comments in the judgment on a number of topics:

1. The usefulness of summary judgments in notice cases.

4. Wrongful dismissal cases lend themselves particularly well to resolution through summary judgment proceedings. Cause is seldom at issue and the criteria to assess damages typically involve few disputed facts. The difference between the low and high end of likely damages is seldom as great as the costs of finding the answer following a full trial with all the trimmings. In my view, the practice of resolving wrongful dismissal damages cases in a co-operatively managed summary judgment proceeding is to be strongly encouraged: Arnone v. Best Theratronics Ltd., 2015 ONCA 63 (CanLII), Fraser v. Canerector Inc., 2015 ONSC 2138 (CanLII).

2. The lesser importance of character of employment 

20. I am also mindful of the fact that “character of employment” is a criterion that is often of limited value in the modern context. This is a point that our Court of Appeal has recently emphasized in cases such as Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469 (CanLII). It bears in my view only some weight in a case such as this. It may be that this particular criterion is fast becoming a vestige of a by-gone era. It is certainly difficult to defend on a principled basis. However the near universal application of Bardal over the last fifty-six years is such that I must leave the consideration of that issue to a higher court on another day. It is not of any great weight in this case and I shall leave it at that.

3. Use of prior cases with the same defendant 

There has been a number of wrongful dismissal cases involving IBM in the last few years on the issue of notice. In this case, the judge seemed to rely heavily on prior IBM cases as shown in this paragraph:

27. In Quinn v. IBM Canada Ltd. (unreported, CV-16-552858 released November 28, 2016), Myers J. awarded a 55-year-old “Band 7” IBM employee 20 months of notice. Mr. Quinn had worked his entire working life at IBM with more than 35 years of service. In Waterman v. IBM Canada Ltd., 2010 BCSC 376 (CanLII); (affirmed 2013 SCC 70 (CanLII)), another “Band 7” IBM employee terminated at age 65 with 40 years of service was also awarded 20 months of notice. In Liboiron v. IBM Canada Ltd., 2015 BCSC 1523 (CanLII) a 57-year-old Band 6 IBM employee with 32 years’ service was awarded 20 months. In Lee v. IBM Canada Limited, (unreported, CV-15-532014 released February 4, 2016) a 62 year old part-time employee with 40 years of service was awarded a notice period of 21 months. The “Band” of this employee does not appear in the decision but her full-time equivalent income would suggest that it was at a similar level (i.e. Band 6 or Band 7).

28. These four cases were relied upon by both parties with differing emphasis. They are useful comparators here not simply because they all involve the same employer. However, the IBM internal employee classification system in “bands” referred to by three of them provides at least a superficial basis of comparison of the character of the employment within the same organization. Two were one band higher while one was also in Band 6 (the fourth likely being in that same range). Importantly, the employees in question were all quite long-serving, in the upper age range and each was described as having quite challenging job prospects going forward. Three of these cases awarded 20 months of notice while one awarded 21 months of notice. These four employees had considerably more years of service to their credit than Mr. Patterson.

29. Every case turns on its facts and no two cases are exactly alike. That being said, these four cases are the most similar to the facts before me of any of the cases presented to me by the parties and recommend themselves to me for that reason.

This is similar to what happened in the Canac line of cases in which the court relied primarily on other Canac cases in determining reasonable notice.

4. Determining how the issue of future mitigation can be recognized in the calculation of damages given the period of reasonable notice has not yet expired. 

40. It is only relatively recently we have managed to get to the point of being able to render a decision on wrongful dismissal damages while the period of reasonable notice is still running. The practice in such cases is divided. Some judges have opted to apply the “trust and accounting” approach and require the plaintiff to account to the defendant for future income if any earned during the notice period: Drysdale v. Panasonic Canada Inc., 2015 ONSC 6878 (CanLII). Others have reasoned that future employment income damages are like any other contingent future damages and can be calculated with appropriate discounts for contingencies if necessary: Peticca v Oracle Canada, 2015 ONSC 2584 (CanLII).

41. I don’t think there is any hard and fast rule requiring me to adopt either approach and I may look at both for guidance on how best to achieve justice between the parties on the facts of this case.

42. Of the two approaches, the discounted approach appears to me to be the most consistent with general principles of calculating damages. It is also an approach that commends itself on other grounds. A “once and for all” calculation removes the incentive, even if only subconsciously, for the plaintiff to be lukewarm in his search for a new position if all income earned would have to be remitted immediately to a former employer. Society and the parties are all unquestionably better off if the plaintiff is able to resume productive, taxpaying work as soon as possible. A discounted approach also avoids the possibility of future legal entanglements between the parties.

43. In the present case, the notice period found by me has seven months to run. I have found it preferable in this case to fold into my consideration of the reasonable notice period the additional consideration of a minor discount for potential future earnings over the seven months or so I have found remain to be run in the notice period. Given the plaintiff’s poor prospects, the amount would at all events be quite minor relative to the total award and it seemed to me to be preferable to arrive at a global damages award rather than attempt to parse it artificially. I have thus applied the discounted approach but chosen not to break it out in a separate calculation here.

I especially like his policy analysis in paragraph 42. It recognizes that both the general law of mitigation and the trust approach used in some cases creates a situation whereby if an employee were to find a new but somewhat lesser paying job early on during the notice period, he or she is effectively working for free for the balance of the notice period as the former employer gets full credit for every dollar the employee earns in his new job. I don’t know about you, but as much as I like my job, I am sure not doing it for free. 

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