An Ontario Superior Court judge has awarded a former senior executive $450,000 representing 9 months of severance, ruling that the employer repudiated the employment agreement by attempting to impose an additional condition on his termination entitlements, which was originally set at three months.
The 44-year-old Vice-President with 3.5-years of service, at U.S.-based scientific technology company was terminated on a without-cause basis in March 2023.
Although the termination clause in his employment agreement provided for at least 3 months’ severance, the termination letter claimed it would only pay him 1 week’s severance unless he signed a full and final release.
The termination clause did not state that a release was required. Counsel for the VP argued that the employer’s conduct repudiated the employment agreement, meaning that they could not now rely on it to limit the VP to only 3 months’ severance.
Justice John Callaghan agreed, finding that a reasonable person would conclude that the firm had no intention of being bound by its own agreement and was withholding payment of severance as leverage to obtain a release of any further entitlements.
As a result, the judge found that the VP was entitled to common law severance of 9 months, amounting to $450,000, including compensation for lost bonuses and benefits.
Despite the VP’s short service of 3.5 years, the judge noted that his employment prospects were limited by his large salary of $357,731.19 USD ($475,782.48 CDN) and the small size of Canada’s niche gene therapy industry.
Of the 5 other companies in this industry, the VP had already worked at 2 of them. Employment opportunities within his field were not anticipated to grow as funding for new gene therapy companies is limited.
“While he is not old at 44, his opportunity for employment in his field of expertise is limited,” the judge wrote.
