Laid-off employee wants old severance deal

Employer offered severance package in 2004 to anyone who stayed on but terminated employee with only working notice in 2006

This instalment of You Make the Call involves a dispute over a severance package during layoffs.

Marija Ciric worked as a software engineer in the British Columbia facility of Raytheon Canada, an Ottawa-based manufacturer of air traffic management systems. In January 2004, Raytheon was downsizing through layoffs but wanted to retain key employees. To encourage those employees to stay on, Raytheon assured employees that anyone who was laid off in the future would receive severance pay of one month’s salary for each year of service plus further adjustments based on the age and level of the employee. Employees who accepted this package would sign a release they wouldn’t pursue their right to pay in lieu of notice and employment would end within a few days of being laid off.

In September 2005, Raytheon announced the B.C. facility would close permanently in September 2006 with all employees receiving one year working notice. Ciric was told her employment would end on June 10, 2006. Raytheon also informed her she was entitled to 9.4 months’ notice, one month more than the working notice and would be paid the difference when she signed a release.

Ciric felt she had agreed to Raytheon’s 2004 proposed severance package and she should receive it as she was now being laid off. She didn’t say anything at first and continued to work. In May 2006, one month before her termination, she filed an action saying Raytheon was obligated to stick with the package agreed to in 2004.
You Make the Call

Was Ciric entitled to the severance package offeredin 2004?

OR

Was the 2004 offer replaced by the notice Raytheon gave her in 2006?


If you said the offer was no longer valid and Ciric had to accept the notice offered her upon her termination in 2006, you’re right. Though the trial judge felt Ciric and other employees accepted the 2004 offer by continuing to work for Raytheon and not accepting voluntary layoffs, the British Columbia Supreme Court disagreed. The B.C. Supreme Court said employees are bound to serve the employer for payment. This is simply what Ciric did and to constitute an acceptance of the offer, there would have to be something beyond the regular terms of employment. She would also have had to have been given a notice of termination to accept the offer at that time, which she hadn’t been.

The B.C. Supreme Court also said for Raytheon to have been bound by the 2004 offer, Ciric would have to have accepted it before she was given the new layoff date and its terms of severance. When Raytheon informed her in September 2005 of her impending termination with working notice, it constituted a withdrawal of the previous offer and the introduction of a new one involving working notice.

“The assurances may have been given as an incentive to encourage key employees to stay with the company, but at best they remained an offer that could not have been accepted, and a unilateral contract formed, until Ciric’s employment was terminated,” the court said.

The trial judge found Raytheon didn’t give any notice the previous offer was terminated before making the new one, but the B.C. Supreme Court disagreed. It found the notice of termination Ciric received in September 2005 should have been perceived as a withdrawal of the previous offer.

“Raytheon made it entirely clear to Ciric no severance was being offered to her. She was being given working notice,” the court said. “If the company’s assurances were indicative of an offer to Ms. Ciric, she was given effective notice that it was being withdrawn.” Since Ciric could only have accepted the original offer if she was being terminated at that time, the B.C. Supreme Court ruled she couldn’t have accepted the offer by simply remaining with Raytheon. Raytheon was entitled to withdraw the offer and provide the offer of working notice when it gave her a notice of termination. See Kornerup v. Raytheon Canada Ltd., 2008 CarswellBC 1155 (B.C. C.A.).

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