Court rules low severance payment for town worker ‘completely unacceptable’

Peters v. Kelvington (Town), 2004 Carswell Sask 62 (Sask. Q.B.)

Yvonne Peters worked for five-and-a-half years as the economic development officer for the town of Kelvington, Sask. She was described as a “splendid employee” who often went beyond the call of duty. At the time of her termination she earned about $2,720 per month.

Throughout 2002 the town was facing severe budgetary pressures and on Sept. 11 the mayor and a town councillor met with Peters to tell her she was being terminated. This was unanimously approved at the next meeting of the town council as part of a motion that included a reference that she was to “receive payment in lieu in accordance with the Labour Standards Act.”

Peters was given severance pay of six weeks’ salary, which equated to her being paid up to Nov. 15, 2002. The court accepted that the embarrassment of having lost her job, and her future financial unpredictability, made it difficult for Peters, particularly so in the small town where she lived.

The Saskatchewan Queen’s Bench found the six weeks’ severance pay given Peters by the town was “entirely unacceptable.” The general rule of one month’s notice or pay for every year of service was appropriate for Peters, the court ruled, and thus she ought to have received five-and-one-half months’ notice or pay in lieu.

But the court noted Peters had not only mitigated her damages, but she had found a position that paid her about $500 a month more than she had been earning with the town. The court recognized the replacement position she found, as a substitute teacher with the Yellow Quill First Nation, was day-to-day and then week-to-week and then month-to-month. But that employment had remained permanent and continual since Nov. 16, 2002.

The court rejected Peters’ claim that she had lost other income, such as a loss of medical benefits to cover her husband’s prescription costs, and mileage costs to get to her new job. The court also rejected her claim for punitive damages within the scope of Wallace v. United Grain Growers Ltd. In that case the onerous manner of employees’ dismissal was a major consideration, the court ruled, which didn’t apply to this case.

The court found that even though Peters and her family believe they were poorly treated by the town, the town was never untruthful or unduly insensitive towards her and she had never been mistreated. A tough decision had to be made for budgetary reasons, but the town “was never unfair or in bad faith,” the court ruled.

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