High-tech worker spurns Celestica’s severance offer, ends up with less after court fight

Judge rejects worker's "one-month-for-every-year-of-service" request

A high-tech worker who spurned his employer’s severance package during a downsizing ended up with a smaller award after taking his fight to court.

Walter Bustos started working for Celestica International in Toronto intermittently as a student in 1993. He accepted a full-time job in 1996, eventually moving up to the position of production cell leader.

In April 2004 the company announced a reduction in its global workforce because of the downturn in the technology sector.

On June 30, 2004, Bustos was called into a meeting with 30 other individuals and advised of his termination.

All the workers were given an opportunity to speak with on-site counsellors, say goodbye and pick up a compensation package from their managers before being escorted from the building. A total of 430 workers at the Toronto site were terminated during this time.

At the time of his termination, Bustos was earning $46,452 per year. In his compensation package he was offered 27.5 weeks of base salary and applicable shifts and weekend premiums. Celestica also agreed to continue his medical benefits and pension contributions for 12 weeks following the termination date and provide outplacement counselling to assist him in finding alternate employment.

Bustos did not accept the package. Consequently Celestica paid him 23.5 weeks’ salary continuation, as required under the Employment Standards Act, and severance pay. His benefits were continued for 12 weeks.

At trial, Bustos argued that given his years of service he was entitled to 11.5 months’ notice of termination. The court rejected that idea, arguing it was based on the “one month for every year of service rule” that was specifically rejected as a basis for calculating notice in a 1999 decision.

At the time of termination, Bustos was 32. He had worked for Celestica intermittently as a student for three years and as a permanent employee for eight-and-a-half years. The Ontario Superior Court of Justice said eight months was a reasonable period of notice in this case.

Bustos did not start looking for another job until 12 weeks after his employment with Celestica was terminated. The court said this was simply too long to wait.

“Although (Bustos) is entitled to an appropriate amount of time to adjust to his situation and to plan for the future before fulfilling his duty to mitigate, I am of the opinion that, in these circumstances, 12 weeks is unreasonable,” said Justice Dunnet.

The court reduced the reasonable notice period by two months because he took so long to start looking for work.

Assuming a base salary of $46,452, a notice period of eight months would result in a payment of $30,968 to Bustos. He was also entitled to $1,046 for benefits owing after the 12-week period during which the benefits and pension coverage was continued following his termination.

The court gave Celestica credit for the $20,920 it already paid to Bustos under the Employment Standards Act. Therefore, the amount remaining owed to Bustos from the eight-month notice period was $11,094. From that amount the court deducted $8,142, representing two months’ salary and benefits for his failure to mitigate damages by looking for another job.

Therefore Bustos was entitled to $2,952 for a total award of about $23,872. Had he accepted the original severance offer from Celestica, based on 27.5 weeks’ pay at his regular salary, he would have received about $24,566.

For more information see:

Bustos v. Celestica International Inc., 2005 CarswellOnt 2933 (Ont. S.C.J.).

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