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LegaL report/laBouR & eMployMenT "This case certainly adds fuel to the fire. if you're acting for a seller you don't want to be hit with that liability." MARK NEWTON, HEENAN BLAIKIE LLP employment with Domtar continued. Option B was to transfer out the commuted value to a locked-in retirement savings plan and cash out their flexible pension account balances or transfer to an RRSP account. Gordon Kerfoot and Carl Harshenin were both long-term employees in management positions and both chose option B and transferred out their commuted value. However, subsequently, they brought a claim against Weyerhaeuser for damages for wrongful dismissal and claimed the pension accrual they would have had during a reasonable notice period. After five years, in 2012, the Supreme Court of British Columbia found Weyerhaeuser had always described the transaction as Let us open the right door for you We specialize in Employment and Labour Law in Canada Kuretzky Vassos Henderson is a leading employment and labour law firm situated in the heart of Toronto. We are comprised of eleven lawyers, all of whom specialize in the area of employment and labour law. We act for many prominent public and private sector employers as well as for individuals. Kuretzky Vassos Henderson LLP Our work includes extensive experience in the areas of: Wrongful dismissal • Human rights • Labour relations/Labour law/Collective barganing • Workplace health and safety • Sexual harassment • Employment standards • Employment contracts • Canada Labour Code • Class actions • Mediation/arbitration/ADR www.kuretzkyvassos.com • 416.865.0504 A DAily Blog uretzky_CL_May_11.indd 1 of CAnADiAn legAl news 4/14/11 10:32:23 AM [ www.canadianlawyermag.com/legalfeeds ] 44 F e b r uary 2013 www.CANADIAN L a w ye r m a g . c o m subject to a number of conditions such as regulatory approvals and in the end employees found out the transaction was going ahead at the same time their employment was terminating. "The court found that both Kerfoot and Harshenin were entitled to reasonable notice of termination of employment — approximately a year and a third for Kerfoot and a year and half for Harshenin," says Mayer. "Neither employee qualified for the subsidized early retirement at the time of termination, but Harshenin would have qualified within the reasonable notice period, so he was entitled to have his commuted value." Kerfoot would not have qualified even at the end of the reasonable notice period. So in assessing damages he argued, and the court accepted, his damages were the difference between the amount he would have accrued in the Weyerhaeuser plan and the amount he actually accrued in the Domtar plan during the notice period. Kerfoot was awarded $10,493 by the court, but Harshenin's damages award was $81,244 — due largely to the lost opportunity to qualify for the "rule of 65 and 10" benefits. "It is a word to the wise in these sales where an employee loses a valuable early retirement option there can be a potential claim," says Dan Shields of Shields O'Donnell MacKillop LLP, who says quite often the pension is the big differentiator in a company sale. "And with an aging workforce, if there is a need to reduce someone who is an executive or employee in a DB plan, there is a good chance that person will be deprived of some benefits in the future and a significant cost on a dismissal claim can be the pension aspect of it, which is a relatively new development." Kerfoot would have had a different result in Ontario due to automatic rules for how pension service is accounted for after a sale, which are not the same in B.C, but lessons can still be gleaned from the case, says Mark Newton, who leads the national pension and benefits practice at Heenan Blaikie LLP. He says when it comes to dealing with pensions in a company sale it's a matter of buyer beware. "I understand the employment law analysis in this case, but from a policy perspective, in each and every purchase and sale transaction employees can make these arguments," he says. "If you're buying from a mining, forestry company, or other legacy industry that still has defined benefit pensions and all you have is a defined contribution plan the liability could be massive," says Newton. PowereD By CAnADiAn lAwyer & lAw times

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