Case In Point
Court Awards Terminated Executive Over $456,000 After Finding Employer’s Conditional Severance Offer Constituted Repudiation of the Employment Agreement
Date: February 4, 2025
The Ontario Superior Court of Justice recently provided important guidance regarding the repudiation of employment agreements and common law notice entitlements in Timmins v. Artisan Cells. In this decision, the Court addressed the consequences for employers who depart from their severance obligations and contractual commitments when terminating the employment of employees.
Background
Dr. Nicholas Timmins joined Artisan Development Labs Inc. (ADL) in November 2019 as Vice-President, Cell Technologies, and Entrepreneur in Residence. His role involved identifying therapeutic product opportunities using ADL’s genome editing technologies.
Through successive promotions, Timmins advanced to Executive Vice-President in March 2021, where he established ADL’s Toronto operations and formed its subsidiary, Artisan Cell Labs (ACL). By August 2021, he had become Chief Development Officer, overseeing the company’s Canadian operation with 19 employees and serving as the face of their Canadian business.
Timmins’ compensation package included a base salary of $475,782 CAD, plus stock options, annual bonus, and comprehensive benefits.
Timmins’ employment agreement contained a termination provision which provided him the greater of three months’ notice, or his minimum statutory entitlements under the Employment Standards Act, 2000 (ESA). However, when ADL and ACL terminated Timmins’ employment without cause in March 2023, Timmins received only one week of termination pay, with additional severance amounts being conditional upon Timmins signing a broad release containing non-disclosure and non-disparagement provisions.
Court’s Analysis
Justice Callaghan found the defendants had repudiated the employment agreement through their conduct. The Court determined that, by failing to provide the contractual three months’ severance, or even the three weeks’ notice or pay in lieu thereof owed pursuant to the ESA, and attempting to impose additional release conditions, the defendants demonstrated an intention not to be bound by the agreement.
The Court noted that withholding the contractually mandated severance deprived Timmins of the agreement’s “only remaining benefit,” stating:
… The release sought was not a condition for receiving the severance payment under the Employment Agreement and, even if a release was an implied term to receipt of the severance payment, the release went beyond any release for severance amounts as it included a release from any other claim, a non-disclosure provision and non-disparagement provision. The Defendants sought a benefit from the release which it was not entitled to under the Employment Agreement. I am satisfied that the Defendants, by their correspondence and actions, repudiated the Employment Agreement.
Court’s Decision
In determining the appropriate notice period, the Court considered Timmins’ age (44), length of service (3.5 years), senior position, and the specialized nature of the gene therapy field. Given the limited availability of comparable positions in this niche sector, the Court awarded nine months of common law notice, which amounted to $456,908.82.
However, the Court declined to award the punitive damages sought by the plaintiff. The Court noted that one factor to consider in determining if punitive damages are appropriate is whether the compensatory damage award already carries an element of deterrence. In this case, the Court was satisfied the compensatory award provided sufficient deterrence, being three times the contractual notice period.
Key Takeaways
This decision underscores the critical importance of complying with contractual termination entitlements for departing employees. The Court’s ruling makes clear that deviating from severance commitments and attempting to impose additional conditions can amount to repudiation of the employment agreement, thereby entitling the employee to common law notice.
For assistance with any termination matters, please contact your regular Hicks Morley lawyer.
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