Employee Gets Advantages of Both Fixed Term and Reasonable Notice :

In Rice v Shell Global Solutions ( 2019 ABQB) Eamon J. had a situation where an employee who had already worked for the defendant for about 8 years under a number of different fixed term and indefinite term agreements, was offered a new position which had the following language :

Your Assignment Length will be : 4 years.

She was let go without cause 10 months later and was provided with working notice and termination pay for another 3 months. She found new employment 7 months after her notice of termination.

The Judge had to decide what meaning to put to the reference to 4 years. This is how the Judge sets out the alternative interpretations

57      Consequently, a reasonable person interpreting this contract, having carefully thought about the matter, could see more than one meaning. In my opinion, there were three alternative meanings. One could reasonably ask:
By “Assignment Length” do you mean that
(1) she is a fixed term employee whose employment is over at the end of four years,
(2) she is an indefinite term employee who cannot apply for other positions without her manager’s permission for four years, or
(3) you are promising her work or an assignment for at least four years?
The Judge concludes that the correct interpertation is the the third one .
63      The objective interpretation which gives reasonable meaning to the explicit phrase “Assignment Length”, does not impose the harsh consequences of a traditional fixed term contract, is the most plausible meaning in the limited surrounding circumstances which both parties knew or ought to have known, and is most favourable to Ms Rice, is that Ms Rice receive the promised assignment of four years (absent termination for cause) but not that the contract would automatically end at the conclusion of that time. Thus the contract is terminable effective any date thereafter in accordance with the common law. The use of the word “assignment” rather than “employment” in the contract supports this interpretation. The relatively short duration of the assignment distinguishes this case from the long, and therefore unlikely, claim to employment duration considered by the Manitoba Queen’s Bench and Court of Appeal in Wallace.
In assessing damages the Court calculated what she she would earned with Shell during the balance of the 4 years but deducted what she actually did earn by way of mitigation income. The Judge examined the Ontario Court of Appeal case which said that these earnings are not deductible ( Howard v Benson Group Ltd 2016 ONCA 256) but ruled that where the language does not exclude mitigation earnings, it must be deducted .
Interestingly the Judge also went on to find that if the contract was not a fixed term, the common law notice would be 15 months. However the actual damage award only reflected the losses to the end of the 4 year fixed term but not  also the 15 months after the end of the notice period. Apparently Plaintiff’s counsel did not seek that remedy as the Plaintiff only requested payment until the end of the fixed term.

Mitigation Earnings of 30% of Former Salary are Deductible as Mitigation Earnings :

In Dengedza v CIBC ( YM2707-10905) Adjudicator Montieth in a CLC Unjust Dismissal complaint had to determine whether or not a former senior  investigator with the Bank was entitled to not have his mitigation earnings affect his 14 month notice award.

In his job at the Bank, the Complainant earned $62,379 for presumably a 40 hour work week. After his dismissal he worked 60 hours a week as an UBER driver and made $600 a week or $31,200/ year. This works out to $10/hour as opposed to the $30/hour that he was making at the Bank.

The Adjudicator then applied the test in Brake v PJ-M2R Restaurant ( 2017 ONCA 402) which stands for the proposition that post termination income that is “minimal, trivial or inconsequential ”  should not be considered as mitigation earnings.

Even though the UBER income was 1/3 of his Bank income, the Adjudicator found that these amounts were sufficently large enough to be characterized as amounts received in mitigation of loss.

My Comments :

I think the Adjudicator approached this analysis incorrectly.

He seemed to look at the weekly earnings without regard to the hourly rate. Sure, the Plaintiff earned about 50% of his former income on a weekly basis but that is only because he worked 50% longer every week.

Moreover, as the Complainant was making $4.00 less than the ESA minimum wage driving for UBER, it seems somewhat inappropriate to find that these UBER earnings did not qualify as ” minimal and trivial “.

In other words the comparison should be based on the hourly rate, not on the weekly income. Effectively the Complainant was working 1/3 of his former rate . No Court would require an employee to mitigate his losses by taking a job at 1/3 of his previous rate, especially when that rate itself was below the minimum wage .

In effect the Complainant was punished for taking the crappy UBER job, and the Bank got a windfall because its former employee needed to eat and put a roof over his head.

Although there is no reference to this in the decision, it seems likely that as the Bank alleged just cause, the Complainant  probably did not get EI. Had he received EI, that amount would not have reduced his damage award, although in certain circumstances he may have had to repay some or all of it to the Government.

Service Advisor Taking Secret Pics of Female Clients = Just Cause

In Durant v Aviation A. Auto ( 2019 NBQB 214 ) Justice LeBlanc had a situation where a 34 years service advisor at a car dealership took secret videos of  female clients and shared them with co-workers. The Plaintiff’s explanation that he was doing it to protect the dealership was not accepted by the Judge.

The Judge considered the following factors in determining   whether there was just cause.

The nature and extent of Mr. Durant’s conduct on August 30, 2018, is  the following:

  1. He surreptitiously took a first video of the female client in attendance at the Audi Moncton premises for improper purposes;
  2. The first video was taken with his work issued tablet computer;
  3. He surreptitiously took a second video and a photograph of the female client with his personal cellphone;
  4. He showed the first video to several co-workers while making inappropriate comments, including mocking the female client;
  5. He showed the second video to Audi Moncton employee Justin Guimond while making inappropriate comments about the female client;
  6.   Over the course of the labour day weekend, he texted the photo of the female client on his cellphone to his co-worker, Mr. Donovan.

In deciding that just cause had been proven the Court made the following comments :

For the reasons already given, a consideration of the full range of misconduct leads to the conclusion that it was very serious.  That misconduct, the invasion of the female client’s privacy and the derogatory comments made during the subsequent viewings of the video, were incompatible with Mr. Durant’s employment obligations toward Audi Moncton.  No plausible explanation was offered for the misconduct and none is evident on an examination of the evidentiary record.

  Durant’s misconduct on August 30, 2018 is very serious as a stand alone incident but it is made more egregious considering that he had been warned of the inappropriate nature of similar conduct in the past, i.e. the warning letter issued in relation to the November 2014 incident and the discussion with Mr. Hambrook in January 2018.  In addition, after August 30, 2018, it came to light that the very behaviour shown by Mr. Durant on August 30, 2018, had occurred several times in the past. 

My Comments :

I take 3 things from this case :

  1. The conduct of the plaintiff was obviously throughly obnoxious and disgusting.
  2. His failed attempt to justify his behavoir, as opposed to apologizing for it, hurt his otherwise slim chance of winning.
  3. The fact that he had been previously warned about similar behaviour sealed his fate.

One can see that if this was the first and only time in 34 years  that he acted in this fashion and if he accepted  responsibility from the beginning, the result may have been very different.

Insubordination Not Enough to Terminate With Cause:

Patruniuk v Candu Energy ( YM2707-11352) Arbitrator Price in a CLC unjust dismissal case had a employee who repeatably refused to take a refresher course in basic radiation protection. Despite numerous meetings to hear his concerns, he still refused . Finally he  he was told by email that if he did not complete the training that day, he would be fired .

The employee did not see the email until after work on that same day .

He was fired the following day, which was a Friday

However, after finally seeking legal advise, the employee, on the Tuesday following his dismissal  emailed his employer an apology and agreed unconditionally to take the training, which was a one hour computer PowerPoint exercise.

The Complainant at the hearing wisely admitted that he had been insubordinate but simply argued that dismissal was not warranted but rather he should have received some lesser degree of discipline.

In deciding to reinstate the employee with a two month suspension, the Adjudicator took the following matters into account:

  1. The insubordination was of of a minor nature which was only tangentially related to his job duties.
  2. He did not openly challenge management in front of other employees.
  3. The employee remained civil in his dealings with management.
  4. The workplace encouraged employees to adopt a ” questioning attitude “
  5. The Employer never used progressive discipline. The fact that upon termination he immediately apologized and agreed to take the training was seen as evidence of the fact that a lesser penalty would have modified his behaviour.
  6. The employment relationship was not irredeemably fractured.

My Comments :

It must be remembered that reinstatement with a suspension is a remedy open to CLC Adjudicators, but not judges in a civil action.

This case also illustrates the wisdom of not trying to argue the impossible. Some  lawyers would have attempted to dream up some bizarre rationale for their clients behavoir and only when that argument failed, would they argue  for a lesser penalty.

It is a much better tactic to admit the wrong and argue the penalty. Judges and arbitrators so rarely see people taking responsibility for their misdeeds that when they actually encounter it, they will often exercise their discretion and do something to lessen the blow of the termination.

Ontario Court of Appeal Reaffirms Entitlement to Stock Options Over Notice Period Unless the Exclusionary Language is Clear and Unambiguous :

In O’Reilly v Imax Corp ( 2019 ONCA 991) the Court was faced again with the issue of what type of language in a bonus or stock option plan effectively denies the dismissed employee compensation for these elements over the notice period .

The exact wording under review was as follows

18      The LTIP contained provisions for the award of both RSUs and stock options:
RSUs under the LTIP
This Agreement sets forth the general terms and conditions of Restricted Share Units (“RSUs”). By accepting the RSUs, the Participant agrees to the terms and conditions set forth in this Agreement and the IMAX 2013 Long Term Incentive Plan (the “IMAX LTIP”). . . .
4. Termination of Employment Generally. In the event that the Participant’s employment with the Company terminates for any reason other than death, Disability or for Cause, the RSUs shall cease to vest and any unvested RSUs shall be cancelled immediately without consideration as of the date of such termination. Any vested RSUs shall continue to be settled on the applicable Settlement Date.
5. Death; Disability. If the Participant’s employment with the Company terminates as a result of the Participant’s death or Disability, a portion of the RSUs shall vest such that, when combined with previously vested RSUs, an aggregate of 50% of the RSUs granted pursuant to the Agreement shall have vested. Any vested RSUs shall be settled on the applicable Settlement Date and any unvested RSUs shall be cancelled immediately without consideration as of the date of termination.
6. Termination for Cause. If the Participant’s employment with the Company terminates for Cause, any outstanding RSUs, whether or not vested, shall be cancelled immediately without consideration as of the date of termination, and the Participant shall have no further right or interest therein.
Stock Option Grants under the LTIP
This Agreement sets forth the general terms and conditions of Options. By accepting the Options, the Participant agrees to the terms and conditions set forth in this Agreement and the IMAX Corporation Long-Term Incentive Plan (the “IMAX LTIP”). . . .
(5) Termination of Employment Generally. In the event that the Participant’s employment with the Company terminates for any reason other than death, Disability or for Cause, the Options shall cease to vest, any unvested Options shall immediately be cancelled and revert back to the Company for no consideration and the Participant shall have no further right or interest therein. Any vested Options shall continue to be exercisable for a period of thirty (30) days following the date of such termination; . . . To the extent that any vested Options are not exercised within such period following termination of employment, such Options shall be cancelled and revert back to the Company for no consideration and the Participant shall have no further right or interest therein.
19      A separate Stock Option Plan provided for the award of stock options in addition to those provided under the LTIP. The relevant provision stated as follows:
Stock Option Grants under the Stock Option Plan
7. Termination of Employment, Consulting Agreement or Term of Office
(a) In the event that a Participant’s employment, consulting arrangement or term of office with the Company or one of its Subsidiariesterminates for any reason, unless the Board or the Committeedetermines otherwise, any Options which have not become Vested Options shall terminate and be cancelled without any consideration being paid therefor. [Emphasis in original.]
The Court of Appeal upheld the trial judges’ finding that these clauses did not oust the Plaintiff’s common law entitlement to compensation for these elements of compensation during the reasonable notice period. This is what they had to say :
56      In the application of the second step, the motion judge, referring to Veer, found that the reference to “terminates for any reason” in the plans could not be presumed to refer to termination without cause. Further, he found that the phrase “cancelled immediately without consideration” was not “a clear, express provision that remove[d] the common law right of an employee, terminated without cause, to claim damages in respect of lost unvested RSUs”: at para. 64.
57      The motion judge applied the correct legal principles and arrived at the correct conclusion. As I have explained in the discussion of Kieran, above, in the absence of unambiguous contractual language, as there was in Kieran, the awards continued to vest during the reasonable notice period. The respondent was entitled to damages for the loss of his entitlement to exercise his rights.
My Comments :
This issue is, as the Court said in a footnote ( see below)
” fertile ground for litigation”.
Maybe, just maybe, this decision will provide some much needed guidance on how to properly approach the issue not only of these bonus clauses but also ESA termination clauses.
This case illustrates that it is NOT an exercise in determining which interpretation is more reasonable, as it would be in a normal commercial contract.
Rather, you start with the assumption that the dismissed employee is entitled to receive his or her total compensation over the notice period and only then do you see if the plan language is so clear and unambiguous that the employee should get less than his or her common law entitlement.
Any reasonable ambiguity means the clause is ineffective.
Yes, it does look like legal hair splitting.
But remember, the Courts realize that there is no real bargaining in these relationships and  that these agreements are more like a contract of adhesion.
Moreover, it seems that Courts are bothered by the idea that the party breaching the contract of employment, by failing to give reasonable working notice, should then seek to benefit by this breach and claim that the employee is not entitled to payment solely because they are no longer working for the company.
Case Footnote :
That this area remains fertile ground for litigation is demonstrated by the fact that in the past year there have been four decisions of this court on the same subject: Dawe v. The Equitable Life Insurance Company of Canada, 2019 ONCA 512, 435 D.L.R. (4th) 573 (bonus plans); Mikelsteins v. Morrison Hershfield Limited, 2019 ONCA 515, 56 C.C.E.L. (4th) 1, leave to appeal requested, 38806 (shareholders’ agreement and share bonus); Manastersky v. Royal Bank of Canada, 2019 ONCA 609, 146 O.R. (3d) 647, leave to appeal requested, 38788 (incentive plan); and Andros v. Colliers Macaulay Nicolls Inc., 2019 ONCA 679, 437 D.L.R. (4th) 546 (bonus).