Heller Beats UBER in SCC:

Here are quick takeaways from Heller v Uber ( 2020SCC 16) :

1. Employment cases are to determined under the Arbitrations Act even if they have a international aspect.

2. Under the Arbitrations Act, a Court may choose not to defer to an arbitrator on the issue of jurisdiction if the validity of the agreement is in question.

3. An arbitration agreement can be illegal if it is unconscionable.

4. If an arbitration procedure is effectively not accessible to one party, then that can make it unconscionable.

5. This agreement was not accessible to Heller due to cost, location of arbitration and choice of law., thus it was unconscionable, thus illegal and unenforceable .

6. The SCC declined to rule of the issue as to whether it was invalid because it offended the ESA.

No Holiday Pay During Notice Period:

In Kraus v S3 Manufacturing ( 2020 SKQB 175 ) Justice Megaw determined that the plaintiff was entitled to 18 months notice but that to pay him both 18 months wages plus the stat holiday pay for those holidays in the notice period would count as double recovery and thus was not allowed. The judge determined that there was no evidence to show that had the plaintiff actually worked out his notice period that he would not have been permitted to take those stat holidays and be paid when he was not at work.

The same issue would apply to a claim that I often see in mediation, which is a claim for vacation pay over the notice period. Unless there is a pattern shown that the plaintiff routinely did not take his or her vacation and was paid money instead, this claim fails. However where the employee’s vacation pay is paid on every pay check ( which is common in some industries) the plaintiff would be entitled to this payment over the notice period.

Having said that it is always prudent for plaintiff counsel to review with the client whether there is outstanding vacation pay from either the current year or as carryover from previous years. Also remember that vacation pay is payable on all cash compensation, including commissions and bonuses. This is often not done correctly and thus there can be very large claims for past vacation pay owing on bonuses, particularly for employees whose bonus compensation is a large part of their total compensation.

Also, it may be a small amount, but under the Ontario  ESA , employees are entitled to vacation pay on their termination pay but not on severance pay. This is often forgotten in termination letters.


Does Mitigation Income Earned During the Balance of Fixed term Contract Reduce Damages ? Depends on Which Province You Live in :

The law across all common law provinces seems to be that if an employee is terminated before the end of a fixed term contract and there is no valid early termination clause, then the employee is entitled to be paid for the balance of the unexpired term .

Secondly there seems to be a consensus that there is no duty for the employee to mitigate his or her damages. She can sit at home and collect her money.

But what if the employee does actually mitigate and earns income? After all, dismissed employees still have to eat while the court case goes on.

In Ontario it would seem that this income is not deducted but at least in BC and Saskatchewan it seems it is .

This is all discussed in great  detail in Crook v Duxbury, 2020 SKCA 43.

Maybe one day the SCC will sort this out.

No Duty to Investigate Where Just Cause is Upheld:

In McCallum v Saputo ( 2020 MBQB) Justice Rempel found that an employee had stolen product from a customer of the employer. The Employer relied solely on evidence they had collected and did not give the employee a real chance to give his side of the story.

However the Court found that absent a contractual obligation to do so, there is no duty of procedural fairness before terminating someone for cause and furthermore the employer can properly rely on additional evidence that they obtained after the dismissal.

My Comments:

The issue is not whether the employer made a reasonable decision about just cause. The issue is whether the Court finds that the employer has proven on the balance of probabilities that the plaintiff committed an act of just cause.

Thus where the employer conducts no investigation or a poor investigation but the Court finds the employee committed theft, just cause has been proven.

Where the employer conducts a perfect investigation which finds the employee guilty of theft but the Court disagrees with that conclusion, the employee will succeed.

Remember an investigation report is itself is NOT evidence of the matters set out in report. Each of those facts must be independently proven in Court.

I arbitrated a case awhile back where the case looked airtight for the employer to prove cause based on the evidence that the investigator had found. However, for various reasons the employer did not or could not present  the same evidence at the arbitration and they were unable to prove just cause.
On the other hand,  plaintiffs sometimes want to advance the argument that the investigation was faulty or negligent. Presumably this is to advance claim for punitive damages. If they do this the report does go into evidence and can be considered by the Court . Although this report  should not be considered as evidence of the facts set out in the report, it does get read by the judge and may well affect the judges’ view of the case.
I think in most cases plaintiffs are better off trying to keep the entire report out of evidence and forcing the employer to prove every point of the just cause allegation by live witnesses and admissible documents .

Court Finds that Investment Advisor Who Forges Client Signature and has License Suspended is Just Cause:

I read a lot of cases to keep up with my Wrongful Dismissal Database and this blog. I am constantly amazed at some of the cases that make their way to trial.

In Movassaghi v. Harbourfront Wealth Management Inc.,
(2020 BCSC 579) an investment advisor who was switching firms, forged the signature of one of his clients, without her consent, inorder to transfer her account to his new firm. The client found out and reported it both to his employer and the securities commission. His license was suspended for 8 months. The Plaintiff admitted the forgery.

As the Court noted, forgery is a criminal offence. Not surprisingly , the Court also found that it was just cause.

Duh! If this guy had walked into my office ( when I was an advocate ) , I would have told him he was lucky that he wasn’t facing criminal charges and to move on with his life.

Instead, he brings a hopeless lawsuit that holds him responsible for the defendants costs and makes public his misdeeds for all to see.

Ontario Court of Appeal Says Just Cause Clause Offends ESA and Voids Entire Termination Clause and Not Saved by Severability Clause:

In a short and punchy decision  called Waksdale v Swegon North America ( 2020 ONCA 391 which was released on the same day as I am writing this blog ) the Ontario Court of Appeal had a two part termination provision in an employment contract.

The first part said that if you were terminated for just cause , you get nothing. The Employer conceded that this was illegal because the ESA has a higher test for when you gets nothing and thus that clause was illegal . That is old news. Nothing special so far .

The second, separate clause had a perfectly legal if you are fired without cause all you get is the ESA minimums.

The Plaintiff was terminated without cause.

At the trial level the Judge   said that because they are different paragraphs, the illegality of the one clause does not affect the legality of the other clause.

This always struck me as a meaningless distinction. The Court of Appeal agreed with me .

This is what they said:

[9]          In the present case, there is no question that the respondent would not be permitted to rely on the Termination for Cause provision. The issue is whether the two clauses should be considered separately or whether the illegality of the Termination for Cause provision impacts the enforceability of the Termination of Employment with Notice provision. The respondent submits that where there are two discrete termination provisions that by their terms apply to different situations, courts should consider whether one provision impacts upon the other and whether the provisions are “entangled” in any way. If they are not, the respondent argues, then there is no reason why the invalidity of one should impact on the enforceability of the other. 

[10]       We do not give effect to that submission. An employment agreement must be interpreted as a whole and not on a piecemeal basis. The correct analytical approach is to determine whether the termination provisions in an employment agreement read as a whole violate the ESA. Recognizing the power imbalance between employees and employers, as well as the remedial protections offered by the ESA, courts should focus on whether the employer has, in restricting an employee’s common law rights on termination, violated the employee’s ESArights. While courts will permit an employer to enforce a rights-restricting contract, they will not enforce termination provisions that are in whole or in part illegal.  In conducting this analysis, it is irrelevant whether the termination provisions are found in one place in the agreement or separated, or whether the provisions are by their terms otherwise linked. Here the motion judge erred because he failed to read the termination provisions as a whole and instead applied a piecemeal approach without regard to their combined effect.

[11]       Further, it is of no moment that the respondent ultimately did not rely on the Termination for Cause provision. The court is obliged to determine the enforceability of the termination provisions as at the time the agreement was executed; non-reliance on the illegal provision is irrelevant.

[12]       The mischief associated with an illegal provision is readily identified. Where an employer does not rely on an illegal termination clause, it may nonetheless gain the benefit of the illegal clause. For example, an employee who is not familiar with their rights under the ESA, and who signs a contract that includes unenforceable termination for cause provisions, may incorrectly believe they must behave in accordance with these unenforceable provisions in order to avoid termination for cause. If an employee strives to comply with these overreaching provisions, then his or her employer may benefit from these illegal provisions even if the employee is eventually terminated without cause on terms otherwise compliant with the ESA.  

Having lost that argument, the Defendant tried to rely on a sever ability clause.

Nope, says the Court.

14]       We decline to apply this clause to termination provisions that purport to contract out of the provisions of the ESA. A severability clause cannot have any effect on clauses of a contract that have been made void by statute: North v. Metaswitch Networks Corporation, 2017 ONCA 790, 417 D.L.R. (4th) 429, at para.

44. Having concluded that the Termination for Cause provision and the Termination of Employment with Notice provision are to be understood together, the severability clause cannot apply to sever the offending portion of the termination provisions.  

This case will have a monumental effect because almost every  termination clause that that I have ever read has the typical just cause clause.

Moreover this will not just affect ESA termination clauses but every  single termination provision in Ontario. In other words, even if the termination provision said you get 3 weeks per year  of service with a maximum of 52 weeks, but it also had the just cause clause, the employee would be entitled to common law reasonable notice.