26 Month Notice Period Explains Special Circumstances:

In Currie v Nylene Canada ( 2021 ONSC 1922) Justice Smith had a situation where it was found that there were special circumstances which justified going over the general rule that 24 months notice was the maximum that a Plaintiff could recover.

This is what the Judge said about why this case had exceptional circumstances :

84      The Ontario Court of Appeal has recently held in Dawe that exceptional circumstances will be required in order to support a notice period that exceeds 24 months. I acknowledge that the cases relied upon Ms. Currie predate Dawe but there are worthy of consideration because they share some similarities to the case at bar. When combining and applying all of the factors to Ms. Currie’s unique situation, I am of the opinion that taken as a whole, it supports the conclusion that there are exceptional circumstances:
a. Ms. Currie left high school to start working at BASF as a temporary twisting operator, earning $4.50 per hour. She secured this job through her father who had worked there for over 30 years until his retirement in 1999. She was eventually promoted to a supervisory position and she has faithfully remained with one employer (Nylene and its successor employers) for 39 years. Her entire working life has been dedicated to working at the Arnprior plant. She has known nothing else.
b. At the time of termination, Ms. Currie was 58 years old. She was in her twilight working years, closing in on the end of her career.
c. She has worked and developed skills in a very specialized field (fiber production operation). Finding similar employment, as described later in this decision, has not been easy. Ms. Currie has made diligent efforts to mitigate and attempt to gain basic computer skills. That said, I am not convinced that she will succeed in securing alternative employment, by no fault of her own.
d. Since Ms. Currie entered the workforce in 1979, the work landscape has evolved and changed significantly. Ms. Currie’s experience has been limited to one employer (Nylene and its predecessors), in one type of environment (specialized manufacturing job), which makes it very difficult to transfer her skills to a new employer.
e. Given Ms. Currie’s age, limited education and skills set, the termination was equivalent to a forced retirement. She must compete with people that are much younger than her and that have a different set of skills that may be required such as advanced computer knowledge. She is not well equipped to effectively compete in today’s market or secure comparable employment.
85      Considering Ms. Currie’s unique situation and combining all of the factors set out in Bardal, I conclude that Ms. Currie has demonstrated the existence of exceptional circumstances.

 

My Comments :

The Court of Appeal in Dawe was well aware of the previous cases involving notice periods of over 24 months. By setting the ceiling at 24 months except for exceptional circumstances, they were implicitly overruling those same cases that the Plaintiff was relying upon in this case.

Moreover every one of the factors that this judge sees as exceptional is already taken into account in the Bardal Factors. How can a factor that goes into the Bardal analysis be seen also as an exceptional circumstance? Should not these exceptional circumstances be limited something else that affected the Plaintiff’s ability to obtain employment ? For instance, if an employer alleged just cause without reasonable grounds or where the employer took active steps to obstruct the Plaintiff’s re-employment.

I have been observing the issue of how to determine notice periods all my entire professional career. I had the naive hope that over time the issue of predicting notice periods would become more  certain to both employers and  employees and therefore avoid unnecessary lawsuits over notice. This case puts us back to the pre Dawe days where there was  even less certainty in a already uncertain world.

I feel that judges often do not have a sense on what goes on in the world outside their courtrooms. We all know that 99% of these cases are settled. Settlements are easier to achieve when there is more predictability in the outcome. Since Dawe, both employers and employees knew that 24 months was the realistic maximum and that it was quite easy to hit that  mark. These two factors has made long service cases easier to settle. Now we will be  back to Plaintiffs claiming 30 months  notice and Defendants responding with 16 months.

This is not a good thing.

20% Reduction in Compensation in Response To COVID Pandemic = Constructive Dismissal :

In Kosteckyj v Paramount Resources Ltd, 2021 ABQB 225, Justice Sidell found that a 20% reduction in the total compensation of a 6 year Engineer constituted a constructive dismissal even though it was. company wide compensation initiative because of the COVID situation and its affect on the company . This 47 year old Plaintiff was awarded 9 months notice.

Here is what the judge said :

[41] Paramount relies on Doran v Ontario Power Generation Inc, [2007] OJ No 4476, for the proposition that a compensation reduction of 14% to 17% is a not a breach that would give rise to a finding of constructive dismissal. Here the salary reduction and RRSP contribution nsuspension were collectively a 16% reduction. In addition, the 2019 Bonus Program was subject to “delay/cancelation”. In the previous two years, Ms. Kosteckyj had earned a cash bonus $1,000 and $6,267, plus restricted share units benefits (“RSUs”) which Paramount says were “worth a nominal value of $2,000 and $12,333” because at the vesting date the value was substantiallymreduced. Using her pre-April 1, 2020 salary of $154,800, the 16% reduction, together with the loss of a cash bonus of $1,000, would result in a 16.65% compensation reduction. The 16% reduction, together with the loss of a cash bonus of $6,267, would result in a total reduction of 20%. The effect of the Cost Reduction Program significantly affected Ms. Kosteckyj’s compensation in the range of 16.65% to 20%, without considering any value for the RSUs. I find that the implementation of the Cost Reduction Program resulted in the constructive dismissal of Ms. Kosteckyj.

 

For a copy of this case email me at barryfisher@rogers.com
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Improper to Plead Settlement Offers in Pleadings :

In Kosteckyj v Paramount Resources Ltd, (2021 ABQB 225) Justice Sidnell had this to say about a defendant’s Statement of Defence which plead that the Plaintiff wrongfully turned down their reasonable offer to settle :

[10] Disclosing a settlement offer in a pleading undermines judicial impartially and can encroach on the fair and just system of judicial determination that we rely upon. While it may be appropriate to raise the existence of a settlement offer after a decision has been made, and in the context of the costs to be awarded, it cannot be disclosed in the pleadings or else where in the litigation before a decision has been rendered. When the defendant intentionally discloses it rebuffed settlement offer, it must be presumed that the defendant proposes an inference that the plaintiff, in not accepting the settlement offer, did not act reasonably. This type of inference has no place in our adversarial system.

[11] After termination of employment, an employee is not required to accept an employer’s settlement offer to mitigate the employee’s damages when that offer requires a release of the claim against the employee, as it did in this case. A defendant cannot argue that a rejection of a settlement offer was unreasonable until after the court makes its determination as to what are reasonable damages in lieu of notice. That is why, in relation to formal offers to settle, Rule 4.2 is clear that the formal offer to settle is to be “to be kept confidential and not disclosed to the Court” until accepted or “the remedy for the claim has been decided”.

[12] It is important for the proper functioning of our independent and impartial legal system to maintain the confidentiality of all settlement offers in litigation until the merits of the case are determined. Disclosing a rejected settlement offer may be appropriate on an application for costs.

Indeed, Rule 10.33(2)(h) contemplates that the court may consider “any offer of settlement made”, regardless of whether or not the offer of settlement is a formal offer of settlement under the Alberta Rules of Court. Disclosing a settlement agreed to may also be appropriate where a party seeks to enforce the terms of that agreement or relies on other exceptions to settlement privilege: Bellatrix Exploration Ltd v Penn West Petroleum Ltd, 2013 ABCA 10, para 29.

My Comments:

This restatement of a basic principle is welcomed. The Courts’ job is to assess what the reasonable notice period is , not whether the employer or the employee made reasonable offers. Similarly their is a line of “Ballpark Justice ” cases from long ago that also stated the Courts job is to assess the proper notice period , not whether the notice provided by the Employer was reasonable .

This often arises in my mediations when I have to explain to a defendant that the only thing a Court will see is that you only paid the ESA minimums and not that you offered 18 months if the Plaintiff signed a release. If the Employer wants to get credit for their reasonable offer, then they must unilaterally pay out that amount without the requirement of a release. If this is done upfront, then any Plaintiff’s lawyer who is on a contingency fee will think twice before taking on a case with little uphill potential .

If you wish a copy of this case, contact me at barryfisher@rogers.com

 

Non Lawyers in Manitoba Cannot Represent Parties in a CLC Unjust Dismissal Proceeding:

In Tacan v Sioux Valley Dakota Nation ( 2021 CarswellNat 507) Adjudicator Palamar held that in Manitoba only lawyers can represent parties in Unjust Dismissal hearings. He found that to allow non lawyers to do so would amount to the unauthorized practice of law. This is so even though the booklet put out by the Ministry says that a party may be represented by an ” agent”.

Query : In Ontario, paralegals are a regulated profession under the jurisdiction of the Law Society of Ontario. Can a licensed paralegal represent a client in these proceedings? If anyone has the answer, please post it and provide the explanation.

Restrictive Covenant Fails in Part Because of a Too Broad Definition of Customer :

In Labrador Recycling v Folino ( 2120 ONSC 2195) Akbarali J. commented on the a restrictive covenant clause in the metal industry. In finding that one clause in particular was unreasonable , the Judge stated as follows:

It purports to prohibit Mr. Folino from soliciting and accepting business from any of the plaintiff’s current or prospective customers. It defines a “current or prospective customer of the company” as “an individual or entity with which [Mr. Folino] personally had direct or indirect contact, or access to conduct confidential information about, during the last two years of [his employment].” Notably, the definition of customer or potential customer of the company includes no relationship between the customer or potential customer and the plaintiff. For example, it does not say that a customer or potential customer is someone with whom Mr. Folino had contact in connection with his employment duties. The only limitation on who is customer or potential customer when it comes to someone with whom Mr. Folino had contact is that the contact take place within the last two years of his employment. As drafted, his drycleaner would qualify.

I love that comment. But there was more. Here the Judge lists in clear terms why this clause is unenforceable :

[25]In my view, the plaintiff has not established a strong prima faciecase that the clause is reasonable:

a.Given the evidence that deals come together in the aluminum scrap industry within hours, a one-year temporal limit is unreasonably long. The plaintiffagrees the point of a non-solicitation or non-competition period is to allow the employer to  solidify its relationships with its customers after the departure of the employee. Here, the plaintiff will have frequent contact with its vendors and purchasers due to the nature of the industry and so would not require a year to solidify any relationships that require solidifying.

b.There is no geographic limit set out in the clause. On its own, in a non-solicitation clause, no geographic limit may be reasonable if the customers are reasonably defined and identifiable. In this case, the definition current or prospective customers that the restrictive covenant purports to preventMr. Folino from accepting work from casts a very broad net and is imprecise.

c.The terms ofthe clause are not clear and unambiguous.For example, the clause restricts Mr. Folino from accepting work from a person he may never have had contact with but in respect of whom he had access to confidential information.It is not clear how he would identify such people.The clause also purports to restrictMr. Folino from soliciting or accepting work from someone with whom hehas hadindirect contact over the past two years. It is not clear what“indirect contact”means.

d.Moreover, in prohibiting Mr. Folino from soliciting or accepting work from anyone with whom he personally had direct contact during the last two years of his employment, the clause purports to restrict him from accepting work from his personal contacts who may have had nothing to do with the plaintiff at any time.The plaintiff says this is ridiculous but asI have noted, the definition in the agreement of customer or potential customer of the company does link that person in any way to the company or Mr. Folino’s employment duties.

My Comments:

In the olden days when I was a litigating lawyer, if I represented a client who was faced with one of these clauses, I would have the client send a letter to his former employer as follows:

” Dear Sir:

In your recent letter you reminded me that under the terms of my employment contract I am to have no contact with any of the Company’s customers for 12 months following my departure. Without admitting the enforceability of such a provision, I want to make sure that I do not breach this provision. I would therefore appreciate it if you could send me a complete list of all of the Company’s customers so that I may know exactly whom I may and whom I may not approach in the next 12 months . ”

Of course the former employer would refuse to give this information and therefore my client would approach whoever he or she wanted.

Another thing to remember, since injunctive relief is an equitable concept, the person requesting the injunction must come to Court with ” clean hands”.

If the ex-employee was terminated, then he or she presumably has a wrongful dismissal action against the ex employer seeking the relief. It seems clear that an employer who has breached their obligation to provide reasonable notice of termination does not come with ” clean hands “.

Third point. There is case law to say that the existence of a clause like this has an effect on the notice period. The reason for this is that if the purpose of the notice period is to allow the plaintiff to find employment in their chosen field , then disallowing a person from going after some or all  jobs in his or her chosen field, means that  they will need more time to get such a job.  Thus the notice period should be extended to take into account this additional barrier to employment.

Interestingly, the contracts with the longest non compete or non solicitation periods also tend to have the shortest notice periods for termination.