Court Confirms That Under the Unjust Dismissal Section of the Canada Labour Code the Arbitrator Can Order Reinstatement or Compensation in Lieu:

In Hussey v Bell Mobility ( 2022 FCA 95) Justice Pelletier was reviewing the decision of a Unjust Dismissal Adjudicator who, having found that the employee was unjustly dismissed, refused to reinstate her as he was not satisfied that given the employee’s past actions and her lack of remorse and self reflection, that there existed the grounds for a viable continuing employment relationship.

In lieu of reinstatement, he ordered compensation of 8 months notice ( she had 7 years employment ) plus another 4 months compensation for losing the protection of secure employment.

The Federal Court of Appeal upheld the decision of the adjudicator in spite of the employee’s argument that she should have been reinstated as set out by the SCC in Wilson v Atomic Energy.

My Comments:

As a labour arbitrator ( I am not just a mediator) this approach has been around forever in the unionized context. Reinstatement is the default remedy but there are situations where although the employer did not have just cause, the evidence is clear that to put the grievor back into the workplace would be a disaster because of issues relating to the grievor. If the difficulty of returning the employee is the fault of the employer or other employees, then that is not a reason to deny reinstatement as otherwise you would be rewarding the wrongdoer.

The other interesting part of this decision is the math on how the adjudicator calculated the compensation. The adjudicator found that reasonable notice was 8 months and then added 4 more months for the loss of job security.

So it seems that the formula for compensation in lieu of reinstatement could be expressed as follows:

Reasonable Notice X 1.5 = Compensation in Lieu of Reinstatement.

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OCA Rules on Notice Periods for Employees Who are Rehired After a CCAA Reorganization.

In Antchipalovskaia v. Guestlogix Inc., 2022 ONCA 454 Justice Favreau had a fact situation as follows:

The plaintiff worked for the Defendant from 2011 to 2019 at which time the Defendant obtained creditor protection under the Companies’ Creditors Arrangement Act. As a result of the CCAA proceeding the Plaintiffs employment was terminated and she became a creditor with regards to her severance entitlement. She ended up receiving 72% of her ESA entitlement. The court order under the CCAA contained a release of all claims upon payment to the creditor.

She was immediately rehired by the same Defendant. There was no share or asset sale as the owners simply worked their way out under the CCAA order. The new contract did make it clear that for all employment related purposes her new start date was 2019 and not 2011.

About 2.75 years later she was terminated without cause and was entitled to reasonable notice.

The trial judge considered her employment continuous both under the ESA and the common law. and awarded her 12 months.

The Court of Appeal said even though under the ESA this is true this is not the same under the common law. Her employment came to an end in 2016. She received some termination pay and most importantly she released all her claims by virtue of the CCAA court order.

However, in assessing the common law notice period the Court indicated that they can take into account the prior years of service as this provided a benefit to the Defendant that they would not have had if they had hired a new person off the street.

The Court of Appeal awarded 7 months notice for a 2.5 year Senior Business Analyst.

My Comments:
This case continues what I think is a unnecessary and unfair distinction between the manner in which companies are bought and sold and its effect on employees.
Simply put, if the company is sold by way of a share purchase, then there is continuity of employment because the employer has not changed ( the same corporation) as only the shareholders have changed.
However if the assets of the company are sold to a different legal entity, then the employee’s employment is terminated and, if done right, the new employer need not recognize the prior service, except for ESA purposes.
This can have a profound effect on an employee’s termination rights.
Imagine this situation.
Employee A and B work for ABC Corp, which has two divisions, Alpha and Beta. They have both been there 20 years and are both managers making the same money. Both employees are in their mid 50’s. A works for the Alpha Division and B works for Beta.
ABC decides to sell Alpha to Newco and, based on tax advice, it is done as a share sale.
ABC decides to also sell Beta to Newco but this  time, again for tax planning purposes, the sale is an asset sale.
Two years later, Newco terminates both A and B without cause.
A  gets his ESA entitlement of 30 weeks and little or no common law notice above that because he has  been employed by Newco for only 2 years.
Lucky B is now a 22 year employee of Newco and gets around 20 months notice.
Why the difference?
Simply because the two companies decided to arrange the two transactions differently, of course without the input or the knowledge of the employees. In fact the internal announcement to the employees at the time referred to both transactions simply as a “sale”.
Does this strike anyone as fair?

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Court Uses Oppression Remedy to Get to Successor Employer and Shareholders:

In Wisser v CEM International Management Consultants Ltd, 2022 ABQB 414 Justice Hollins had to determine who was liable to pay the wrongful dismissal damages of 18 months. Here is what happened.

Shortly after terminating the Plaintiff and getting sued by him, the two shareholders stopped taking buisness under the original company. They incorporated a new company , sold the assets of the old company to their new company and carried on essentially the same business as before, using the same directors and shareholders and even using the same trade name.

Using the oppression remedy analysis, the court found that both the successor corporations and the directors/ shareholders were liable to pay the full judgement.

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” 60 Days or More Written Notice” Means Reasonable Notice with a Floor of 60 Days not a Ceiling of 60 Days:

In Bryant v Parkland School Division, 2022 ABCA 220 ,the Justices considered the meaning of the following termination clause:

“This contract may be terminated by the Employee by giving to the Board thirty (30) days or more prior written notice, and by the Board upon giving the Employee sixty (60) days or more written notice.”

The trial judge said that this gave the Employer a discretion but not an obligation to give more than 60 days notice.

The Court of Appeal thought otherwise. Here is what they said :

[15] The starting point, then, is that there is a presumption of an implied term requiring the employer to provide reasonable common law notice on dismissal. Only where the employment contract unambiguously limits or removes that right will the presumption be rebutted, and the implied term ousted. The chambers judge did not begin his analysis with these principles at the forefront.

[16] When these interpretive principles are properly applied, it is clear the clause does not unambiguously limit the employees’ right to common law reasonable notice. The clause does not clearly fix the employees’ notice entitlement. It does not impose an upper limit on the amount of notice an employee is entitled to receive. It does not suggest that 60 days is the maximum notice to which an employee is entitled. To the contrary, it explicitly provides that an employee can be entitled to more notice. The inclusion of the words “or more” recognizes a longer notice period as a realistic possibility.

[17] The chambers judge noted that “if the contract contained only the words ‘60 days’ it would be abundantly clear that [the employer] had fixed its notice at 60 days”. We agree. Such languagewould have been clear and unambiguous. But that is not what the clause says. The chambers judge concluded the employer had given itself the discretion to decide the amount of notice owing to an employee. That seems a questionable conclusion. If that was intended the employer could have written the contract to clearly say so. Another, and more reasonable, interpretation is that the employer intended the notice period to be in accordance with common law standards, subject to a minimum notice period of 60 days.

[18] The key point is that the clause is not sufficiently clear, unequivocal and unambiguous to remove or limit the presumed common law right of the employees to reasonable notice. Thereading more favourable to the employee must prevail.

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One Day Summary Judgement Motion Awards $28,000 in Costs to the Winning Plaintiff:

In Sandham v Diamond Estates Wines & Spirits Ltd ( 2022 ONSC 3670 ), Justice MacNeil had previously awarded $208,448 to the plaintiff in a wrongful dismissal action.

The Plaintiff beat their Rule 49 offer and was thus entitled to both partial indemnity costs up the the date of their offer and substantial indemnity costs thereafter.

The Plaintiff asked for $34,000. The Court awarded $28,000 saying there was some duplication of work between the senior lawyer and the two juniors who worked on the file.

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Notice Period Reduced from 14 to 5 Months due to Dismal Failure to Mitigate :

In Patel v Crimp Circuit ( not on CanLii) Ontario Small Claims Court Judge BOCCI initially awarded 14 months notice to a 54 year old Quality Assurance Inspector with 14 years service making $32,000/year.

However the notice period was drastically reduced to only 5 months because of the following;

1. Although the last time the Plaintiff had worked in the health care industry was 15 years ago in India, he only applied to these types of jobs.

2. The company that purchased his former employer offered him the same job a few months later but he never even contacted them.

3. Defence counsel gave the plaintiff 6 job openings in the same industry as the defendant, but the Plaintiff did not pursue any of them. In fact he never sought any job in the only field in which he had Canadian experience.

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Ontario Court of Appeal Rules That Sophistication of Parties Does Not Validate a Termination Clause which Breaches the ESA.

In Rahman v. Cannon Design Architecture Inc., 2022 ONCA 451 the Court of Appeal unanimously overturned a decision of Justice Dunphy in which he found that because the Plaintiff was a sophisticated individual who had legal advice when she signed the agreement an otherwise invalid termination clause was enforceable.

The Court of Appeal thought otherwise:

[24] In my view, the motion judge erred in law when he allowed considerations of Ms. Rahman’s sophistication and access to independent legal advice, coupled with the parties’ subjective intention to not contravene the ESA, to override the plain language in the termination provisions in the Employment Contracts. By allowing subjective considerations to distort and override the wording of those provisions, the motion judge committed an extricable error of law reviewable on a correctness standard: Amberber v. IBM Canada Ltd., 2018 ONCA 571, 424 D.L.R. (4th) 169, at para. 65. It is the wording of a termination provision which determines whether it contravenes the ESA – even compliance with ESA obligations on termination does not have the effect of saving a termination provision that violates the ESA: Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, 134 O.R. (3d) 481, at paras. 43-44.

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Judges Reduces Notice Period For Failing to Look for a Job in Same Field That Plaintiff Spent 25 Years In and Then Discounts Go Forward Damages by a Further 15%:

In Okano v. Cathay Pacific Airways ( 2022 BCSC 881) Justice Weatherill had a situation where the following events occurred regarding mitigation.

1. Plaintiff is given working notice of two months so that she can shut down the department she managed. She does not look for a job in this period.
2. For two months after final day of work she also does not look for a job as she says she is depressed.
3. Then she takes career coaching for 3 months because she refuses to look for a job in the airline industry, the only area she has ever worked in .
4. She then applies for 50 non airline jobs, with no success.

The Judge made the following rulings:

1. It was reasonable for her not to look for a job in the 2 month working notice period as she was assisting in the transfer of the Canadian jobs to the Philippines.

2. It was not reasonable for her to not apply for airline jobs as ” it was incumbent upon the plaintiff to explore available positions in the very industry in which she had spent her entire working life.”

3. The judge knocked 3 months off a 24 month notice period and then reduced damages by a future 15% discount on the amount owing from the date of the hearing to the end of the 21 month notice period as the judge felt ” that there is a real and substantial possibility that she will find a job commensurate with her qualifications and experience at some point during the balance of the notice period.”
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Motion Seeking Substitution of Person to be Examined Fails. Cost Award of $45,000 .

In  Nezhat-Mahal v. Cosmetica Laboratories Inc., 2022 ONSC 3143,  Justice Vermette determined that the partial indemnity costs awarded to the Plaintiff in a motion brought by the Defendant to substitute  a Vice President for the President for examination for discovery was $45,000 where the Plaintiff claimed substantial indemnity costs of $84,621 and the Defendant said that their own partial indemnity costs were $39,648.

Do the math :

1. The Plaintiff apparently spent $84,621 as this is what they were asking for as substantial indemnity costs.
2. The Defendant spent at least $39,648 as this was only their partial indemnity costs. There real cost would probably be much higher.

These parties spent at least $124,000 on a two hour motion with a half day of cross examination, and minimal affidavits and documents.

I said it before and I say it again.

You gotta love the law.

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CLC Arbitrator Rules on What He Can and Cannot Do in Considering Issues Not Brought Forward by the Parties :

In Lopez v Bank of Nova Scotia ( File YM2727-15590 Arbitrator Bendal responded to the Complainant’s position that he should recuse himself from the case because on a number of occasions he raised legal issues and did legal research on issues that were not raised by either party.

There were two main issues that the Arbitrator raised himself, conducted research on and then asked for the parties submissions. These issues were :

1) Could he consider an offer of reinstatement made in the context of a settlement discussion between the lawyers as a factor in the arbitration. He ruled he could .

2) The reinstatement offer which the Complainant refused contained certain conditions which the Arbitrator believed were not enforceable and thus should the Complainant have agreed to these conditions and then argue before the Arbitrator that they were of no force and effect. He has yet to rule on this issue because the Complainant brought a motion for recusal.

In lengthy reasons, he ruled that he was correct in his rulings and did not show any bias.

The case now continues.

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