Two Court Decisions on Common Employer: Plaintiffs Lose Both:

The issue of a common employer usually arises when the entity that is the obvious employer ( that is the one whose name is on the paycheque), is insolvent but a related company has assets to satisfy a judgement.

  1. In Freeman v PetroFrontier Corp ( 2017 ABQB 340 ) Justice Neufeld had a situation where the Plaintiff had two separate employment contracts with two interrelated companies, each responsible for 1/2 of her combined salary.

This is what the Judge said :

47      The Plaintiff contends that in the circumstances of this case, Rodinia and PetroFrontier were common employers due to factors such as: a shared corporate history; shared office and equipment; similarity of directors; and shared executives and employees.
48      PetroFrontier argues that the common employer doctrine does not apply in this case. While acknowledging the commonalities relied upon by the Plaintiff, it says that this is not a case in which the true employer of Ms. Freeman is in doubt. Nor is it a case in which a business entity has continued to shield itself from liability to employees through the use of an asset-less “paymaster” company. Rather, it is a case where two separate companies have engaged in two separate businesses for the benefit of two distinct set of shareholders, and have entered into separate employment contracts.
49      I agree with PetroFrontier that the common employer doctrine does not apply in this case. There is no doubt as to who Ms. Freeman was employed by. Her employment contracts make it clear that she was employed by each company with separate terms of employment and separate confidentiality agreements executed for each. There is no need to lift the corporate veil, because it has never been let down.
50      To use the common employer doctrine to impose joint and several liability would constitute re-writing a contract that is clear on its face and that was executed in good faith. Although sympathetic to Ms. Freeman’s plight, I am not prepared to take such step.
2) In Rowland v VDC Manufacturing ( 2017 ONSC 3351) Justice Morgan had a plaintiff who first worked for HMV ( and was issued a T4 )  and then after 6 months was transferred to a related company , VDC, who from then on issued T4’s under its name.
When the Plaintiff did work for HMV,  VDC sent an invoice to HMV. The companies handled different ends of the business, one did engineering, one did manufacturing and another did the marketing.
 These are the comments that the judge made about why he held that the companies were not common employers:
14      The Plaintiff has not succeeded in establishing that there was anything like “a highly integrated or seamless group of companies which together operated” what was effectively one business and one employer: Downtown Eatery, at para 34. An example of such integration would be where one company in the group is the ‘paymaster’ for the others such that it is impossible to say which one is the real employer: Ibid., at para 33. On the evidentiary record before me, it cannot be said that the Defendants “apparently compete for the role of employer”: Sinclair, at 181.
I note that just as the Defendants market themselves on their website as a “Group of Companies”, the Plaintiff has marketed himself on his C.V. as working for a single company, AVL. In my view, neither of these marketing efforts is significant, as they are not aimed at the issue at hand. The Defendants’ website is targeted at customers, and is not designed to send a message to the Plaintiff or other employees with respect to the corporate identity of their employer. Similarly, the Plaintiff’s C.V. is targeted at prospective employers, and is not designed to make a point about the corporate or group identity of his former employer. These reciprocal marketing efforts are just that — marketing efforts — and should not be taken to reflect the views of either party with respect to the employment relationship.
11      It is significant that the Defendants have consistently kept a formal distance from each other not just in their corporate legal structures, but in their dealings with the Plaintiff. Whereas the Plaintiff worked for one of the Defendant companies, HMW, for the first 6 months after being hired, that company formally transferred him to AVL, where he continued to work for the rest of his 9 years on the job. Likewise, the Plaintiff himself has conceded that the companies issued invoices and Purchase Orders to each other for services he rendered to companies other than his formal employer, AVL. This documented separation between the Defendant corporations in terms of their responsibility for the Plaintiff militates against their having common control over the Plaintiff as employee: Sinclair v. Dover Engineering Services Ltd., [1987] B.C.J. No. 60 (B.C. S.C.), at 181.
12      In order to establish that two or more legal entities are his common employer, the Plaintiff must demonstrate that he had a reasonable expectation that the Defendants were each a party to his employment contract. “[M]ere allegation of corporate affiliation simpliciter is not sufficient to bring the common employer doctrine into play . . . Any plaintiff invoking the common employer doctrine must be able to demonstrate on the particular facts of the case that he or she held a reasonable expectation in the circumstances that each of the alleged common employers were parties to the employment arrangement governing that particular employee at all relevant times”: Mazza v. Ornge Corporate Services Inc., 2015 ONSC 7785 (Ont. S.C.J.), at paras 85-86, aff’d 2016 ONCA 753 (Ont. C.A.).
13      Where the employee is aware that he was employed by a single employer, the fact of interlocking shareholders with his formal employer does not itself establish a common employer: Dumbrell v. Regional Group of Cos. (2007), 85 O.R. (3d) 616 (Ont. C.A.), at para 83. The onus is on the Plaintiff to demonstrate that there was “effective control over the employee” by all of the alleged common employer companies: Downtown Eatery (1993) Ltd. v. Ontario (2001), 54 O.R. (3d) 161 (Ont. C.A.), at para 33. There must be evidence of an actual “intention to create an employer/employee relationship between the individual and the respective corporations within the group”: Gray v. Standard Trustco Ltd. (1994), 8 C.C.E.L. (2d) 46 (Ont. Bktcy.).
Unfortunately this Judge did not refer to a recent similar case on the Ontario Court of Appeal  entitled King v. 1416088 Ontario Ltd. (Danbury Industrial), 2015 ONCA 312, where similar facts involving interlocking ownership, common marketing and working for more than one company was found to be sufficient to uphold a finding of common employer.
The Rowland case  in particular would seem to impose a very high burden on an employee to be able to prove the issue of common ownership.
Think of this situation. Vince, the owner of 4 related companies operating out of the same site, tells the accountant, who is only on the payroll of one of the 4 companies, to go to the bank with a envelope of checks to be deposited . The envelope contains deposits for all 4 related companies. Can the accountant open up the envelope , extract only those checks that relate to the company that he gets his T4 from, and refuse to deposit the rest because that is not his job?
If the answer is no, that would be insubordination, then how it can he that he is not the employee of all four companies?
The Defendant is the one who sets up the corporate structure. The employee has no input into this process, nor can he object to be ” formally transferred” to another related  corporate entity. Why then should the employee get the short end of the stick when the owner decides to bankrupt one company and keep the other alive ?

Plaintiff Wins Summary Judgement Motion and Gets $24,576 for Claim and $35,000 for Costs.

In Thambapillai v Labrash Security Services ( 2017 ONSC 3299) Justice Goldstein found that a 72 year old security guard with 12 years service was entitled to 8.6 months notice and $7,500 for mental distress.

In the cost assessment, the Plaintiff beat his Rule 49 offer . Moreover the Judge noted that the Defendant refused to have the case mediated.

The result was a $35,000 substantial indemnity cost award, more than the amount awarded at trial for the claim. The judge had this to say about the defendant’s conduct:

” I found that the Defendant treated the Plaintiff – an elderly immigrant of very limited means and sophistication – unfairly. The Defendants then played hardball litigation. They are entitled to do that and it is not necessarily unethical or immoral. But it is expensive. When I take into account the offer to settle and the manner in which the case was litigated, I agree that $35,000.00 in substantial indemnity costs, all-inclusive, payable to the Plaintiff, is appropriate. ”

The Defendant submitted a cost claim for its side at 50% of the Plaintiff’s claim. We can therefore assume that they spent at least $17,500 for their own costs. Thus their total cost of this litigation would have been at least $24,576 + $35,000 + $17,500 = $77,076.

Apparently the main issue at trial was based on whether the 72 year old plaintiff was able to mitigate his damages.

That apparently was the $77,000 question.

Gee, I wonder what the outcome and cost would have been if the Defendant had agreed with the Plaintiff’s proposal to mediate.

Unfortunately Rule 24 .1 ( Mandatory Mediation ) and the relevant Practice Directions  do not require a mediation before a motion for summary judgement, only before a trial .

Fixing this loophole in the Rules  would go along way to reducing litigation costs, at least in the three jurisdictions that have Mandatory Mediation, namely Toronto, Ottawa and Windsor.

Aggravated Damages of $75,000 for Baseless Accusations of Just Cause:

In Lalonde v Sena Solid Waste Holdings ( 2017 ABQB 374 ) Justice Gill awarded $75,000 in aggravated damages to a 57 year old Millwright with 4 years service. He was also awarded 6 months notice .

This was the reasoning behind this award ;

2      In this case, I am satisfied that the actions of the Defendant amount to a breach of the obligation of good faith and fair dealing and support an award of aggravated damages. Those actions include the following:
1) The Plaintiff was summarily terminated after being accused of serious safety violations and insubordination relating to alleged retention of salvageable equipment and scrap metal and failure to supervise an unassigned contract worker.
2) The Defendant maintained these allegations which are described in the Statement of Defence as “serious safety violations and insubordination” from the date of suspension in June, 2012 until shortly before trial in May 2017 at which time they withdrew those allegations.
3) Two days after the Plaintiff’s suspension, without regard for his explanation and without giving him an opportunity to fully explain the alleged misconduct, a decision was made to terminate his employment on the 15th of June. An internal memo from the Maintenance Manager, Mr. Goegan, to the HR Manager, Ms. Burr, shows a decision had been made to terminate the Plaintiff; this despite not having any response from the Plaintiff as to the alleged breaches of conduct. The Defendant ignored a letter from an employee (Larry Dakin) which supported the Plaintiff’s contention that he had done nothing wrong in relation to the alleged lack of supervision of a contract employee. The evidence supports the conclusion that the internal investigation was essentially a sham.
4) The nature of the allegation concerning the mishandling of salvageable equipment and scrap metal implied some form of illegal conduct or dishonesty on the part of the Plaintiff. This suggestion can be found in the Statement of Defence where the Defendant outlined in detail the alleged cause for termination using such wording as “the plaintiff’s serious safety violations and insubordination.” The Statement of Defence suggested that the dismissal for cause included “unsatisfactory performance, dishonesty, insubordination, serious misconduct.” In the Statement of Defence the Plaintiff’s misconduct is described as constituting “serious misconduct, insubordination and conduct constituting cause.” It is stated that “the Plaintiff’s misconduct was such that it interfered with and prejudiced the safe and proper conduct of the SHTC thereby, justifying cause for immediate dismissal.”
73      Other examples include paragraph 36 in the Statement of Defence which indicates that the Defendant “could not justify continued employment of the Plaintiff given his cavalier attitude toward safety and clear lack of respect for his Supervisor’s authority” [Emphasis added].
74      Paragraph 37 states:
The conduct of the Plaintiff constitutes:
a) Breach of express or implied terms of the Plaintiff’s Employment Agreement;
b) Breach of express or implied terms of the Plaintiff’s Agreement to abide and be bound by SHTC’s Safety Manual and its Safety Policies and Procedures;
c) Disregard for his safety, the safety of his coworkers and the community;
d) Insubordination; and;
e) Incompetence or negligence.
75      I note also that there was evidence of the impact that the actions of the Defendant, before and at the time of dismissal, has had on the Plaintiff. I note that while the evidence from the Plaintiff’s wife was in letter form it was not contradicted and was supported in substance by the sworn evidence of the Plaintiff. As already discussed, the letter describes how the termination has greatly affected their relationship and how the Plaintiff is now depressed, miserable and uninterested in activities and relationships with family members that he previously relished. She explains the economic, physical and mental stress that he had gone through. In addition, his reputation has suffered. I note also, that the Plaintiff lives in a small town, and the Defendant was one of the larger employers located close to the small community where the Plaintiff lived and it is reasonable to infer that the information concerning his termination and the ongoing allegations may have had an effect on both his reputation in the community and also his ability to obtain similar work due to the rumors surrounding his termination.
76      I note also that the Plaintiff’s EI benefits were delayed as a result of the allegations of cause made by the Defendant at the time of the dismissal.
77      In summary, I am satisfied that the Defendant’s conduct during the course of dismissal was unfair, breached the requirement of good faith and the expectation that both parties to the contract had that the employer would act in good faith in the manner of dismissal.
78      The Plaintiff has proven that the manner of dismissal caused mental distress, particularly by the Defendant’s actions in attacking the Plaintiff’s reputation at the time of dismissal and representing that there was sufficient cause for dismissal for an extended period of time.
79      The Plaintiff seeks aggravated damages in the amount of $125,000.00. Reviewing the case law relied upon by the Plaintiff, including Karmel v. Calgary Jewish Academy, 2015 ABQB 731 (Alta. Q.B.) [“Karmel”] and Boucher v. Wal-Mart Canada Corp., 2014 ONCA 419 (Ont. C.A.) [“Boucher”], I find the amounts awarded in those cases to be inappropriate for the facts of this case. In Karmel and Boucher the actions of the employers were much more prolonged, serious and arguably vindictive, thus in those cases the conduct supported a claim of $200,000 in aggravated damages.
80      In this case there was abusive conduct leading up to the dismissal, inappropriate and false reasons for dismissal and an inadequate and unfair investigation. The plaintiff did not receive procedural fairness. I would characterize the actions of the Defendant in this case to be less serious and egregious than in both Boucher and Karmel thereby warranting lower damages. Although the Defendants actions appear not to have been vindictive, they were intentional, unnecessarily prolonged and caused the Plaintiff significant mental distress. The wrongful allegations were maintained for almost 5 years causing the Plaintiff considerable mental distress during and after his sudden termination. He was publicly humiliated at the time of dismissal and the humiliation continued as rumors concerning the reasons he was dismissed continued to circulate. Consequently substantial aggravated damages are justified for the Defendants failure to comply with their duty to act in good faith.
81      It is difficult to quantify an award of aggravated damages. No case is identical or directly applicable. The following cases displayed similar unfair and insensitive conduct to what occurred in this case. Doyle v. Zochem Inc., 2016 ONSC 3188 (Ont. S.C.J.), aff’d 2017 ONCA 130 (Ont. C.A.) -$60,000; Strudwick v. Applied Consumer & Clinical Evaluations Inc., 2016 ONCA 520 (Ont. C.A.) -$70,000; Zesta Engineering Ltd. v. Cloutier, 2010 ONSC 5810 (Ont. S.C.J.), additional reasons 2013 ONSC 385 (Ont. S.C.J.), reversed in part on other grounds 2014 ONCA 762 (Ont. C.A.) -$75,000; Tim Ludwig Professional Corp. v. BDO Canada LLP, 2017 ONCA 292 (Ont. C.A.) -$100,000 aggravated damages in a Partnership Context; Price v. 481530 B.C. Ltd., 2016 BCSC 1940 (B.C. S.C.) – $50,000 aggravated damages; Pate Estate v. Galway-Cavendish and Harvey (Township), 2013 ONCA 669 (Ont. C.A.) — $100,000. Taking into account the evidence in this case and the jurisprudence, I award aggravated damages in the sum of $75,000.
I like the fact that the Judge clearly articulated the reasons for finding that the employer breached their duty of good faith.
I also like the fact that the judge referred to the devastating effect of the termination on the Plaintiff’s personal life and that he accepted that evidence without the requirement of an expert medical opinion that the Plaintiff was truly depressed and upset  about the false accusations made against him.
In fact, it seems that the Judge approached the damages as if it were  a defamation claim, in which expert evidence is not required to prove damage to reputation.
This approach makes it easier and cheaper to prove moral damages.

Hired and Fired Before You Even Started Gets You 6 Weeks Pay in Lieu, Tax Free:

In Buchanan v Introjunction Ltd ( 2017 BCSC 1002) Justice Skolrood awarded 6 weeks  notice to a 27 year old Senior Software Engineer who was supposed to make $125,000 per year in this new job.

The Employer purported to ” retract” the offer of employment after it was accepted, which the Court found was a dismissal.

The employment agreement had an probationary clause , which the Defendant tried to rely upon, however the Judge rejected that argument saying as follows:

16      The defendant submits that the probation clause should be found to apply because it would be illogical for the plaintiff to have better rights before he commenced employment than once he started work, given that as of November 1, 2016, the defendant had an unfettered right to terminate the plaintiff without notice or cause.
17      I find that the defendant cannot rely on the probation clause to support its termination of the plaintiff without notice. I reach this conclusion for the following reasons.
18      First, on its face, the probation clause provides that the three month probation period commences as of the effective date of November 1, 2016. Thus, it was not in force on October 29, 2016 when the defendant retracted the Contract. Had the defendant intended to maintain a right to terminate the Contract without notice at any time after execution, it could have included a term to that effect. In DeGagne, Madam Justice Dardi similarly found that a probation clause had no application prior to the employee actually starting work (at para. 45).
19      Second, I reject the defendant’s argument that had the probation clause applied, it gave the defendant an unfettered right to terminate the plaintiff without notice or cause. The purpose of a probationary period is to permit the employer to engage in a good faith assessment of the employee’s suitability for the position in issue.
20      This point was recently confirmed by Madam Justice Morellato in Ly v. Interior Health Authority, 2017 BCSC 42 (B.C. S.C.) where she said at paras. 57-58:
[57] As addressed above, the test for dismissal in the context of probationary employment is suitability. Just cause need not be established. An employer needs only to establish that it acted in good faith in its assessment of the probationary employee’s suitability: Jadot.
[58] In determining whether an employer acted in good faith, courts have examined the process through which the employer determines whether the employee is suitable for permanent employment. While an employer is not required to give reasons for the dismissal of a probationary employee, that employer’s conduct in assessing the employee is reviewed by the court in light of various factors such as: 1) whether the probationary employee was made aware of the basis for the employer’s assessment of suitability before, or at the commencement of, employment; 2) whether the employer acted fairly and with reasonable diligence in assessing suitability; 3) whether the employee was given a reasonable opportunity to demonstrate his suitability for the position; and 4) whether the employer’s decision was based on an honest, fair and reasonable assessment of the suitability of the employee, including not only job skills and performance but also character, judgment, compatibility, and reliability: See Geller v. Sable Resources Ltd., 2012 BCSC 1861at para. 33; Ritchie; Jadot; Longshaw v. Monarch Beauty Supply Co., [1995] B.C.W.L.D. 2945 (S.C.); Rocky Credit Union Ltd. v. Higginson (1995), 27 Alta. L.R. (3d) 348 (C.A.); Jacmain v. Attorney General (Can.) et al., [1978] 2 S.C.R. 15 (S.C.C.); Gebhard v. Board of Education of the Wilkie School Division No. 59 (1986), 52 Sask. R. 272 (Q.B.).
21      Here, there was no good faith assessment by the defendant of the plaintiff’s suitability for the job for which he was hired. Suitability was not a factor at all; rather, the defendant changed its mind about its business and staffing needs. This is apparent from Mr. Nabavi’s October 29, 2016 letter to the plaintiff where he said:
This decision is due to further evaluation of our business priorities and resource needs. It, needless to say, has absolutely no reflection on you. We simply made a mistake of hiring too many front-end people.
22      While it was open to the defendant to do so, it cannot rely on the probation clause to escape its obligation to pay damages in lieu of notice.
Here is a little known tax fact. Because the Plaintiff was fired from his job before he actually started, his damages are not taxable. ( Schwartz v The Queen [1996] 1 SCR 254.

Unjust Dismissal under CLC Covers Dependant Contractors :

In an Adjudication under Part III of the Canada Labour Code entitled Dieter v Peepeekisis Cree First Nation ( unreported decision dated April 9, 2017) , Adjudicator Daniel Cameron had to determine whether or not a dependent contractor was considered a ” person ” under Section 240, which is the Unjust Dismissal part of the Code.

The term ” dependant contractor ” is found in Section 3 of the Code in Part I – Industrial Relations.

In that same section, a dependant contractor is included in the definition of “employee” for the purpose of Part I.

However there is no similar definition section under Part III, so the issue is whether a dependant contractor is also considered an employee under that section.

The adjudicator reviewed a number of previous unjust dismissal decisions, the Supreme Court decision in Wilson v Atomic Energy of Canada ( 9 2016 SCR 29) and a Hansard quote from 1978 when John Munroe , the Federal Minister of Labour introduced the Unjust Dismissal legislation .

He then concluded that as Mr. Dieter was a dependant contractor rather than a independent contractor, that he was covered by the Unjust Dismissal provisions and  thus awarded him the balance of his term under his fixed term contract, which came to 8 months or $30,000.



Signing Contract on First Day of Work OK if Employee Actually Did Not Start Real Work That Day :

In Cottrill v Utopia Day Spa and Salons ( 2017 BCSC 704) Judge Harris was faced with the issue of the validity of an employment contract which was signed on the first day of employment.

Most Courts have ruled that an employment contract containing a restrictive termination clause ( restricting the employee to only the minimum requirements upon termination contained in the Employment Standards Act ) is not enforceable if it is first introduced to the employee on or after the first day of work.

The theory behind this principle is that the deal was already made before the start of work, in that the parties agreed before the actual first day of work on the essential terms of employment, including position, start date and compensation. As this oral agreement did not have a termination clause, the law imposes a term into the agreement that the employee can only be terminated without just cause upon receiving reasonable notice of termination.

For the Employer to introduce a new term, that is a an express termination clause, requires the Employer to now provide fresh consideration, failing which the termination clause is of no effect.

In this case the employee was hired 11 years ago. The Judge described the hiring process as follows:

12      In April of 2004, the plaintiff was interviewed for a position by Ms. Fell. She was subsequently called back for a “practical interview” in a group setting, in which she and other applicants were asked to perform skincare services on staff. She later received a telephone call from Ms. Fell in which Ms. Fell told her that she had been successful and that her first day would be on May 3, 2004.
13      On the first day, she went through an orientation program, which included meeting with various representatives of the company and signing a written contract of employment.
However in deciding that the contract was still valid, this is what the Judge had to say:
13      That said, I will consider the plaintiff’s submission that the 2004 and 2014 written employment contracts do not apply to the plaintiff for lack of consideration. The plaintiff suggests that she was employed on an oral agreement, which provided for common law notice and that it was not effectively modified by the subsequent employment contracts.
114      I start with the general proposition that the standard principles of contract law apply in the employment setting. As noted by Madam Justice Dardi in DeGagne v. Williams Lake (City), 2015 BCSC 816 (B.C. S.C.):
20 The essence of any legally enforceable contract is consensus ad idem; there is no contract without the required meeting of the minds. Both parties to an alleged contract must have manifestly expressed an intention to be legally bound by the agreement and the parties must be shown to have reached consensus on the essential terms of the alleged contract. The parties must have expressed those essential terms such that “their meaning can be determined with a reasonable degree of certainty” by the courts: Frolick v. Frolick, 2007 BCSC 84 (B.C. S.C.) at para. 30.
115      The parties must therefore have reached an agreement on the essential terms for the employment contract to be enforceable.
116      Here, the plaintiff asserts that an oral employment contract was formed in the telephone call in which the plaintiff was told she was “hired”, while the company contends that Ms. Fell told the plaintiff that “she was successful in her interview and to come in for an orientation”. I am not persuaded that, given the effluxion of time, either the plaintiff or Ms. Fell recall precisely what was said in the 2004 phone call. However, I am satisfied from their evidence, that the telephone discussion was brief and that there was no discussion of the terms of the plaintiff’s employment. Although in some circumstances, the court may imply reasonable terms to give effect to the unexpressed intentions of the parties, it must be satisfied that it is appropriate to do so. In this case, I am not satisfied there was any discussion of the essential terms of the employment relationship in the telephone call. I find the written contract of employment was executed before the plaintiff commenced her position as a skincare therapist.
117      I accept Ms. Fell’s testimony that on May 3, 2004, she followed her usual practice with the plaintiff, which was to go through all the required paper work, the company policies, and the terms of the employment contract. The plaintiff does not dispute that she was asked by Ms. Fell if she was comfortable signing the contract and whether she wanted to obtain legal advice. The plaintiff also did not dispute that Ms. Fell reviewed the contract with her, line by line.
118      Further, in cross-examination, when the plaintiff was asked about her 2004 telephone call with Ms. Fell, she testified that she was told by Ms. Fell she “was going to be hired and to show upon on May 3 at the Langley location”. Despite the plaintiff’s suggestion that, as she had trained on the first day, she had worked prior to signing the contract, her evidence was that she did not start her work duties with the company until after she signed the contract.
119      In my view, the instant case can be distinguished from the decision in Francis in which the employee had signed a full offer letter prior to signing a more restricted formal agreement and from the decision in Holland in which the employee had been working for nine months prior to being presented with a written agreement.
120      The decision in Rejdak can also be distinguished. In that case, the evidence supported that the employer and employee had agreed to the salary, position title, and start date on the phone prior to the employee starting work and that the employee had done a full days’ worth of worth before being presented with the written contract. I am not able to find that the plaintiff and the company discussed such essential terms as salary and benefits during the phone call.
121      I find that this case is more analogous to the situation in Bern v. Amec E & C Services Ltd., 2007 BCSC 856 (B.C. S.C.). In that case, Mr. Justice Bauman (as he then was) held that the contractual relationship between the parties did not crystallize until the plaintiff had reviewed all the terms of the written contract. He emphasized that the plaintiff did “not begin performing his duties of employment” until after the written contract had been signed. Here, I find that the plaintiff’s first day was an orientation day, in which she toured the spa facilities, was advised on general procedures and policies, and reviewed the contract of employment. There is no evidence that she provided any skincare services prior to signing the agreement. I am not satisfied that she could be said to have commenced her duties as an employee prior to signing the contract.
122      I, therefore, find that the 2004 agreement was valid and in effect during the plaintiff’s employment.
I have a number of concerns with this decision:
1) The legal  analysis should start with the premise that reasonable notice is a term of the employment unless the party claiming  otherwise can prove the contrary. Thus the onus of proof in this case always rests upon the Employer to prove that the essential terms of the agreement were not discussed in the earlier two interviews or the phone call prior to the first day of employment. Here the Judge reverses the onus , finds that neither party can really remember what was discussed 11 years ago ( DUH!!)  and finds therefore that the Plaintiff loses.
2) There is no dispute that when she showed up on May 3rd, she had not even seen the termination clause. There is no evidence  to believe that she was not paid for her attendance on May 3. What possible policy reason could there be to distinguish between an ” orientation day ” and a ” skin care day “?  What if the orientation and training period had lasted 2 days or 2 months before the employee actually did any productive work ?
This area of law is confusing enough, and now employees have to have an exact  memory of the day they were hired, what time of day they first saw the contract and what activities they did and did not do immediately before and after the signing of the employment contract. This is completely unrealistic.
How onerous could  it possibly be to simply tell an Employer that if they wish to restrict the common law duty to provide reasonable notice of termination, that they must provide the employee with that information before the first day of work so that the Employee can have a realistic opportunity to assess whether or not they wish to be employed under those terms?

Making Secret Recordings of Meetings with Boss May Constitute Just Cause:

In Hart v Parrish & Heimbecker ( 2017 MBQB 68) Justice Edmond upheld the dismissal of 42 year old Merchandising Manager with 15 years service for a series of four separate incidents that the plaintiff had with peers and subordinates.

In essence he was found to have yelled at employees , displayed excessive anger, and similar activity.

These matters were discussed with the Plaintiff on a number of occasions.

34      For the period from October 16, 2013 up to and including the date of his dismissal, the plaintiff surreptitiously recorded meetings with senior management of the defendant. He recorded the meetings by placing his cell phone on the table in the record mode and did not advise the parties that they were being recorded. The plaintiff sought to enter the recordings as an exhibit at the trial. The defendant agreed that the recordings could be entered in evidence and that submissions would be made regarding the weight and relevance of the information contained in the recordings. The recordings commenced shortly after the complaint by Mr. Letkeman.

The Employer claimed that the fact that the Plaintiff made secret recordings of his meetings with management was itself grounds for dismissal. This is what the Judge said about that issue.

97      The plaintiff’s inappropriate use of his cell phone in secretly recording meetings with his superiors does amount to a breach of his confidentiality and privacy obligations to the defendant. The plaintiff admitted on examination for discovery that he knew a breach of the confidentiality obligations could result in termination (examination for discovery transcript of the plaintiff held December 11, 2014, qq. 34 – 45, Exhibit 10).
98      The misuse of his cell phone was also a breach of his personal code of conduct that he prepared as a result of his meetings with Stone Ridge Consulting. In conducting the contextual analysis and assessing the severity of the misconduct, the plaintiff did not disclose the recordings to third parties outside of the defendant other than to his legal counsel and for the purpose of these proceedings.
99      This evidence was considered by me as a factor in determining whether the defendant had just cause for dismissal. However, it is unnecessary for me to decide whether the plaintiff’s use of his cell phone amounts to just cause for dismissal in this case. The plaintiff’s misconduct, as noted above, was relied upon by the defendant at the time of dismissal, and in my view, that provides just cause for dismissal in the circumstances of this case.
I have always had concerns about the issue of secretly recording meetings or telephone discussions with coworkers or bosses. This is the first case that I am aware of in which the Courts have dealt with this issue.
This case should serve as a warning to those parties and their lawyers who think that secretly recording an employer or a co-worker is a good idea.
Ironically in this case it does not seem that the actual recordings in any way helped the Plaintiff’s case.

Case Provides Useful Analysis of Difference Between Independent vs Dependent Contractor:

In Glimhagen v GWR Resources ( 2017 BCSC 761) Justice Rogers was faced with a plaintiff who during the course of his 23 years association with the defendant had been an independent contractor, then a dependant contractor and finally an employee.

However in order to determine the amount of reasonable notice, the judge had to determine the period of time in which the Plaintiff was either an employee or a dependant contractor, as his time as an independent contractor did not count towards reasonable notice.

Most of the reported cases deal with the difference between an employee and an independent contractor whereas this case deals with more exacting differences between two different types of contractors.

This distinction is becoming more important as the rights given to dependant contractors are increasing. Under the common law, dependant contractors are entitled to reasonable notice of termination ( see Keenan v Canac Kitchens 2016 ONCA 79) . Under the Canada Labour Code, dependant contractors are deemed to be employees for the purpose of the Code. One of the key recommendations of the just released Changing Workplace Review by the Ontario Ministry of Labour had this to say about the issue :

We identify the issue of employees who are misclassified – intentionally or unintentionally – as independent contractors not covered by the ESA as a significant one and recommend that the Ministry make misclassification a priority enforcement issue. We further recommend that the term “dependent contractor” be added to the definition of “employee” in the ESA Finally, we recommend that where there is a dispute about whether a worker is an employee, the person receiving the worker’s services has the burden of proving the worker is not an employee and an obligation to provide all relevant evidence.

The Judge in this case went over all the relevant factors and determined whether each factor favoured either the dependant or the independent contractor status .

I will quote extensively from the judgement as it best shows the judges’ reasoning .

Dependent or Independent Contractor
48      The point of departure in this case is to determine whether the plaintiff was a dependent contractor and if he was, when he acquired that status. The relevant factors are:
Whether the agent was largely limited exclusively to the service of the principal
49      The defendant never required the plaintiff to provide services exclusively to it. In fact, even after he went on the defendant’s payroll the plaintiff continued to be free to provide accounting and consulting services to other parties.
50      The factor militates against a dependent relationship at any time prior to August 2012.
Whether the agent was subject to the control of the principal, not only as to the product sold but also as to when, where and how it was sold
51      The evidence demonstrates that at the outset, the plaintiff provided computer consulting services to the defendant. The defendant had no expertise in computer based accounting systems. The plaintiff controlled the advice he gave to the defendant about what kind of accounting system to install and how to operate it. Further, the plaintiff testified that he designed and set up the digital accounts and control systems for the defendant. The plaintiff also designed and implemented an on-line system for tracking the defendant’s accounts receivable and accounts payable. The evidence was quite clear that the defendant did not direct the plaintiff in those tasks.
52      The physical bookkeeping that the plaintiff performed for the defendant was done at the defendant’s direction.
53      The accounting processes that the plaintiff carried out were the kinds of processes required of any in-house accountant. He was directed to prepare quarterly financial statements and to put together the information necessary for the defendant’s auditors. The defendant made it clear to the plaintiff that these were among the things he was expected to do. The defendant did not, however, provide the plaintiff with a set of instructions on how to do those tasks — the defendant left it to the plaintiff to apply his own expertise.
54      The defendant also required the plaintiff to ensure that its corporate filings and account keeping complied with the policies and regulations of the TSX. Again, the defendant did not provide the plaintiff with an instruction manual to carry out his responsibilities. The defendant relied on the plaintiff to educate himself as to the relevant elements of TSX operations and to comply with those strictures.
55      This factor militates somewhat against the plaintiff being a dependent contractor.
Whether the agent had an investment in or interest in the tools necessary to perform his service for the principal
56      The plaintiff always used equipment and software supplied by the defendant. He carried out his tasks at the defendant’s places of business. Only occasionally did the plaintiff do the defendant’s work from his home office.
57      The factors argue in favor of the plaintiff being a dependent contractor.
Whether by performing his duties the agent undertook risk of loss or possibility of profit apart from his fixed rate remuneration
58      The plaintiff was not required to show up at the defendant’s office at any particular time of day, nor was he required to put in a given number of hours of work in a day. The defendant did not control the plaintiff’s hours of work; the defendant only required that the plaintiff properly perform the tasks assigned to him. To the extent, then, that the plaintiff performed his work efficiently more hours of the day were available for him to devote to promoting his other business interests. On the other hand, the plaintiff might have to forego other remuneration if his work for the defendant increased in a given month due to, say, the need to prepare accounts for a quarterly or annual report.
59      Further, the plaintiff regularly accepted shares issued by the defendant in lieu of cash for his work. In so doing, the plaintiff took a risk that he would not be fully paid, as would be the case if the value of the stocks fell, or make a profit over his monthly stipend, as would happen if the shares increased in value.
60      The factor argues against the plaintiff being a dependent contractor.
Whether the agent’s activity was part of the principal’s business organization — in other words ‘whose business was it?’
61      The plaintiff’s work for the defendant was an integral part of the defendant’s operation. It would not have been possible for the defendant to have carried on its business without a set of properly functioning books of account. The same is true of the document management that the plaintiff performed for some years ahead of his appointment as corporate secretary. It cannot be said that the plaintiff’s duties were peripheral to the defendant’s business.
62      Further, the plaintiff carried out some degree of financial control over the defendant’s operations. He usually assessed whether an account ought to be paid and determined when to pay it. While the plaintiff was not wholly in charge of the firm’s finances, he did act as a watchdog over inappropriate use of the defendant’s money. To that extent, then, the plaintiff was looking out for the defendant’s business, not his own.
63      The evidence relevant to this factor argues in favor of the plaintiff being a dependent contractor.
Whether the relationship was long standing — the more permanent the term of service the more dependent the contractor
64      The relationship between the plaintiff and the defendant started in 1989 and persisted through to 2012 — a span of 23 years. It may be important to note that the plaintiff’s tenure with the defendant was not punctuated by his coming and going. The plaintiff provided services to the defendant steadily and without interruption throughout that period.
65      Significantly, the plaintiff’s ‘job description’ changed considerably when his sister Margret passed away. With her passing he began to take over the things that Margret had been doing for the defendant. Those things included some office management and financial control.
66      The evidence establishes that not only was this a long-standing relationship, it was an evolving one as well. Over time there was an increase in the plaintiff’s tasks and responsibilities for the defendant.
67      This factor militates for a dependent contractor relationship.
Whether the parties relied on one another and closely coordinated their conduct
68      There can be no doubt that prior to his becoming an employee in August 2010, the defendant relied heavily on the plaintiff. Although there was no direct evidence on the point, I find that it is more likely than not that by the late 1990’s the plaintiff was the only person in the defendant’s organization who thoroughly understood the systems managing the defendant’s finances. And again, while there was no direct evidence on the point, I find that it is more likely than not that the plaintiff relied on the defendant’s monthly stipend to tide him over droughts in his other business enterprises. Both parties relied on each other.
69      Additionally, they coordinated their interaction, especially when it came to the preparation of quarterly and annual financial reports. For those reports to make sense and be delivered on time, the plaintiff and other members of the defendant’s management had to work together to gather, collate and process the relevant data. Mr. Shives testified to an example of that coordination when he described how and why the plaintiff would regularly visit his field office in Lac La Hache, B.C.
70      This factor argues in favor of a dependent contract relationship.
71      Taking all of the evidence into account, I have concluded that prior to the late 1990’s the parties were not so tightly bound together and their efforts were not so integrated with one another as to have made the plaintiff a dependent contractor.
72      I find that when the plaintiff took on his late sister’s role with defendant, that status began to evolve. By the year 2000, the plaintiff was an integral part of the defendant’s operation — it would have been very difficult for the defendant to have carried on efficiently in the plaintiff’s absence. By the same token, although the plaintiff was free to pursue other business interests and he did in fact pursue those interests, his relationship with the defendant was, by the year 2000, well ingrained and established.
73      For these reasons, I find that as of the year 2000 the plaintiff was a dependent contractor for the defendant. It is from that year that the plaintiff’s entitlement to notice credits starts to accumulate.
As the Plaintiff  was found to be either an employee or a dependant contractor for 12 of the 23 years and the judge found that the proper notice was 12 months.

Arbitrator That Finds Employer’s ” Generous” Actions at Termination are Grounds for Not Upholding Just Cause:

In an adjudication under the Unjust Dismissal section of the Canada Labour Code, Arbitrator Allan Kaufman decided in Navaneethakrishnan v Bell Mobility ( YM2707-10699) ( 2017 CarswellNat 1825) as whether a single act of insolence constituted just cause.

The Employee was called into a meeting to be told that she was being promoted, but not to the job that she had hoped for. The employee was not a happy camper.

In the course of that meeting with her boss she said the following things:

7      This meeting of May 11, 2016 then went downhill. According to an e-mail that Luca sent to Tomassina in HR later that same day, the employee stated during that meeting with Luca that:
• “Marco and Luca do not know how to lead”;
• “Luca’s group have the absolute worst reputation”;
• “Luca does not have a clue when it comes to budgeting”;
• “I have zero respect for you(Luca) and Marco – zero.”
• “Luca never stood up for the team and gave her zero support”;
• “I’m way too smart for this, I studied Finance, I did my CFA, I’m way too smart.” At which point she unilaterally walked out and ended the meeting with her boss, Luca.
Luca was her boss and Marco was the boss of Luca.
The Adjudicator was not impressed with the Employee’s conduct :
18      I regard this conduct on the part of the employee, if true, as being very serious, since was accusing her immediate boss, and his boss, of not knowing how to lead, and of basically being incompetent. After all, there are not too many worse comments that an employee can hurl at her boss’ face than what this particular employee was alleged to have said. Fortunately for the employee, there was nobody else in the meeting room who heard her comments, except Luca. Yet he was her immediate boss and she is alleged to have said these things directly to his face.
19      At the Hearing, the employee denied making most of the above quoted statements during the May 11th meeting. Whereas Luca testified that all of those quotes were accurate. I tended to believe Luca’s version of those events…
However the Adjudicator found that the employee was entitled to a warning before a termination for just cause could be upheld. I have no problem with that finding.
However, the Adjudicator went on to find that two of the Employer’s actions also contributed to his finding that the employment relationship was not totally severed.
1. Before termination, Bell wrote the employee a letter.
5. However, the main problem for the employer is that the employer’s own letter of termination dated May 17, 2016 suggests that the employment relationship had not been totally severed between the parties. This is evidenced by the fact that the employer took the highly unusual but very generous step of writing in its letter of termination to her dated May 17, 2016 that if she could come forward and advise the employer of any adverse medical condition or other personal issues in her life that might have explained her outburst during the May 11th meeting, the employer would consider re-hiring her. I believe this to have been a most generous gesture on the part of the employer. However, it served at the same time to undermine the employer’s legal argument that the employment relationship between the employee and the employer could not subsist. If the relationship was completely irreparable, as the employer contended before me at the Hearing, how could the employer have offered in its letter of termination to even consider the possibility of taking her back to work? Yet the employer did so.
The answer to the adjudicator’s question is obvious. If in fact  her outburst had a medical basis then this would trigger a duty by Bell to accommodate her under human rights legislation. Surely the Employer’s legitimate and arguably legally required inquiry should not be held as evidence against the employer.
2. The Employer paid the employee three weeks termination pay .
6. The employer’s own letter of termination dated May 17, 2016 also contained the unusual step of paying the employee the statutory two week notice of termination pay under the Canada Labour Code, plus two weeks of continuing coverage under the employer’s medical plan. In addition, not only did the employer pay to her that two weeks’ pay, but it also paid her a third week of pay following her termination – up to June 5, 2016. I view all of this as “unusual”, since if the employer was taking the position in its letter of termination that it was terminating the employee for cause, I would not have expected the employer to have paid her three weeks’ pay thereafter – or any other amount for severance pay. It was almost as if the employer – while asserting at the Hearing before me that it had cause to terminate the employee – did not fully believe it, as reflected by its conduct at the time of the dismissal.
The effect of this thinking is to reward employers who treat dismissed employees cheaply ( paying then nothing by way of termination pay ) and to punish those employers who chose to pay a dismissed employee some minimal termination pay, even when they have alleged just cause.
Moreover the issue of whether the employer believes they have or do not have cause should be irrelevant.
Just cause is a matter of law. It is not based the opinion of the parties.
In almost every mediation I have regarding the issue of just cause, one party feels strongly that there is just cause and the other that there is not.
That’s nice.
I only care about predicting the opinion of one person. The judge.

Employee Who Went to Welder School Instead of Accepting General Labourer Job Failed to Mitigate :

In Benjamin v Cascades Canada ULC ( 21017 ONSC 2583) Justice Glustein was faced with assessing the correct notice period for a unskilled general labourer with 28 years service who upon termination was only given his ESA minimum payment of 34 weeks.

The major issue was whether or not the Plaintiff had reasonably mitigated his damages.

The relevant facts were as follows:

  1. He was terminated on May 12, 201 as part of a plant closure that involved 41 other employees.
  2. He decided to retrain as a skilled welder and thus attended full time school for 6 months from August 2016 to February 2017. Because of this he did not apply for any job prior to the motion for summary judgement which was held on April 10, 2017. He also did not attend the outplacement counselling or coaching offered by the Defendant.
  3. His reason  for choosing retraining was so that he could improve his skills and so that he could restore himself to his former job security and income.
  4. Cascades brought to his attention  three comparable positions at other plants run by the Defendant. He ignored all of these opportunities. This was part of a program run by the Defendant to bring to the attention of all terminated employees job opportunities both inside and outside Cascades. The Defendant led evidence to the effect that had he applied for any of these positions, he likely would have been accepted .

The Judge then reviewed the law on mitigation:

[88]           The leading case on the duty to mitigate in wrongful dismissal cases is Michaels. In Michaels, Laskin C.J. held that:

(i)                 an employee is required to mitigate damages arising from wrongful dismissal;

(ii)               the onus is on the employer to establish a failure to mitigate; and

(iii)            the onus requires the employer to establish that (a) the employee did not take reasonable steps to seek comparable employment, and (b) if the employee had done so, the employee could have procured such comparable employment.

On the onus issue, the Judge had to decide whether the test required the Employer to prove that  the employee could have obtained alternative  employment or would likely have obtained alternative employment.

[106]      I agree that there are differences between establishing a “could have” onus as compared to a “would likely have” onus. For the reasons that follow, however, I find that the Michaels test sets out a “could have” onus and it is the proper approach to follow.[6]

[107]      The court in Cimpan v. Kolumbia Inn Daycare Society, 2006 BCSC 1828 (CanLII) (“Cimpan”) addressed the submission of the employee in a wrongful dismissal case that that an employer seeking to discharge its onus to establish a failure to reasonably mitigate ought to be required to prove that the dismissed employee “would have” been able to secure a particular job with another employer. Truscott J. rejected that submission. He held (Cimpan, at para. 108):

While the onus is on the defendant to prove the plaintiff has not mitigated, it would be impossible for any employer to prove that the employee would have been able to secure a particular job.

[108]      Counsel for Benjamin agreed that an onus requiring employers to establish that the employee “would have” obtained a comparable position would be logically “impossible” and is not appropriate. I agree for the reasons of Truscott J. in Cimpan.

[109]      However, to increase the onus on an employer to show that the employee “would likely” have obtained an available comparable position, as submitted by Benjamin, raises similar concerns as in Cimpan. Under such a proposed test, employers would somehow have to establish the “likelihood” of a dismissed employee obtaining a comparable job, potentially requiring the employer to lead evidence as to the number of candidates applying for a job with another employer,[7] and knowledge of the particular aspects of a candidate’s resumé that might be attractive to other employers.[8]

[110]      While the “would likely” test is not logically impossible in the same sense as the “would have” test discussed in Cimpan, it is nevertheless inconsistent with Michaels and is unreasonable.

[111]      In essence, the test proposed by Benjamin would require an employer to prove the “odds” of a terminated employee obtaining a comparable position with another employer. That approach is not consistent with the Michaels test that the onus is on the employer to establish that “by the exercise of proper industry in the search, [the employee] could have procured other employment of an approximately similar kind reasonably adapted to his abilities”. [Emphasis added]

[112]      It is not clear in either Fisher or Yiu that the court is attempting to impose a different onus on employers than the “could have” test in Michaels. In Fisher, Perell J. relies on Di Tomaso, which follows the Michaels analysis. In Yiu, D. Brown J. follows the analysis of Echlin J. in Link v. Venture Steel Inc., 2008 CanLII 61389 (QC SAT), [2008] OJ 4849 (SCJ) (“Link”), in which Echlin J. held (Link, at para. 49):

Nevertheless, it remains incumbent upon Venture to lead evidence that Link failed to pursue alternate employment opportunities that were of a comparable nature and that such opportunities were not only available, but that if pursued, Link could have minimized the damages sustained. [Emphasis added][9]

[113]      On appeal (cited as Link v. Venture Steel Inc., 2010 ONCA 144 (CanLII)), the court upheld the decision of Echlin J. on the mitigation issue (and allowed the appeal in part on another issue). The court held that the mitigation defence of the employer could not succeed because the employer had not led any evidence about the availability of comparable employment, a factor consistent with the “could have” onus under Michaels. O’Connor A.C.J.O. held (Link (CA), at para. 73):

Because Venture did not lead any evidence about the availability of suitable employment, the trial judge concluded that Venture had not met the second prong of the test set out above.[10]

[114]      In none of the above cases do the courts suggest that they are seeking to alter the onus as set out in Michaels. If there is any uncertainty as to whether the employer is required to establish that the employee “could have” obtained comparable employment or “would likely” have obtained comparable employment, I would adopt a “could have” test based on the decision in Michaels and my reasons discussed above.[11]


On the issue of choosing to retrain during the notice period, the Judge said :

[116]      A decision by a terminated employee to seek retraining is not, on its own, a basis for an employer to submit that the employee failed to reasonably mitigate damages.

[117]      However, if the employer meets the Michaels test and establishes that (i) the employee did not take reasonable steps to seek comparable employment “by the exercise of proper industry in the search”, and (ii) if the employee had done so, the employee “could have procured” such comparable employment, then the employee cannot choose to engage on a new career path as a “charge” to the employer.

[118]      Such an approach maintains the onus on the employer to establish (as required in Michaels), that there were comparable positions available for the employee but the employee did not take reasonable steps to pursue those opportunities.

[119]      Further, this approach maintains the Michaels principle that an employee must attempt to reasonably mitigate damages arising from wrongful dismissal.

[120]      If the employer can establish that the dismissed employee (i) chose to retrain instead of seeking comparable positions, and (ii) could have procured that comparable employment, a dismissed employee ought not to have a “free pass” to change careers to enhance job security or obtain better hours, and then collect damages for notice simply because of dismissal. In those circumstances, an employer should not be required to fund retraining (through payment of reasonable notice) when the employee could have obtained comparable employment.relied upon by Cascades. Retraining on its own is not evidence of a failure to reasonably mitigate damages; rather, if an employer can establish that comparable work is available and the employee made a choice to retrain and not to seek comparable employment, retraining would not constitute reasonable mitigation.

 [148]      In the cases relied upon by Benjamin, there was evidence as to efforts to find employment, the unavailability of employment, or other reasons why it was reasonable to make a career change, which allowed the courts in those cases to find that retraining was reasonable mitigation.

[149]      In the present case, by contrast, the evidence is that comparable employment was available, which Benjamin could have procured had he taken reasonable steps to seek employment. In these circumstances, the decision to retrain does not constitute reasonable mitigation.

The next issue was one of timing. Does turning down a job to retrain for 8 months simply mean you deduct 8 months from the notice period or does the notice cutoff occur when the employee turns down the job?

[157]      If a terminated employee chooses not to seek comparable employment that he or she could have procured after termination, the employee chooses to deprive the employer of the opportunity to avoid damages arising from the dismissal. If the plaintiff employee had made reasonable efforts and obtained such comparable alternate employment, the defendant employer would not have been exposed to any damages after that time. If the plaintiff had obtained the comparable position before the amount of months paid by the employer on termination, the plaintiff would not be entitled to damages.

[159]      Consequently, I do not agree with Benjamin’s submission. I find that the applicable law is that the plaintiff is not entitled to recoverable losses as of the date the employer establishes under the Michaels test that the plaintiff fails to reasonably mitigate damages.

The plaintiff got zilch as he turned down the job opportunity, or technically did not pursue it, before the end of the ESA period that he was already paid for.

Does this mean that a dismissed cannot go to school during his notice period? Is he or she stuck in the rut of having to look for another dead end job, just like the one he or she was terminated from?


The Plaintiff simply has to do two things at the same time :

  1. Take the retraining or schooling to improve their future. AND
  2. Look for comparable jobs.

Remember, the easiest thing to do in the whole world is to not get a job offer following a less than great interview for which you unfortunately were 15 minutes late for because your alarm was not working, or the TTC was slow or your dog was sick.