Plaintiff Wins $56,000 But Serves 20 Day Jail Sentence :

In Covenoho v Pendylum Ltd. ( 2017 ONCA 284) Justices Rouleau, Pepall and Roberts in a short endorsement dealt with an issue where an employee with less than 3 months service was terminated. She was employed by an agency which placed her at a clients location ( Ceridian) . She had a one year fixed term contract which had the following termination provision;

2.1 The term of this Agreement will commence on the date of this Agreement and will continue in full force and effect unless the Agreement is terminated as follows:

(a) immediately by PENDYLUM providing written notice to you if you violate or fail to honor any of these provisions of this Agreement or fail to perform your duties as set out in Appendix A in a satisfactory manner as determined by PENDYLUM (known as Cause); or if the PENDYLUM Client to which you have been contracted terminate[s] its contract with PENDYLUM for your services; OR

(b) by either party providing written notice of at least two (2) weeks to the other.

2.2 In the event of termination, we will have no liability to you, save and except to pay any accrued and earned compensation up to and including the date of termination.

The client then decided that they did not want the Plaintiff working for them anymore and thus the Defendant terminated the plaintiff with no notice, relying on the bolded section of the termination clause.

This was held by the Court of Appeal to be contrary to the ESA because if the termination had taken place after 3 months of employment, this clause, allowing termination without cause and without notice, would be illegal under the ESA.

This is how they said it :

In determining whether the contract is in compliance with the ESA, the terms must be construed as if the appellant  had continued to be employed beyond the three months ; if a provision’s application potentially violates the ESA at any date after hiring , it is void.

The Court went on to cite Wright v Young & Rubicon ( 2011 ONSC 4720), Shore v Ladner Downs ( 1998 BCJ 1045 BCCA) Machtinger v HOJ Industries ( 1992  1SCR 986 and the very recent decision of Justice Laskin in Wood v Fred Deeley Imports ( 2017 ONCA 158).

If the clause had said that the person would receive two weeks notice no matter what, as this was a fixed term contract of one year, that provision may have been enforceable as it would have complied with the ESA.

However the trial decision ( 2016 ONSC 4969) shows that in effect this was not a one year fixed term contract as it had an automatic renewal clause:

Term: 12 months, starting July 15, 2013 (Commencement Date) and ending July 14, 2014, automatically renewing for the same period unless either party gives to the other written notice at least 4 weeks prior to the current contract’s expiration of its desire not to renew the agreement.

The Court awarded her the balance of the contract, which came to $56,000.

Therefore even if the two week clause was in the agreement, as the contract could  have been extended, you could argue that that the two week provision was invalid.

The Plaintiff was originally terminated because she refused to provide her consent for the client to do a background check after her hiring, claiming that it was not a condition of her employment at the time of hiring.

The Defendant then terminated her.

After that she did the following. This is what the trial judge wrote:

Disclosure of Confidential Information – Threats, Injunction and Contempt Proceedings

[13] Over the course of the next several months, the Plaintiff threatened to release confidential information on several occasions. The Defendant and Ceridian commenced an action against the Plaintiff to prevent the Plaintiff’s disclosure of confidential information. On May 9, 2014, Justice Belobaba granted a five-day ex parte injunction that: 1) restrained the Plaintiff from publishing or otherwise disclosing any confidential information relating to the business methods and software applications of the Defendant and Ceridian; and 2) required the Plaintiff to provide the Defendant and Ceridian with a list of persons to whom she had disclosed the above information: see Ceridian Canada Ltd. v. Azeezodeen, 2014 ONSC 3801 (CanLII). The circumstances for the issuance of the injunction were described, at paras. 12-13, as follows:

In November 2013, the defendant sent a letter to Ceridian in which she made numerous defamatory statements about the plaintiffs’ business practices and operations, which she threatened to make public. [Covenoho] advised Ceridian that unless she was paid the sum of $23.2 million, she would make public confidential information relating to Ceridian, Pendylum and their customers. On January 6, 2014, [Covenoho] again wrote to Ceridian threatening to “go public” with numerous allegations about Ceridian and Pendylum. [Covenoho] now offered not to publicize the allegations in exchange for a “settlement” of $500,000.

On April 24, 2014, Ceridian received another letter from [Covenoho] in which she made another threat that she intended to circulate a “press release” to “every press agency and HR and payroll agency across Canada and the U.S.” and that she would do so on May 12, 2014. The “press release” [that Covenoho] threatened to publish contained confidential information regarding Ceridian and Pendylum’s business methods. It also made various defamatory statements regarding the business dealings of Ceridian and Pendylum, including their dealing with the independent contractors. On May 8, 2014, [Covenoho] wrote again to Ceridian repeating her threat that she would widely disclose her “press release” on May 12, 2014.

[14] After receiving a copy of the injunction, the Plaintiff paid for the publication of her press release containing the Defendant and Ceridian’s confidential information, in contravention of the injunction. The press release was published on May 13, 2014. On June 24, 2014, the Plaintiff was found in contempt of court by Justice Belobaba. On July 15, 2014, the Plaintiff was sentenced to 20 days in jail, to be served intermittently over five weekends.