Barry Fisher's Employment Law Blog

This is what the judge had to say:

The evidence of Mr. and Mrs. Ensign on these matters is uncontroverted and while it is uncorroborated by physicians or other third parties, I nevertheless accept it in its entirety.  The defendant was not truthful and candid with Mr. Ensign about the reasons for his termination.  It had the benefit of legal counsel before Mr. Ensign’s working notice period had expired and, given the absence of any written employment agreement limiting notice, must be taken to have known that eight weeks’ notice was woefully inadequate.  Instead of righting the wrong by reinstatement or offering an alternative position with appropriate encouragement, training and remuneration “top ups” or guarantees for the ensuing 10 months, the defendant embarked on aggressive and unmeritorious defence tactics that it must have known would cause financial stress and considerable worry on the part of Mr. Ensign.  There can be no doubt that this is the type of conduct and impact upon a wrongfully dismissed employee that an award of aggravated damages is designed to address.

Whoever said that the ” best defence is an offence” was wrong. This is a prime example of how some Courts will treat overly aggressive litigation tactics that cause real damage to their litigation opponents.

 

In Skov v G&K Services Canada ( 2017 ONSC 6752) Justice Diamond initially set the reasonable notice period for a 54 year old Customer Development Manager with 21 years service at 18 months.

However the Plaintiff had posted in his LinkedIn profile that he had held the position of Director of Process Improvement and Customer Development, a position which did not even exist. Furthermore the Court found that his actual position was not even managerial   and that by limiting his job search to only real managerial jobs, he had ” overshot” by only applying for jobs that he was not qualified for, therefore  he  had  failed to conduct a reasonable job search.

His notice period was reduced by 2 months to 16 months

In Fulmar v Nordstrong Equipment ( 2017  ONSC 5529) Justice Diamond had a plaintiff who was terminated on December 12, 2016 and was awarded 10 months notice. His bonus arrangement called for discretionary bonus for based on the calendar year. The judge had no difficulty awarding him a bonus for 2016 as the ESA termination period alone ( 6 weeks ) would have taken him past the year end. However as the Plaintiff was awarded 10 months notice, his deemed end of employment was October 12, 2017, which was 2.5 months short of the bonus year end.

The judge denied the bonus over the notice period as he found that payment over that period was “not in the reasonable expectation of the plaintiff”.

Then in another case by the same judge and the same defendant (Singer v Nordstrong Equipment 2017 ONSC 5906) the judge awarded a 17 month notice period which covered all of the 2016 bonus year and 5 months of the 2017 bonus year. However the Judge decided against the Plaintiff saying as follows:

Issue #3         Is Singer entitled to payment of a 2017 and 2018 bonus? 

[40]           I have found that Singer is entitled to 17 months’ reasonable notice.  Singer further claims entitlement to a bonus that he would have received over that notice period (i.e. for all of 2017 and the first five months of 2018).  Singer argues that it is reasonable to forecast that his bonus over the 17 month notice period would have been at least equal to his 2016 bonus. 

[41]           As per my comments in Fulmer v. Nordstrong Equipment Limited 2017 ONSC 5529 (CanLII), I believe that Singer’s argument is overreaching.  The purpose of reasonable notice is to provide a terminated employee with sufficient time to locate comparable employment.  Historically, bonuses were earned and calculated at the conclusion of the defendant’s fiscal/calendar year, and no doubt granted on the basis of an employee’s positive efforts and contributions to Nordstrong East’s business. 

[42]           Subject to successful mitigation efforts, Singer’s employment with the defendant would have ended in or around May 2018.  The purpose of the defendant’s incentive plan is to maximize efforts to generate profits.  As in Fulmer, I do not find it to be within Singer’s reasonable expectation to be able to earn a bonus for the 2017 and 2018 fiscal years while he searched for alternative comparable employment. 

[43]           I therefore decline to award Singer any bonus for the 2017 or 2018 fiscal years. 

With the greatest of respect I think that this case is wrongly decided.

Why wouldn’t the Plaintiff believe that he would receive his total compensation during the notice period?

What if 90% of his income came from this bonus scheme, which is very common in the financial industry?

It is the Employer who decided to give pay in lieu of notice and not working notice as is required by law. Why should the employer benefit from their own decision to breach the plaintiff’s contract?

The law of damages is very simple, I learnt it in first year contracts.

In a case of breach of contract, the plaintiff is entitled to be put in the same position had the contract not been breached.

The Employer breached the contract by not giving reasonable notice of termination. The Plaintiff is entitled to every penny that he would have earned had he been given the opportunity to work out his notice period, including the bonus.

I am advised that these cases are being appealed.

 

In Wood v CTS of Canada  Co. ( 2017 ONSC 5695, Justice Sproat held that in a mass termination under the ESA of Ontario that the employer only gets credit for working notice, under both the ESA and the common law of reasonable notice, from the date that the Form 1 is filed with the Ministry of Labour and then is posted in the workplace.

Furthermore, in any week of working notice that the employee works in excess of the maximum overtime ( usually 48 hours ) that week does not count as working notice.   In this case the Employer gave termination letters on April 17, 2014 giving them working notice ending March 27, 2015 , some 11 months. However all that working notice was useless as the Employer did not file the Form 1 until May 12, 2015.

In Nogueira v Second Cup ( 2017 ONSC 6315) Justice Morgan was faced with determining the validity of this termination clause :

If the Second Cup terminates your employment, it will comply with its obligations under the employment standards legislation in the province in which you work (the ‘Employment Standards Act’).

The judge held that this clause did not oust the common law term of reasonable notice. This is what he said on that issue :

10]           It is evident that the clause in Machtinger is considerably more explanatory than that in the case at bar. In Machtinger, the employer went out of its way to advise the employee of what he would get (or, more accurately, what he would not get) upon termination. Likewise, in Roden v. Toronto Humane Society, 2005 CanLII 33578 (ON CA), 2005 CanLII 33578, the Court of Appeal found a termination clause displaced the common law where it provided that the employee would receive “the minimum amount of advance notice or payment in lieu thereof as required by the applicable employment standards legislation”. Along similar lines, in Farah v. EODC Inc., 2017 ONSC 3948 (CanLII), the contract provided that, “Upon termination, the Applicant would only be entitled to the statutory entitlements prescribed under the Employment Standards Act” [emphasis added].

[11]           No such explanation or warning sign appears in clause 13 of the Employment Agreement here. Using the barest possible language, it says nothing more than that the employer will obey the statute. The new employee being asked to sign this contract could be forgiven for assuming that the clause is there to reassure her that none of her rights are being curtailed, when in fact the very opposite is true.

[12]           It is evident that the Defendant, as employer, is responsible for drafting the Employment Agreement. It is addressed to the Plaintiff in the form of a letter agreement and refers to the employee as “you”. To the extent that an ambiguity exists in interpretation, the Employment Agreement should be interpreted contra proferentem against the employer as drafter. As Stinson J. stated in Singh v. Qualified Metal Fabricators Ltd. [2010] OJ No 4219, at para. 15, “I am not prepared to find that the Employment Agreement operated to nullify or detract from the implied common law requirement of reasonable notice of termination”…especially “having regard to the power imbalance that exists between an employer and employee as a matter of course.”

[13]           In my view, the words of the Employment Agreement are ambiguous at best. They do not convey the meaning that the Defendant attaches to them, and I do not see them as curtailing in any way the common law principal of reasonable notice or pay in lieu thereof.

There now seems to be at  least three basic attacks on ESA contracts that the Ontario Court of Appeal  has endorsed.

1. Failure of consideration. ( Hobbs v TDI Canada Ltd , 2014 ONCA 44783)
2.  Finding of an ambiguity in the wording. ( Wood v Fred Deeley Imports Ltd ( 2017 ONCA 158)
3. Finding that any part of the  termination clause is contrary to the ESA and thus the whole provision is held to be invalid even if there is a severability clause. ( North v Metaswitch Networks Corp, 2017 ONCA 790)

What future grounds for attack exist in the future?

If and when it happens you will read about it first on this blog.

In Smith v Vauxhall Co-Op Petroleum Limited ( 2017 ABQB 525) Justice Dario had a situation where she had to determine the proper notice period for a 57 year old Divisional Manager of 22 years service who made $70,000 per year.

The employer had alleged just cause , including an allegation of sexual assault and sexual harassment. .The Judge found that these particular allegations  were unproven.

In assessing the proper notice period ( which she found to be 20 months ) the Judge commented as follows:

[ 152] Based on the Bardal Factors, I find Mr. Smith would be entitled to a notice period of 20 months. He is entitled to such an award given his length of service, level of seniority, and the difficulty he may have had securing comparable employment.

[153]      In calculating Mr. Smith’s notice period, I have also taken into consideration Ms. AM’s allegations of sexual harassment and sexual assault: see Elgert at para 68. Consequently, I have assessed the notice period as higher than it would normally be for someone in similar circumstances. This is due to the impact the allegations may have had on Mr. Smith’s ability to find new employment.

Here is the kicker. This assessment of 20 months was a provisional assessment solely for the purpose of a potential appeal.

In fact the Judge upheld the discharge for just cause on the basis that the Plaintiff had engaged in a pattern of personal harassment of, but not sexually assaulted or sexually harassed,  his female subordinate. The other element of just cause was that he lied to his employer during the investigation about the nature of his relationship with the female subordinate.

That is what you call a Pyrrhic Victory.

Quite frankly, 20 months notice would see to be the correct notice period under normal circumstances so it is odd that the judge emphasized that she would have  awarded  an increased notice period because of the unproven allegations of sexual assault and sexual harassment.

 

 

In Chabot v Ottawa Media ( 1987 CanLII 6335 (CA LA) Adjudicator Francois Bastien commented on the test to be used in determining whether an employer could rely on the ” lack of work” or ” discontinuance of a function ” exemption from the unjust dismissal section of the Canada Labour Code ( Section 242 (3.1) (a) ). I note that although the CANLII cite is 1987 the case was actually decided in 2017.

The Adjudicator confirms that it is a two  stage process:

1. There must be a valid economic justification. Generally  speaking this mean that the Employer must show that they did not simply replace the dismissed employee     with another employee. However they need not show that the job duties have been eliminated as it is perfectly proper to lay off one employee and then to redistribute his or her duties amongst  the remaining employees. The onus of proof for this stage is on the Employer.
2. Once it has been shown that there was a real layoff, the employer must show that they had a reasonable explanation for choosing the employee in question as the one to be laid off.

The Adjudicator made the following comments on this second branch of the test :

[113]   This leaves the issue of the “reasonable explanation for the choice of employee laid off”, the second prong of the afore-mentioned test described in Thomas, supra.

[114]   In her review of a passage from the Christie, England, Christie, Employment Law in Canada (Loose leaf, 3^rd edition, 1998) textbook cited and relied on by the adjudicator in Rogers Cablesystems, supra, para. 40, Federal Court judge Eleanor R. Dawson, as she was at the time, restores its context by citing in turn the preceding and following passages. They read:

Unlike some other country’s legislation, which expressly encompasses the notion of unjust selection procedures in layoffs, s. 240 does not empower adjudicators to review the intrinsic fairness of such procedures. Nevertheless, the fairness of selection procedures is relevant as evidence in determining whether the employer’s motive is to terminate the claimant for economic organizational reasons or for some other reason unrelated to the layoff conditions. As Adjudicator Swan puts it, an adjudicator can review the selection procedure applied by the employer in order to determine whether it was utilized as a “colorable attempt to avoid the restrictions on unjust dismissal set out in the Code “. [footnotes omitted]

The quote is then followed by this passage:

Those words are generally interpreted as establishing a test of subjective intention: does the employer intend to release the claimant for economic reasons or for some other reason? The employee carries an “evidentiary” burden of raising a prima facie case of bad motive on the employer’s part, whereupon the onus shifts to the employer to “clearly” establish a “reasonable explanation for the choice of the employee to be laid off’. It must be emphasized that adjudicators will review the employer’s selection procedures only for this limited purpose of ascertaining the presence of a bona fide motive. The choice of appropriate selection procedures, however, is for the employer alone to make, be it operational factors, straight seniority, comparative skill and ability, or a mixture of both seniority and ability. Indeed, the employer can even choose on the basis of who is paid the least. If the employer makes comparative skill and ability the determinative factor, adjudicators will review the employer’s decision only so far as is necessary to ensure that there is no bad faith; adjudicators will not second-guess the substantive correctness of the employer’s decision since the employer has the superior expertise to make such judgments, not the adjudicator. 

This is similar to the analysis when one brings a human rights complaint in respect to whether or not a layoff was discriminatory. In most cases there is a legitimate reason, free of human rights issues, in deciding whether to reduce the work force. However, in deciding which employee stays and which is laid off , this decision is sometimes improperly affected by Code based criteria.

For instance, a front line manager may be told that he has to reduce his team by one member but is not given any guidance on how to select the appropriate candidate for layoff. The manager then uses illegal criteria, ie age, disability or gender, to decide that this employee is to be laid off. This would be a breach of the Human Rights Code.

It seems that this same  analysis now applies to unjust dismissal terminations. If the Adjudicator determined that the predominant motivation behind choosing the complainant over one of his co-workers for lay off was done in bad faith, then the Adjudicator has jurisdiction over the case. Absent the employer proving just cause, the default remedy would then be  reinstatement.

What would constitute bad faith ? In the case in question the Complainant argued that the reason that they laid him off was because he had a long standing feud with a co-worker about which he had complained about to management and they had done nothing about it. The Adjudicator found that the Employer had simply chosen the most qualified candidate to stay, ( who was not the co-worker with whom the Complainant had the feud )  and that was not the Complainant.

Bad faith can be many things. The only restriction is a lawyers’ creativity.

This case means that Adjudicators will now  look more closely at Employers who contest  jurisdiction under this provision and give more opportunities for Complainants  to argue that even though there was a legitimate shortage of work, the selection of who would be selected for lay off was so flawed that the result is a unjust discharge and that reinstatement with full back pay is the appropriate remedy.

This case should be a consideration when deciding whether a federally regulated employee should  proceed by way of an unjust dismissal remedy under the CLC or a wrongful dismissal action in the Courts.

 

In Ellis v Artsmarketing Services Inc (2017 CanLII 51563 (ON SCSM), Prattas DJ had a situation where he found that the Employer intentionally delayed issuing an EI Record of Employment for 5 months and then said that the employee quit on the ROE.

Here is what the Judge said about this issue:

The Record of Employment and inconvenience damages

[55]           There was some confusion as to the ROE. The plaintiff testified that she asked for it right

away, while the defendant said that since she was not terminated from the company but merely from the particular campaign it did not have to provide her with the ROE.

[56]           An employer is required to provide a ROE directly to Service Canada within seven (7) days of an interruption of earnings. Even if the defendant felt that it had not terminated the plaintiff from the company on April 1, 2016, it certainly knew by June 2016 when it was served with the Plaintiff’s Claim, which had been commenced on May 31, 2016. Yet despite this the defendant did not issue a ROE until August 12, 2016 and when it did issue it the defendant declared that the reason of termination was that the plaintiff had “quit”.

[57]           If the plaintiff had “quit” as alleged by the defendant, then, why didn’t the defendant issue the ROE much earlier than August?

[58]           This intentional act of the employer in inordinately delaying issuing the ROE and the declaration of “quit” resulted in the plaintiff being denied employment benefits, which in turn resulted in financial hardship of the plaintiff who had to borrow money from others, including family members, to meet her needs. 

[59]           It is trite to repeat that an employer must promptly submit the ROE whenever there is an interruption in earnings. This was acknowledged by Shifman in his testimony. It is obvious that the dithering by the defendant for about five months before submitting the ROE is inexcusable and caused the plaintiff stress and inconvenience for no good reason.

[60]           Jurisprudence has allowed the recovery of inconvenience damages under a variety of circumstances. See the following cases: Jarvis v. Swans Tours Ltd. [1973] 1 All ER 71; Fuller v. Healey Transportation Ltd. (1978), 1978 CanLII 1693 (ON SC), 22 O.R. (2d) 118; Tanglewood (Sierra Homes) Inc. v. Bell [2010] O.J. No. 2344; Foghi v. MCI Travel Ltd., [2013] O.J. No. 1759; Karampatos v Torabipoor, [2004] O.J. No. 4255;  

[61]           Taking into consideration what the plaintiff went through as a result of the defendant’s deliberate act of not promptly submitting the ROE and the initial rejection of the plaintiff’s application for employment benefits, I think that the sum of $1,000 is an appropriate, fair and proper amount under these circumstances for inconvenience damages to be paid by the defendant to the plaintiff.   

I believe that this may be the first time that damages for “inconvenience damages ” for delaying the issuance of an ROE has been awarded in a wrongful dismissal case.

On the issue of reasonable notice the Judge awarded 9 months notice to a 9.2 year part time sales rep whose age was over 50.

The Judge also noted the submission by the paralegal for the Plaintiff on the issue of reasonable notice by referring to his use of the Fisher Wrongful Dismissal Database, a publication which I am somewhat familiar.