Month: March 2016

In Consbec v Walker et al ( 2016 BCCA 11 ) a 5 year employee employed as an estimator should have given one months notice of his resignation instead of walking out immediately  and going to work for a competitor.

However the Employer failed to prove any damages as it did not show that it would have incurred any significant different expenses if the departing employee would have given the required notice. Moreover this added expense has to be reduced by the savings that the employer utilized by not having to pay the departing employee’s salary for the one months notice that he failed to give.

The damages for a wrongful resignation are not the costs of replacing the employee but rather the extra costs incurred because the employee did not give reasonable notice of his or her resignation.

In Dynamic Tire v Borelli ( 2016 ONSC 1526 ) the plaintiff was awarded 16 months notice, exactly what the defendant offered in its pre-litigation offer.  His partial indemnity costs were $20,334.

In light of the fact that the plaintiff  acted unreasonably in not accepting the pre-litigation offer which if he had would have resulted in more money than he got at the trial, the judge awarded him nominal costs of only $6,000 plus HST.

In Muntean v Enablence Canada Inc. ( 2016 ONSC 1521) the Plaintiff sued in Superior Court but only recovered two months salary, which came to $13,076.

The plaintiff had partial indemnity costs of $20,702.

The defendant said that the plaintiff should not get any costs as he should have either started or transferred his case to Small Claims Court and because he had refused a time limited offer of $20,000 inclusive of costs.

Justice Timothy Ray awarded the Plaintiff only $5,000 costs based on the the issues referred to above and ” the overarching principle of proportionality”

If in fact the two lawyers in these cases actually charged their clients even what they told the Court their partial indemnity costs were, then both clients would have been much better off accepting the employers’ pre trial offers.

 

In Roberts v Zoomermedia Ltd ( 2016 ONSC 1567) the executive employee had a fixed term contract ending Oct 31, 2011 which provided for a lump sum payment of two years salary plus a 6 month paid sabbatical leave if either the employee was terminated before the end of the term or if the term expired. The term expired and the employee stayed on as an employee until terminated by the employer in March of 2012 when he was given working notice of termination of  6 months notice plus 2 months severance.

The Employee took the position that as the term of his employment contract had expired on October 31. 2011, he was entitled to his contractual severance payment of 2 years plus the 6 month paid sabbatical even though he continued on in his employment for another 4 months.

Mr Justice Perell agreed with the plaintiff. The judge treated the employment as being divided into two periods; the period covered by the term certain contract  and the period after the term had expired. After the expiry of the term the employee was under the doctrine of reasonable notice, which the plaintiff did not pursue.

Thus the employee was paid severance pay even though his employment had not ended. Great deal if you can get it.

This was a very unusual termination clause. One wonders why they bothered to make it a term certain contract with an express end date. If the purpose of the termination cause is to agree what the employee will receive in the event his employment ends without just cause, then you are better off not making a term certain contract and just keep it a term of indefinite duration.

I find that employment contracts drafted by corporate lawyers often having a definite end date, even when the contracting parties have no business need for such a term. Worse, these clauses can be misleading to the employee who mistakingly believes that he has a guaranteed 2 year contract, only to find that a later provision in the contract allows the employer to terminate the contract prior to its term upon one month notice.

I used to tell clients that the term of their contract is equal to the shortest amount of time in which  one party can lawfully terminate the relationship.

In Specialized Property Evaluation Control Services Ltd v Les Evalauations MarcBbourret Appraisals Inc and Ross Huartt ( 2016 ABQB 85) the Court was faced with a non-solictation clause which prohibited the Defendant from doing business with any customer of the Plaintiff for a period of 6 months from the date of termination of employment.

The Court found that this provision was too broad because it forbade the ex-employee from soliciting the Plaintiffs’ customers for any business at all, not just from solicting them for business competative with the business of the Plaintiff.

For example, if the employer is in the business of providing forensic accounting services to law firms, and in particular the ASBC Law Firm , this prohibition would purport to prevent the ex-employee from selling office supplies to the ABCS Law Firm.

On this basis alone the judge found that the non-solicitation clause was unenforceable.

The better practice is to:

a) Restrict the solicitation of customers only to the same business as the Employer’s, in other words, you cannot go after the ABCS Law Firm for the provision of forensic accounting services.

b) Define the term ” customer ” in some fashion in a temporal sense. A common definition is ” any customer who has purchased goods from us in the 12 months prior to the date in which you left employment”

c) Define “customer” to include only those customers with which whom the employee has had contact. This is especially true in a large organization that may have thousands of clients.

One should realize however that a strategy of counsel for ex-employees faced with a cease and desist letter or a lawsuit from the ex-employer is to request that the ex-employer provide a complete list of those customers that they consider covered by the non-solicitation clause to insure that their client does not inadvertently violate the agreement. Most employers are quite reluctant to give out such a list, especially to an competing ex-employee and his or her new employer. If they refuse to provide such a list, it might be difficult later on to allege a breach of the clause as the employee could rightly claim that he or she  was not sure who was on this list and who was not.