Month: January 2017

In Miller v Integrated Health Clinic ( 2016 BCPC 440 CanLII) Provincial Court Justice Chettiar had to determine the proper notice period for a 23 year old part time  lab tech with 17 months service making  about $26,000 a year .

In a remarkable 16 page decision he made a number of interesting comments about the task of determining notice periods for short service employees in BC.

First of all these are his comments that the Judge made when presented with Court awards from common law provinces across Canada :

22. I agree with the Defendant’s counsel that it is not necessary to look to cases outside of British Columbia to draw comparables to the present case. There is nothing unusual in the Claimant’s circumstances that guidance cannot be drawn from other BC cases. Therefore, I will not address the non-BC cases the Claimant’s counsel refers to. Besides, the Defendant’s counsel says all of the cases the Claimant relies on are distinguishable from the case at hand.

More importantly he views that all the law regarding notice periods for short service employees starts with the 2009 decision of the BC Court of Appeal in Saalfiel v Absolute Software Corp ( 2009 BCCA 18 ) and that prior cases are not to be considered.

First of all, he says only three of the eight cases are British Columbia cases, and all three of them predate the Saalfeld case which clearly dispelled the notion that five to six months is the normal range of the notice period for short service employees. The court in Saalfeld at para. 15 said as follows:

[15] … the respondent [employee] submits that recent jurisprudence supports a notice period of five to six months in short service cases. While B.C. precedents are consistent that proportionately longer notice periods are appropriate for employees dismissed in the first three years of their employment, I see little support for the proposition that five to six months is the norm in short service cases for employees in their thirties or early forties whose function is significant for their employer, but not one of senior management. … Absent inducement, evidence of a specialized or otherwise difficult employment market, bad faith conduct or some other reason for extending the notice period, the B.C. precedents suggest a range of two to three months for a nine-month employee in the shoes of the respondent when adjusted for age, length of service and job responsibility: [case citations omitted].

In the Saalfeld case the Plaintiff was 35 years old, and had 9 months service is a sales position. The Court of Appeal upheld the trial judges assessment of notice at 5 months, recognizing that she took 9 months to find a job.

In this case the Plaintiff was unemployed for 7 months. The judge found that her mitigation was reasonable .

One would have thought that the judge , having quoted Saalfed , would have followed it and awarded between 2 or 3 months notice.

After all Saalfeld was 35 years old and Ms Miller was 23, both young.

Saalfeld  had only 9 months service but Miller had almost double that time , namely 17 months .

Both had non-managerial jobs.

Saalfeld was unemployed 9 months, Miller 7 months .

Oh, by the way, Ms Miller was terminated as soon as she came back from her maternity leave. Great time to be looking a for a job.

What did Justice Chettiar award as notice : 6 weeks.

Quere? Why quote your own Court of Appeal and then not follow it ?

 

In Krishnamoorthy v Olympus Canada ( 2016 CarswellOnt 18204) Justice Dow had a situation where the Defendant purchased another company ( Carsen Group)  and offered employment to 99% of the predecessor company’s employees, including the Plaintiff.

At the time of his termination the Plaintiff was 58 years old, held the position of Executive Director of Finance and was employed a total of 15 years with the two companies.

The terms of the offer are set out in the decision as follows :

To that end, the defendant provided an offer of employment to the plaintiff on November 30, 2005 outlining the terms of employment which maintained the exact terms of the plaintiff’s employment with Carsen Group Inc. including:
a) transition payments for bonus calculations for pre Olympus employment in 2006;
b) that the “job will likely evolve and change over time”;
c) termination without cause will pay the greater of Employment Standards Act severance pay or four weeks’ pay per year up to a maximum of 10 months if a release is signed for service with Olympus or Carsen Group Inc. (with pay defined as annual salary divided by 52);
d) a mandatory retirement requirement at age 65 (not yet declared void by application of the Ontario Human Rights Code);
e) a severability clause permitting the balance of the agreement to remain in the effect if a particular clause is unenforceable;
f) the employee understands the terms of the agreement that he or she was to “be treated as a new employee” without reference to the opportunity to get legal advice; and
g) a release of not only the defendant from any “further claims but also for any claims against Carsen Group Inc.

During the course of his employment with Olympus, the Defendant acted in a way so that his prior service was in fact recognized.  For instance they

a) Gave him a 10 year plaque after only 5 years with Olympus but recognizing that he joined Carsen 10 years prior.

b) His Total Compensation Statement in 2014 showed that his date of hire was 2000, the year he joined Carsen.

c) His first payroll statement after Olympus purchased Carsen carried over his sick day and vacation credits.

Interestingly, with some other employees Olympus paid significant signing bonuses to get them to sign employment contracts , but alas the Plaintiff did not ask for nor receive such a bonus . He just kept his job exactly like it was before, except now he had agreed to a severance payment considerably less than his common law entitlement .

Then Dow J, had to decide whether the contractual termination clause was valid . He said as follows:

Issues — Validity of Termination Clause
8 .The defendant takes the position its employment agreement of November 30, 2015 is enforceable and rejects the variety of submissions made by the plaintiff to the contrary, The most compelling submission by the plaintiff is that the defendant failed to provide him with valid consideration for waiving his previous right to reasonable notice damages upon termination without cause, The plaintiff submits the employment was continuous and relies on the Employment Standards Act, 2000, S.O. 2000, c. 41 and Section 9(1) which provides for the employment being deemed to include the time that accrued with the seller of the business by the employee who continued with the purchaser of the business. In my view, the defendant did recognize this issue in the employer agreement but limited it to (10 years or 10 months’ notice).
9. The defendant submits the offer of employment was (sufficient) consideration. However, this appeal’s to be contrary to the conclusion reached by the Court of Appeal in Hobbs v. TDI Canada Ltd., [2004] O.J. No. 4876 (Ont. C.A.) where Justice Juriansz (at paragraph 42) states:
The requirement of consideration to support an amended agreement is especially important in the employment context where, generally, there is inequality of bargaining power between employees and employers.
10. The defendant points to the fact it is not the same employer as the plaintiff was working for and thus the employment agreement has not been “amended”. In my view, there are too many similar factors in the situation at hand to distinguish it in this way. That is, the remuneration, the duties to be performed, the substance and the nature of the business all remained the same. The only thing that changed would appear to be the employee’s right to reasonable notice on termination without cause.
11. I am reinforced in this conclusion by the position the defendant takes with respect to it honouring the plaintiff’s prior service with Carsen Group Inc. as well as the fact the defendant did pay (and likely wisely and more economically) some of the Carsen Group Inc. employees it recruited a signing bonus as part of securing their services,
12. In my view, my conclusion is also consistent with the rationale of the Court of Appeal in Holland v. Hostopia.Com Inc., 2015 ONCA 762 (Ont. C.A.) where the Chief Justice states; (at paragraph 53)
The law in this respect is a matter of simple fairness. It is also a matter of sound employment practice.
13. The result is the plaintiff is entitled to reasonable notice of termination at common law.

The Judge also made some interesting comments about the application of the Bardal factors in determining reasonable notice under the common law .

In relation to the character of employment  he wrote :

16, Regarding the character of the employment, it is not disputed that at the time of termination, the plaintiff was performing a senior executive role with the defendant. He was one of the few employees with signing authority. However, although not referenced by counsel in submissions before me, I understand that the principle of greater notice for highly skilled positions and less notice for clerical or unskilled work is of “declining relative importance” (Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469 (Ont. C.A.) at paragraph 27): Thus, this is not as strong a factor for a longer period of notice as it has been in the past.

This is the first time that I am aware of that the Di Tomaso case has been used to lower the notice period of executive rather than increase the notice period of a lower paid employee. This comment will likely further weaken the importance of character of employment in assessing reasonable notice .

In relation to age ( the Plaintiff was 58 at the time of termination ) he wrote :

18. Regarding his age, while the plaintiff would use this as a factor for a longer period of notice, it is presumably on the basis the plaintiff is unlikely to be rehired at this “older” age. In my view, the trend is in the opposite direction, that is not only do the demographics support individuals working longer in this Province but the abolition of a mandatory retirement age provides for this to occur. To the contrary, the parties have agreed that the plaintiff has taken all necessary steps to mitigate his claim by seeking alternative employment and no consideration need be made for dealing with an award that extends beyond the present.

I guess that todays’ age 58 is like yesterdays’ age 48. That mean that I am really only 53.

The Judge found that reasonable notice was 19 months.

The Defendant has filed an appeal.

I know this because Plaintiff ‘s counsel is my son, Matthew Fisher, a partner at Lecker & Associates.

In Bain v UBS Securities Canada Inc ( 2016 ONSC 5362 ) Justice D.A.Wilson had the task of determining the proper compensation for a  45 year old Managing Director, Head of Canadian M&A who had 13 years and 8 months service.  She determined that the correct notice period was 18 months,  based in part because he had been induced away from Employment at Bank of Nova Scotia, where he had been  for 5 years.

The Plaintiff lost his job though redundancy as they closed down the Canadian M&A division.

The interesting parts about this case involve how the Judge dealt with the various items of the Plaintiff’s compensation.

Entitlement to Bonus :

For the first 9 years , his bonus was all cash. Then in 2008 the bonus was split 40% cash and 60% in shares through the Equity Ownership Plan ( the EOP) . His bonuses ranged from a low of $225,000 to a high of $1.6 million. The only exception was 2011 when he received only $78,800, which was because UBS had to pay out a $2.5 billion judgement resulting from a fraud in their London office. In 2011 many UBS bonus were negatively affested like Mr Bain’s.

The Plaintiff was terminated on February 28, 2013, before the payout of the 2012 bonus. He was paid zero bonus for 2012 and for the time  he worked in 2013. All of his co-workers who held comparable positions received substantial bonuses for that period, except one other banker who was terminated at the same time as Mr. Bain.

Had he received a bonus payment for 2012, it would have been paid partly   as shares over a 5 year vesting period, with the first payment not occurring until March 2015. However all previous grants of shares that were granted prior to his termination would continue to vest after his dismissal.

In looking at the Defendants’ decision to pay zero bonus for the 14 months prior to termination, the Court said the following :

90. Simply because a bonus is awarded in the sole discretion of an employer does not mean that it can be done in an arbitrary or unfair fashion or that the employer can decide that an employee should not get a bonus without following a fair, identifiable process. The employer may adjust the weight given to various factors, given the market conditions and other changeable criteria, but that does not obviate the requirement that the exercise must be done in a fair manner. The court must analyze the evidence in a particular case and decide whether the process that was followed was fair and reasonable.

The Judge then noted the following :

1. UBS had a in place a comprehensive and detailed compensation plan in place with the stated goal of transparence and fairness.
2. Historically bonuses made up the bulk of the Plaintiff’s income, ranging from 66% to 90% of his total compensation.
3. For the period in question he received a performance review that exceeded his objectives on many counts .
4. Both his revenue and value of deals were up in 2012 from the previous year.
5. All of his comparators, except the other banker who was terminated, got substantial bonuses.

Why then did the Plaintiff get zero bonus ? His boss testified that it nothing to do with the fact that he was terminated. The Judge did not buy that.

103.  I am at a loss to understand on what basis UBS decided that Bain was not entitled to a bonus for 2012. Auclair’s testimony that notwithstanding his own assessment of Bain, he was “okay” with the decision not to give him a bonus, struck me as disingenuous. I do not accept that it was a coincidence that the only two managers who did not receive a bonus for 2012 were the two who were terminated. The timing of the terminations and the failure to grant a bonus does not assist the defence.

108. An employer is not bound to administer the bonuses in the same fashion each year; circumstances change, particularly in a volatile industry such as investment banking. However, the process followed must be fair and consistent among similarly situated employees. The fact that an employee is terminated because his job is redundant does not relieve the employer from exercising its discretion fairly.
109. I agree with the comments of Wilton-Siegel J. in Chann, where he stated, “The fact that the decision to terminate the plaintiff’s employment had been made did not remove the need to approach the process of decision-making in the same manner as in past years. The plaintiff was contractually entitled to have his remuneration determined on the same basis as in prior years and for other employees in the same year.”
110. Similarly, Bain was entitled to have his bonus for 2012 determined by UBS in the same manner as it did for other employees, and as it had done historically. I conclude that the fact that Bain was being terminated was the driving factor behind the decision of management not to award him a bonus. Despite Auclair’s denial of a link between the dismissal and zero bonus, the email from Murray, dated February 16, 2013, when the decisions were being made, confirms that the subjects of compensation and headcount were “inextricably linked”. In my view, UBS did not treat Bain fairly when dealing with the 2012 bonus and contravened their own process and stated intention to be transparent and objectively based.

The Employers’ second argument was that he was not contractually entitled to a bonus payment because a term in his Total Compensation Statement for 2011 had the following provision :

You will not earn and have no right (whether contractual or otherwise) to be paid nor be eligible to receive any discretionary incentive award if you are not in employment with UBS on the Incentive Payment Date or if either you or UBS have served notice of termination on or before the Incentive Payment Date. 

The Incentive Payment Date was March 15th , by which time the Plaintiff was gone.

However the judge did not accept that by virtue of those terms, the Plaintiff has disentitled himself to a bonus payment .

112. It is submitted that Bain accepted those terms, and the terms of his employment letter no longer govern. UBS argues that an employee’s rights, including the right to a discretionary bonus, can be limited or eliminated by clear contractual language. UBS argues that Bain is not entitled to a bonus for 2012 because he was dismissed prior to the payment date.
113. The difficulty with this argument is that the evidence in this case does not support it. The evidence on what transpired after 2008 was sparse, leading me at times to wonder what the employees were told about the changes that would be in effect after the takeover and what difference, if any, that made to the terms under which they were employed with UBS.
114. There was no evidence that Bain accepted a fundamental change to his entitlement to a bonus. In cross-examination, the document indicating that if he was not employed with UBS at the time of the payment of a bonus, he would not be entitled to the bonus, was put to Bain. It was suggested to him that by accepting his bonus, he also accepted the terms set out in that document. Bain testified that the statement was given to him, there was no discussion about the terms of his bonus for 2011, and he never agreed with its contents. There was no evidence that these new limitations were brought to the attention of Bain by UBS, discussed with him, accepted by him and formed part of his contract of employment.

116. There are a number of documents from UBS which were filed in evidence that make reference to the bonus scheme. The Defendant cannot “cherry pick” certain portions from the documents that assist the position of the defence and submit that the Plaintiff agreed with these terms simply because he continued to be employed by UBS. There are other provisions in the Compensation Plans that are in direct opposition to the argument advanced by the defence.

117. For example, in the Common Terms of the Compensation Plans for 2012, section 7.1.2 states, “Nothing in the Plan Rules, the Common Terms, or the operation of a Plan forms part of the contract of employment of an employee. The rights and obligations arising from the employment relationship between the employee and the corporation or any member of the Group are separate from and not affected by a plan.”

118. In my view, the reasoning set out in Schumacher, is applicable to the case at hand. In that case, the plan provided that employees had to be actively employed at the time the bonus was paid, in order to receive it. Schumacher was constructively dismissed and the employer took the position it did not have to pay the bonus pursuant to the terms of the agreement. The court stated:
His involuntary inability to comply with the condition of the PCP ought not to be justification for the Bank in declining the award of the bonus as part of Schumacher’s damages. If that were the case, an employer would achieve a significant advantage by wrongfully terminating an employee because the severance package would not have to include any bonus. Where the bonus was promoted as an integral part of the employee’s cash compensation, it would be inappropriate and unfair to the employee to be deprived of the bonus by reason of the unilateral action of the employer. I do not agree with the position taken by the Bank on this third issue. Schumacher remains entitled to consideration of a bonus, both for the period he worked and the notice period.
I agree with this reasoning and find it is applicable to the case of Bain.
119. Bain was terminated at the time that bonuses were determined and paid to UBS employees. He worked diligently during 2012; there was no hint of his pending dismissal. He expected payment of a significant bonus, as had been the custom for the prior 13 years he had been with UBS. He was dismissed on February 28, so if I accepted the argument of the defence, he became disentitled to a bonus through the unilateral actions of UBS, over which Bain had no control. In my view, that would be an unfair result. He ought to have been considered for a bonus, just as the comparators were. The same evaluation process ought to have been followed as with the other directors, using the same objective criteria in a transparent manner. This was not done.

Quantum of Bonus :

Unlike many other bonus plans that involve the forfeiture on cessation of employment of unvested but outstanding bonus payments, this plan provided that in terminations due to redundancy only, the unvested awards would continue to vest after the termination date.

Therefore, if UBS had properly assessed his bonus he would have been awarded a 2012 bonus, payable in the 5 years following.

She also rejected the concept that she had to figure out the cash portion and the shares portion of the bonus and award the damages separately . The Judge indicated that :

Bain is not seeking the EOP award, so whether or not those shares would have vested during the notice period is not determinative. Bain is seeking damages at common law for compensation for his salary and bonuses which he would have earned had UBS not terminated his employment and failed to give proper notice. Bain had the right to work and receive his usual remuneration throughout the notice period or be paid in lieu thereof. That did not occur, and he is entitled to damages. The comments of the court in Paquette are applicable to the case at hand: “[T]he appellant is entitled to compensation as part of his damages for wrongful dismissal for the loss of his bonus for 2014 … and the lost opportunity to earn a bonus in 2015”.

In determining the amount of the bonus the judge looked at what the relevant comparators earned for the 2012 period, and averaged that amount, which came to $533,866 for the 2012 year.

For the time that he worked in 2013 ( a total of 2.75 months as he was given some working notice) Again the judge looked at what the comparators earned in 2013, divided it by 12 and multiplied it by 2.75. This came to another $242,380.

Again, for the notice period itself the judge used the average of what the comparators made in the same time frame. This came to another $1,285,044 in bonus payments over the notice period.

His total bonus entitlement for the 32.75 months of unpaid bonuses came to $2,061,290.

Not a bad payday.

Vacation Pay :

The parties agreed that the Plaintiff was owed 20.10 days vacation pay .

How much is one days vacation worth ?

Is it based on the Plaintiff’s measly salary of $385,000 or his total compensation of $1,562,650?

The ESA refers to wages as including ” sums paid as ..bonuses that are dependant on the discretion of the employer and that are not realted to hours , production or efficiency ”

This convoluted statutory language means that if a discretionary bonus is based on either hours worked, production of efficiency, then it counts as wages and thus attracts vacation pay.

In finding for the Plaintiff , the Judge said :

153.  The evidence at trial made it clear that the bonus paid to directors at UBS was based on performance, the employee’s contribution to various transactions, the revenue generated by that employee’s participation in various deals as well as a number of other factors set out by UBS. The bonus was based, in part, on how an employee produced and how diligent he or she was in their work at UBS. Thus, I do not find section 1(1) is applicable and precludes inclusion of the bonus when calculating entitlement to vacation days.

This netted the Plaintiff a cool $87,472 just in vacation pay.

The total judgement, exclusive of costs, was $2,596,268.

I am advised that UBS is appealing the decision on the issue of bonus and vacation pay.

My Comments:

On many   separate occasions in her award , the Judge comments that the actions and /or the positions of the Defendant were ” unfair”, especially when it comes to their decision to pay zero bonus, not just for the notice period ( which is common ) but more importantly for the previous year that the Plaintiff actually worked.

I wonder what the outcome would been had they paid him some bonus, based perhaps on his average over the previous two years ? Would the Court have viewed that as a reasonable exercise  of the Employers’  discretion  and thus not interfered with the decision?

Furthermore, if the bonus constituted “wages ” under the ESA, which the Judge found it did, then how can an Employer ever put a limitation or condition on whether or not to pay these wages?

Would this not constitute an attempt to contract out of the ESA, which is prohibited under Section 5(1) of the ESA?

The only time that an Employer can withhold the wages owing to an employee is in accordance with Section 13 of the ESA, none of which would justify the withholding of an earned bonus .

We all know that an employment contract which required the employee to be a employee on the payday, otherwise they forfeit their wages would be illegal . Why is any different if that earned wage is simply called a bonus?

In Bishop v Rexel Canada ( 2016 BCSC 2351) Justice Burke held that reasonable notice for a 61 year old buyer with 27 years of service was 20 months.

The Court first found that the Plaintiff had not resigned and that the Employer had taken advantage of his emotional state when he said that he was quitting.

After the Plaintiff counsel in a letter to the Employer stated that his client had not resigned, the Employer immediately offered to reinstate him with full back pay, which the Plaintiff refused, claiming that it was unreasonable for him to return to the workplace.

The Court upheld the Plaintiff’s decision not to return for the following reasons:

1. The Employer testified that had he agreed to be reinstated that there was a significant likelihood that he would be laid off later in the year in any event.
2. He had been poorly treated at the time he was terminated, included being escorted out of the office part way through his shift and also the fact that the Employer had purported to accept his resignation letter, when in fact he had never submitted such a letter.

The Judge concluded that ” Unfortunately, there was clearly a breach of trust and some animosity between the parties. Therefore I conclude that this is not one of those rare cases where the employee should have accepted re-employment in order to mitigate his losses.”

It is interesting that the judge uses the term ” rare cases” in a way that seems to assume that an employee does not have to return to work from the same employer who just fired him, unless the Employer can prove that it would be unreasonable not to do so.

Does this mean that the onus of proof is upon the Employer to show that the return to work offer is a reasonable one or does the Employee have to show that to return is unreasonable?

Perhaps this judge, unlike the Supreme Court of Canada in Evans v Teamsters ({ 2008}  1 SCR 661) , realized the absurdity of forcing an dismissed employee to return to work from a place that he was just wrongfully dismissed simply because the employee had the audacity to hire a lawyer and question the compensation being offered by the Employer for the dismissal.

 

 

In Doyle v Zochem Inc et al ( 2016 CarswellOnt 19295 ) Justice Belleghem awarded 10  months notice to a 48 year old female Plant Manager and Health & Safety Coordinator with 9 years seniority.

However he also awarded moral or Honda damages of $60,000 for the following actions of the Employer :

1. She was fired 5 days after making a sexual harassment complaint against her male  boss ( Rogers) , who was critical to the running of the organization.
2. The Employer conducted a meaningless investigation led by an Executive who had no training or experience in human rights issues and whose sole purpose was to clear the harasser.
3. The Employer wanted to replace her with a male so as to avoid any gender issues in the future.
4. The Employer tried in vain to find performance issues to justify the termination, even though in the end they did the termination on a without cause basis.
5. The Employer tried to rely on after acquired cause, which failed.
6. Even though the Plaintiff had been told that she would be given a chance to improve her performance, the decision to terminate her had already been made one month prior to this discussion.
7. The Employer failed to use progressive discipline.
8. Knowing that the Plaintiff suffered from clinical depression, the Employer showed a lack of empathy when the Plaintiff cried at a meeting. The female executive told her to ” stop being so sensitive ” and that ” Leaving a meeting in tears would cause her to lose respect “.
9. The termination meeting was ” cold and brusque.’ She was not permitted to retrieve her own belongings, although her male counterpart, who was also terminated at the same time , was permitted to do this. She was not given the option of leaving through the office or the factory as they did not trust her.
10. The termination offer of 6 months was a take it or leave it offer. If it was not accepted only the ESA minimums would be paid out. No explanation of how the amounts were calculated was included. In fact they only paid the 8 weeks termination pay at first and only paid the 9 weeks severance pay some weeks later. The release contained a release of all her human rights claims, thus the sexual harassment complaints would ” evaporate”. She would have to give up her STD rights . No ROE was provided. Her pension entitlement letter was late by a year.
11. The Employer denied her STD improperly even after their own doctor confirmed her disability. The same Executive who conducted the improper and biased investigation also took on the role of the claims adjudicator of the Plaintiff’s STD claim, for which she had no training. Ironically, because the Employer self insured the STD plan, any payment that they would have made under the STD plan would have acted as a credit towards their severance obligations under the common law.

The Plaintiff also received human rights damages of $25,000 because :

1. The investigation was done in one day .
2. They used an untrained investigator.
3. They failed to implement sensitivity training as recommended by their independent consultant.
4. They did not take the matter seriously other than as “it relates to the singling out of Doyle as a candidate for termination and replacement by a male, as the means to overcome the “problem,” rather than having management confront Rogers as Doyle had done, to remedy the situation. Management’s failure left Rogers to implement his own solution, — a kind of “work to rule,” — that merely made Doyle’s plight even worse.
5. Simply relying on the information that the harassment had stopped and not continue the investigation was not sufficient .
6. In order to avoid the problem of future sexual harassment claims by a female supervisor in an all male environment, the Employer decided to fire the only female manger and replace her with males. This is how they solved their ” gender problem”.

Many of the grounds for the moral damages claim are well founded. However the judges’ concerns about the terms of the offer as set out in paragraph 10 of this blog require some comment.

Oh yeah, it was an OFFER!

I thought that settlement privilege meant that a Court could not even look at an unaccepted offer, let alone determine that the fact that an offer was made could be a ground for moral damages. By the way, most employer offers are presented as take it or leave it basis and require a release.

Instead of focusing on the offers that the  parties make, the Court should focus only on the parties actions. In this case the Court could have said

“Because you only paid out the ESA minimums when you knew that she was entitled to much more, I am awarding moral damages as this is an example of the bad faith involved in using “hardball tactics ” as set out by the Supreme Court of Canada  in Wallace v United Grain Growers Ltd           ( 1997 (3)  S.C.R. 701 at para 108).  If the Employer felt that 6 months notice was the proper amount, then they should have paid out 6 months notice. To do otherwise is simply an attempt to starve out the plaintiff and force him to accept a payment of less than his common law entitlement. This type of Employer action is not to be encouraged.”

 

In Donald v. Metepenagiag Mi’kmaq Nation ( 2016 NBQB 220 ) Justice McNally was faced with the situation of a school principal being terminated allegedly for just cause, however the termination letter gave no reasons for the dismissal. The reasons only came out later in the Statement of Defence.

After reviewing various authorities, the Judge had this to say about the procedural requirement of proving just cause:

27 As I read the authorities, the first step in the analysis of the merits of an action for unjust dismissal is a determination of the reasons communicated by the employer to the employee for the dismissal, followed by a determination of whether those reasons have been proven on the balance of probabilities and finally a determination of whether the facts as proven constitute a repudiation of an essential condition of the employment contract or a fundamental breach of the employment contract by the employee in the particular circumstances and context of the case and the employment relationship — see also McKinley v. BC Tel, [2001] 2 S.C.R. 161 (S.C.C.).

This paragraph sets out three distinct aspects for the employer to prove if they intend to rely on just cause :

1) Setting out the just cause in the termination letter.

2) Proving the facts supporting the cause.

3) Showing that the breach was serious enough to justify dismissal.

In respect to the first ground the Judge had the following to say :

28 With regards to the first step of the analysis in the instant case, the letter of termination presented to Mr. Donald on June 24, 2009 does not articulate the reasons for his dismissal, neither on its face nor by implication by incorporation of the content of the letter provided to him on February 8, 2010 which was apparently attached to the letter of termination. No evidence was presented to establish that the Band provided any more particulars verbally to Mr. Donald for the reason for his termination. No witness with direct knowledge was presented at trial by the Band to articulate the particular reasons for Mr. Donald’s termination. The defendant called two witnesses at trial, Ms. Ward and Karen Augustine, one of the Co-Managers and the author of the letter of concerns of February 8, 2010 to Mr. Donald. Ms. Augustine was on leave at the time of the dismissal and was not personally involved in the decision to dismiss Mr. Donald. She did confirm however, that she had no further discussions with Mr. Donald concerning absenteeism following the February 8, 2010 letter. There was no evidence to indicate that Ms. Ward was directly involved or participated in the actual decision to dismiss Mr. Donald.

The reference to the February 8th letter is a letter of concern regarding some performance issues, however there was no warning that further issues or concerns could lead to his termination with just cause.

The judge also commented on this first requirement in the following passages:

58 Metepenagiag has failed to meet its burden of proving either the specific reasons for the dismissal or that the reasons pleaded as grounds for dismissal constituted just cause in the circumstances. Again, there was no evidence presented from anyone in authority to speak for the employer, or with direct knowledge, to explain the reasons for Mr. Donald’s dismissal. The reference in the letter of termination from the Band Manager Kenny Levi to the issues and concerns addressed in the letter of February 8, 2010 from Ms. Augustine do not, in my view, articulate or sufficiently specify the particular reasons for dismissal. Neither was any evidence presented from a similar source of authority with the Band to establish the degree of prejudice Mr. Donald’s conduct caused, if any, to the employer, or whether, even solely from Metepenagiag’s perspective, that this purported conduct interfered in some substantial way with the school’s operation as opposed to being primarily a concern of the Band with paying Mr. Donald salary for days when he was not present at the school as appears to be the concern indicated in the letter of February 8, 2010.

59 In such circumstances, it is difficult, if not impossible, to assess and determine the specific reasons being relied upon by the defendant to justify the dismissal and more importantly, to determine whether or not the summary dismissal was a just dismissal in the particular circumstances of the case.

As the employee was only half way through a two year fixed contract, the employer was required to pay one years pay for a one year employee.

This case raises some interesting issues :

If the Employer does not set out in the termination letter the reasons for termination, can they even rely on just cause at trial ?
What constitutes sufficient reasons for termination?
If the Employer sets out two reasons for dismissal in the termination letter can they add a third claim later on, without having to rely on the doctrine of after acquired cause?
In the world of unionized labour relations, it is established arbitral law that an Employer must set out all the reasons for termination in the actual termination letter, and any attempt to expand the grounds later on will likely fail unless the employer can prove that it falls within the doctrine of after acquired cause .

Therefore this case should lead employers who intend to rely on just cause to give fulsome reasons in the termination letter. Not only will that insure that the Court will look at the actual merits of the reasons, but it may also have the added benefit of bringing to the attention of the plaintiff’s lawyer that the employer has a serious case of cause.

Imagine if the termination letter said ” On February 5th, 2016 at 5:01 pm, you were observed by a camera at the south warehouse exit removing four boxes of Company product and putting them in the trunk of a 2012 Chevy bearing licence plates YRS2016. We have determined that this car is registered in your name. You were shown this video at your earlier meeting. You denied that you were the person in the video.”

Now imagine that you are Plaintiffs’ potential lawyer and you read this letter. The Plaintiff tells you that this is all a lie and that there has been conspiracy against him by his boss for over 5 years.

Don’t you want to have a look at this video before you take on this file, especially if you are on a contingency fee arrangement?