Author: barryfisher

In Saarinen  v Rogers Communications ( 2023 ONSC 4328 ) Associate Justice Frank  dealt with a refusal motion in which the defendant refused to answer the following question :

Question: To produce the termination packages of all employees (names of said employees may be redacted to only provide first initials) who had more than 25 years of service and were terminated without cause by the Defendant during the period of January, 2017 to December, 2019.

This is what the Court ruled:

[10] It is well-established that in determining the common law entitlement of a dismissed employee, the Court applies the Bardal factors on a case-by-case basis. Thus, a termination package offered to an employee or termination packages offered to other employees would ordinarily not be relevant to the determination of the applicable reasonable notice period for the plaintiff under the common law, which is based on the Bardal factors. As a result, if the plaintiff’s claim were based solely on a common law entitlement, the requested information and documents would not be relevant.

[11] However, in the circumstances of this action, the plaintiff asserts a claim that goes beyond the common law notice entitlement. Specifically, in the amended statement of claim, including paragraphs 12, 18 and 31, the plaintiff alleges that she was wrongfully dismissed and that, based on the implied terms of her employment contract and the defendant’s policies and/or practices in place, she was entitled to a termination package that included 24 months compensation with no mitigation requirements. The defendant consented to the amendments tonthe statement of claim that include these pleadings and joined issue with the plaintiff on this point. For example, at paragraph 22 of the amended statement of defence, the defendant deniesthe implied term alleged by the plaintiff that she was entitled to 24 months compensation andbthat she had no duty to mitigate.

[12] In light of the pleadings in this action, the disputed questions are relevant. If the court finds that there was no just cause for the plaintiff’s dismissal, the termination packages provided to similarly situated employees and the defendant’s policy and/or practice determining termination packages will be relevant to the determination of the plaintiff’s damages. As there is no evidence that the requested information and documentation would offend the principles of proportionality, the questions should be answered, subject to any privilege considerations, as outlined below.

My Comments:

I am not sure why the Plaintiff would plead that it was a term of her employment that she was entitled to the notice period that the employer normally gave to its employees. In my limited 43 years of experience I have rarely seen an employer termination policy which is better than the common law reasonable notice.

I think that this decision is fundamentally flawed as the assessment as to what is reasonable notice is that of the Court alone and should not be influenced in any way by what the past practice of the employer. In most situations of mass layoffs the overwhelming majority of terminated employees take whatever offer the employer makes. Does this mean that an employer can now lead evidence that since 75% of its employees took the employers’ crappy first offer, that is all this particular employee should get ?

Many years ago some courts initially accepted the concept of ” baseball justice ” which meant that the Court would assess whether the employers offer or payment of notice was within the range of reasonable notice. This approach was soundly rejected by the Court of Appeal which reiterated the principle that the determination of reasonable notice was to be determined by the Court and not to simply judge the reasonableness of the employer’s offers.

If you would like a copy of this case, email me at barry@barryfisher.ca

If you would like to book a mediation, go to www.barryfisher.ca

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ever since Howard Levitt’s article came out a week ago I have been swamped with enquiries from employment law lawyers on this issue .

I would like to state the following:

1. I AM NOT A TAX LAWYER. I thought I wanted to be when I articled at Stikeman Elliot but they convinced me I was not cut out for it .

2. The source material on this issue is next to impossible for the average non tax lawyer to understand.

3. I have relied on learned blogs from other people who actually can talk tax ( which is not English )

4. The first thing I learnt is that before you even get into this issue , you have to determine if this is an ” Avoidance Transaction” which is defined as” a transaction if it may reasonably be considered that one of the main purposes of the transaction, or of a series of transactions of which the transaction is a part, is to obtain a tax benefit.”

So is the main purpose of a wrongful dismissal action to obtain a tax benefit ?

Answer: NO. The main purpose of a wrongful dismissal action is to move money from the employer’s pocket to the ex employees’ pocket.

It looks like the purpose of this section of the ITA to to catch those transactions which have no real commercial value other than the tax benefit. In other words, absent the tax benefit, would anyone reasonably go through with this transaction ?

Clearly wrongful dismissal actions would and have existed regardless of the use of general damages. Therefore obtaining a tax benefit by using general damages may not always be in strict compliance with the ITA, but it does not appear to be an Avoidance Transaction that is required to be reported.

Remember, I am not a tax lawyer. This could be wrong.

I welcome any comments or new material on this important issue.

In Tan v Storstac ( no citation provided ) Justice Dinnen had a situation where the Plaintiff received a judgement for $35,886 which was considerably better than the Plaintiff’s Rule 49 offer of $23,000 made back in March of 2021.

The Judge then awarded costs of $35,000.

Lets do some math :

If they accepted the Plaintiff’s Rule 49 offer it would have cost them only $23,000 plus their own costs to date, say $5,000 for a total of $28,000

Instead they will have to pay :

$35,886 for the claim
$35,000 for the costs award
$23,761 for their own lawyer

Total : $94,647

If you wish a copy of this case, email me at barry@barryfisher.ca

If you wish a mediation, consult my calendar at www.barryfisher.ca

In Cumberland v Maritime College of Forest Technology ( 2023 NBKB 065) Justice DeWare awarded a 7 year, 52 year old, Academic Instructor, a 7 month notice period .

This  case, which went on for 9 trial days, focused largely on the various grounds of  just cause. In the end this is what the Judge had to say on the issue:

CONCLUSION ON JUST CAUSE DISMISSAL

[72] In the event Mr. Marshall or Mr. Davies had provided clear warnings regardingnhis conduct to Mr. Cumberland throughout 2018 and 2019, they would have been successful in convincing this Court that Mr. Cumberland was dismissed for just cause.

Mr. Cumberland’s communications with several students are completely inappropriate regardless of the culture of the academic institution. Mr. Cumberland’s interactions with several of his colleagues are equally unacceptable. Mr. Cumberland’s insubordination demonstrated towards both Mr. Davies and Mr. Marshall is simply untenable. All these issues, if properly brought to Mr. Cumberland’s attention, and if likely ignored by Mr. Cumberland, would have easily paved the way for a just cause dismissal. However, Mr. Marshall and Mr. Davies did not take that approach and in so doing deprived Mr. Cumberland of the ability to curb his behaviour and address their concerns. Given the rigidity of Mr. Cumberland’s mindset, I find it unlikely that he could have adequately addressed their concerns if properly advised; however, he was never given the chance, and he is therefore entitled to the benefit of the doubt. For these reasons alone, I do not accept the College has met the burden upon them to establish just cause for the dismissal.

My Comments:

If there was ever a case which showed the importance of due process in proving just cause, this is the one.

In the olden days when I actually practiced law like a real lawyer, I would be asked by my employer client what it would take to build a case for just cause for a particular employee who they were having problems with.

I would ask them a simple question. Is the employee a keeper?

In other words, is this an employee who you think can improve and that you want  to improve?

If yes, then you do not need me as I know zilch about how to manage employees.

If the answer is no, then let’s look at what it will cost to terminate without alleging cause. Otherwise you will have to :

1. Continue to pay this employee for the period it will take for you  to document sufficient warning letters. This could take months. In the meantime this incompetent employee will likely cause you to lose money, clients and have other employees quit.
2. Assuming that you  may have just cause but not wilful misconduct , you will still have to pay out the ESA amounts.
3. You will probably be sued. You will have to pay me and we will probably settle and you will then pay out more money.

In this case the award was $48,644 for the claim and $6,700 for costs.

The cost to the Defendant of this action would likely be as follows :

Paid to Plaintiff and his counsel                          $55,344

Paid to Defence counsel for 9 day trial             $45,000

( I am assuming $5000 per  day of trial )

Total                                                                        $100,344

 

The Recovery for the Plaintiff may be as follows:

Received from Defendant                                  $55,344

Less Lawyers Contingency Fee of 25%.          $13,836

Then Less tax withholding of 30%                   $12, 452

Net Received by Plaintiff                                    $29,056

If the Plaintiff received any EI during this period, the net recovery would even be less.

If the termination had been without just cause, a likely settlement would be around 6 months lump sum. That would have cost the Employer $45,500 and the the Employee would have received  after tax around $31,850.

Instead the Employer probably  paid $100,000 and the employee probably got $29,000.

Does this make sense to anyone ?

If you would like a copy of this case, email me at barry@barryfisher.ca

If you like to book a mediation or an arbitration, go to www.barryfisher.ca

 

 

 

In Giduturi v LG Electronics Canada (no CANLI citation yet) Justice Dinnen had a situation of a 49 year old  warehouse worker of 13 years service whose employer   (  LG ) announced that it ws  outsourcing its warehousing operation in 8 weeks time  to a third party company ( Pantos) who would be offering employment on the same terms and would respect their LG seniority.

However Pantos did not do so in that they offered inferior compensation and purported to say that the employment was ” at will” .

The Plaintiff refused the Pantos offer. Pantos then filled the job. Only after the Plaintiff’s refusal did LG terminate the Plaintiff. 

The Court found that the Plaintiff’s failure to accept the Pantos offer was not a failure to mitigate for two reasons:

1. It was not comparable in terms of the compensation.
2. Citing the Court of Appeal in Dussault v. Imperial Oil Limited 2018 ONSC 1168. where it held “ it is fatal to an employer’s argument that an employee failed to mitigate his damages by working for his old employer where the offer of alternative employment was made before the termination: “

The Plaintiff was awarded 12 months notice.

My Comments:

In many situations where a company is sold, it is common for the purchasing  employer to offer employment to the employees of the seller before closing and before the seller gives notice of termination. The seller does not wish to give notice of termination as this may trigger the obligation to pay ESA termination and severance pay. If the purchaser does employ the employee then the seller is likely off the hook for any termination obligations.

One  way to avoid this situation is for the purchaser to agree that it will keep all its offers of employment open for acceptance to some point after the closing of the transaction. However the purchaser may be unwilling to do so because this would likely create an unacceptable level of uncertainty in so far as staffing is concerned.

If you would like a copy of  this case, email me at barry@barryfisher.ca

For my mediation availability, go to www.barryfisher.ca

 

Following the Waksdale decision by the Ontario Court of Appeal ( which overnight made most ESA only contracts null and void) many employers have revised their contracts for existing employees by substituting enforceable ESA termination clauses. They often  make no other changes to the agreement other than a nominal cash payment.

Where a nominal payment has been made, the employers have relied upon the fact that this was fresh consideration and therefore the new and improved ESA termination clause is enforceable.

The counter argument made by employee counsel is once the old ESA termination clause is voided the common law presumption of reasonable notice becomes the relevant termination provision. Therefore if the employee then signs a valid ESA termination agreement, the employee is giving up a significant benefit ( especially if their common law entitlement would vastly exceed the ESA minimums ) and in exchange is only getting a nominal cash payment. On any objective basis, the employee is worse off under the new agreement than they were under the common law regime of reasonable notice.

In a recent case of the Ontario Court of Appeal called Goberdhan v Knights of Columbus ( 2023 ONCA 327) the issue was the enforceability of a arbitration clause newly introduced by the employer  in an ongoing employment relationship.

The actual issue in the appeal was whether the arbitration clause was invalid because of a failure to provide fresh consideration.

This is what the Court said :

My Comments:

What I find fascinating about this case is that the Court seems to be weighing both the advantages and the disadvantages of the new contract and concluding that as the changes were an overall detriment to the employee, therefore there was no fresh consideration.

The Court also reinforces the concept that simply agreeing to continue the existing employment relationship is not in itself fresh consideration.

If this same analysis were applied to the ESA example I set out above, how could it be considered an  advantage to the employee to have given up their entitlement to common law reasonable notice in exchange for $500?

This case reminds me of a conversation I had with the late Mr Justice Randall Echlin many years ago. Randy always told me that as a lawyer drafting employment agreements he would always make sure that his agreements were at least a little better than the ESA minimums. His concern was that since the ESA was a statutory minimum guaranteed to all employees covered by the Act, what advantage ( in other words “fresh consideration” ) would flow to an employee who agreed to only receive what he was statutorily entitled to anyways?

Because of this conversation, I also adopted a practice that when drafting termination clauses for employers I made sure that the termination clause was at least a little bit better than the ESA.

I am proud to say none of those clauses that I drafted were even contested in court.

If you would like a copy of this decision, email me at barry@barryfisher.ca

For a mediation appointment, consult my calendar at www.barryfisher.ca

 

In Quesnelle v. Camus Hydronics Ltd. ( 2022 ONSC 6156 ) Justice Charney was faced with the following termination clause :

“During your Probation Period and afterwards, you will be entitled only to notice of termination, termination pay and/or severance pay as required by the Ontario Employment Standards Act.”

The Judge found that this clause contravened the ESA for the following reasons:

1. The ESA requires the payment of both termination pay AND severance pay, not one or the other . Th employer probably meant to say that severance pay would only be paid if the underlying conditions were met ( 5 years service an a payroll in excess of 2.5 million dollars) , but they did not say it properly.

2. The clause does not include for the provision of benefits during the termination period and by inserting the word “only” it cannot be inferred that they intended to include benefits.

If you would like a copy of this case, email me at barry@barryfisher.ca

For my mediation dates, go to my calendar at www.barryfisher.ca