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In Merritt v Tigercat Industries ( 2016 CarswellOnt 2508) the employer terminated a 66 year old general labourer with 12.5 years service solely because he had been charged with two counts of sexual assault against minors. The alleged events did not take place in the workplace and did not involve any employees of the defendant.

The Court , in finding that there was no just cause, had the following to say about this situation.

32 Criminal charges alone, for matters outside of employment, cannot constitute just cause.

33 Improper conduct of an employee while not at work can only form grounds for termination with cause in limited situations. There must be a justifiable connection to the employer or the nature of employment.

34 Counsel also referred to two arbitration cases. In Millhaven Fibres Ltd. and OCAW, Local 9-670, Re, [1967] O.L.A.A. No. 4 (Ont. Arb.), the majority on the panel addressed conduct in paras. 19 and 20 as follows:
19 There are a number of arbitration cases which deal with disciplinary matters arising out of the conduct of an employee at a time when he is not in the Plant. Generally speaking, it is clear that the right of management to discharge an employee for conduct away from the Plant, depends on the effect of that conduct on Plant operations.
20 In other words, if the discharge is to be sustained on the basis of a justifiable reason arising out of conduct away from the place of work, there is an onus on the Company to show that:
(1) the conduct of the grievor harms the Company’s reputation or product
(2) the grievor’s behaviour renders the employee unable to perform his duties satisfactory
(3) the grievor’s behaviour leads to refusal, reluctance or inability of the other employees to work with him
(4) the grievor has been guilty of a serious breach of the Criminal Code and thus rendering his conduct injurious to the general reputation of the Company and its employees
(5) places difficulty in the way of the Company properly carrying out its function of efficiently managing its Works and efficiently directing its working forces.
See, also: O.P.S.E.U. v. Ontario (Ministry of Natural Resources), [2008] O.G.S.B.A. No. 102 (Ont. Grievance S.B.), at paras. 140-141.
35 The principles are correctly stated. The cases, however, are not comparable. Mr. Merritt was a general labourer, one of several hundred at Tigercat. He was not a manager, professional or senior employee.

43 As before, there is no evidence to support Tigercat’s position. Mr. Merritt was under no obligation to disclose the criminal allegations. At the time, the investigation was ongoing and he had been charged. Mr. Merritt is entitled to the presumption of innocence and the right to silence. An employee cannot be compelled to discuss the criminal allegations as any disclosure to an employer could easily be forwarded to the police.

What I found most interesting about this case was the comments by the judge of the presumption of innocence and the employee’s right to silence. In most situations a criminal lawyer will tell his client not to say anything to anyone about the charges. This seems to conflict with an employee’s duty to participate in an employer’s legitimate investigation.

This case may give some clarity in trying to balance the employer’s need or legal obligation to conduct an investigation and the employee’s Charter right to be presumed innocent of criminal charges and his right to remain silent.

In Streng v Northwestern Utility Construction ( 2016 CarswellBC 1555) the self represented plaintiff won his case by defeating an allegation of just cause and won an award potentially worth $23,400. However he had mitigated his damages over the 4 month notice period by making $21,782, thus his win was only worth $1,618 plus $176 for costs.

The defendant was apparently defended by a lawyer.

The Judge wrote a 39 page decision.

I certainly hope that the defendant felt that the “principle ” in this case was worth the effort and expense.

In Summerfield v Staples Canada Ltd ( 2016 ONSC 3656) Perell J. had this to say when determining the notice period for a  salesperson:

The character of employment factor tends to justify a longer notice period for senior management employees or highly skilled and specialized employees and a shorter period for lower rank or unspecialized employees: Cronk v. Canadian General Insurance Co., supra; Bullen v. Proctor & Redfern Ltd., supra, at paras. 7-10; Teitelbaum v. Global Travel Computer Holdings Ltd. (1999), 41 C.C.E.L. (2d) 275 (Ont. S.C.J.); Bernier v. Nygard International Partnership, 2013 ONSC 4578 (CanLII) at para. 57; Tull v. Norske Skog Canada Ltd., 2004 BCSC 1098 (CanLII).

However the definitive word on this issue is found in  a case not cited by the Court called Di Tomaso v Crown Metal Packaging Canada LLP ( 2011 ONCA 469) where the Ontario Court of Appeal had this to say about the issue:

27 Crown Metal would emphasize the importance of the character of the appellant’s employment to minimize the reasonable notice to which he is entitled. I do not agree with that approach. Indeed, there is recent jurisprudence suggesting that, if anything, it is today a factor of declining relative importance: see Bramble v. Medis Health & Pharmaceutical Services Inc. (1999), 175 D.L.R. (4th) 385 (N.B. C.A.) (“Bramble”) and Paulin c. Vibert (2008), 291 D.L.R. (4th) 302 (N.B. C.A.).
28 This is particularly so if an employer attempts to use character of employment to say that low level unskilled employees deserve less notice because they have an easier time finding alternative employment. The empirical validity of that proposition cannot simply be taken for granted, particularly in today’s world. In Bramble, Drapeau J.A. put it this way, at para. 64:
The proposition that junior employees have an easier time finding suitable alternate employment is no longer, if it ever was, a matter of common knowledge. Indeed, it is an empirically challenged proposition that cannot be confirmed by resort to sources of indisputable accuracy.
29 In my view, the motion judge conducted an appropriately holistic review of the case before her. She did not give disproportionate weight to any of the Bardal factors. She dedicated nine paragraphs of her reasons to the character of employment factor but it was simply not as relevant in these circumstances as the other three factors. She did not err in doing so.

In other words the assumption that lower ranked people get lower notice periods than higher ranked people has not been the law in Ontario since 2011.

Why then do judges and lawyers still rely on a faulty statement of the law ?

The Ontario Court of Appeal in Oudin v Le Centre Francophone de Toronto, Inc. ( 2016 ONCA 514 ) upheld the trial decision of Dunphy J. which I reviewed on November 16, 2015 under the title “Waiver and Severability Clause Cures All Defects in Employer Contract”.

In my previous blog I was critical of the Judge’s use of a vague waiver and severability clause to cure multiple defects in a ESA only termination clause.

Although this issue was a major point on the appeal, the Court did not even address this issue in their short four page endorsement other than to say that ” The motion judge’s interpretation of the contract is entitled to deference.”

It is very unfortunate that the Court of Appeal did not use this opportunity to clarify the many conflicting cases on the enforceability of these ESA clauses. The issues regarding these clauses deal with the following issues :

1) Does the agreement have to make specific reference to benefits ?

2) Does the agreement have to make specific reference to severance pay ?

3)  Does there have to be a provision which  explains that the plaintiff is limited to these termination benefits and that he has explicitly given up his right to common law reasonable notice ?

4) Does a just cause provision breach the rule that under the ESA there is a higher standard of wilful misconduct ?

5) Does the agreement have to make specific reference that the employee is also entitled to vacation pay on the termination pay ?

6) If the clause requires the employee to sign a release before receiving any payments , is the clause invalid?

7) If the clause gives the employer the right to have the employee work out both the termination pay period and the severance pay “period” , is the clause invalid?

8) To what degree, if any, does the employer need to prove that the termination clause was brought to the attention of the employee at the time of hiring ?

9) Are employees deemed to know exactly what the termination provisions of the ESA are and therefore what the employee is giving up by signing the agreement?

10) What if the person signing this agreement on behalf of the employer also does not know what the ESA provides for ? Can there be a meeting of the minds when neither party understands what they are signing?

11) Does a waiver and severability clause cure all defects in the agreement or does this offend the “no blue pencil ” rule set out by the Supreme Court of Canada ?

12) What if the clause  does not even properly refer to the Employment Standards Act, 2000 ? Are laymen supposed to figure out which statute applies to their situation? What if the employer references the wrong section of the ESA?

13) As employment contracts are usually between parties of grossly unequal bargaining power, should the doctrine of good faith administration of a contract require the employer to obtain from an employee a Certificate of Independent Legal Advice as a condition precedent to enforcing a ESA only termination clause ?

I sincerely hope that this case finds it way to the Supreme Court of Canada and that they take the opportunity to give the public ( who at the end of the day consists almost entirely of employers and employees) some well needed guidance  on this important issue affecting all of Canada , except Quebec. In the Quebec Civil Code there is an express provision providing that all termination clauses must be reasonable and thus the Court can overrule any termination provision  that the Court finds is unreasonable. Vive La Difference!

 

 

 

In Marques v Delmar International ( 2016 ONSC 3448 CanLII ) Diamond J. properly found that entitlement to a bonus was to be calculated as of the end of the reasonable notice period, not the date of termination. The bonus plan guaranteed a ” minimum bonus of $25,000 after your first year of employment”

The Plaintiff first day of work was August 11, 2014. He was terminated on April 7, 2015.

After assessing the Bardal  Principles the judge commented as follows:

The assessment of reasonable notice is certainly an art and not a science. The plaintiff’s age, management position and length of service all warrant consideration. The cases provided by the plaintiff demonstrate a range of reasonable notice periods.

The judge awarded him four months notice taking his notice period to end on August 7, 2015, four days short of his one year anniversary.

The Judge then said :

This is short of the 12 month anniversary of the plaintiff’s commencement dates, and as such the guaranteed $25,000.00 minimum bonus payment is not due and payable by the defendant.

The Plaintiff submitted case law to support a notice period of 7 months. The Defendant submitted no case law at all on the issue of notice.

It gets even worse. In fact the Plaintiff mitigated his damages as of July 27, 2015 which was 3.5 months after termination. Therefore the only real reason for the trial was this bonus issue . The Judge properly determined that the fact that the employee gets a job earlier or later than the notice period is irrelevant ( OCA in Holland v Hostopia ( 2015 ONCA 762 Can LII) . He identified that the determination of the notice period is an art and not a science. In other words he had a broad discretion in setting the notice period.

He exercised that discretion in such a way that the plaintiff failed to get a minimum $25,000 bonus because he missed the mark by a lousy 4 days.

 

This Plaintiff won the battle but lost the war.

In Saliken v Alpine Aerotech Limited Partnership ( 2016 BCSC 832 CanLII) the Court found that a release signed by the plaintiff at the time of his  termination was invalid due to unconscionability or as the judgement said ” The issue is whether the transaction, seen as a whole, is sufficiently divergent from community standards of commercial reality that it should be rescinded” .

The reasons were as follows:

1) The only consideration paid to the Plaintiff was relief from the alleged obligation to repay the balance of a training loan in the sum of approximately $8,000. The Court found that under the terms of the loan agreement nothing was owing as he did not quit but rather was terminated without cause. Thus there was no consideration for the release.

2) The Plaintiff was required to sign the release on the spot in ” circumstances of distress and concern for supporting his family”. The entire meeting only lasted 15 minutes.

3) The termination documents were false and misleading in that they wrongly suggested that the Defendant had just cause, which they did not.

4) Whether the Release was signed or not the Plaintiff was entitled to his minimum termination payments under the ESA, which was two weeks pay.

5) Given the Plaintiff’s limited education ( Grade 11) and the legalese of the Release, the Judge doubted that the Plaintiff truly understood what he signed. The meaning of the documents was not explained to him at the time .

6) He was told by the Employer that unless he signed the Release he would not receive a cheque for his outstanding wages.

Having set aside the release the Court ordered the Employer to pay 6 months notice to a 54 year old Helicopter Mechanic making a salary of $68,000 who was only with the Employer for 1 year and 3 months.

Lessons to be learnt.

NEVER have a dismissed employee sign a Release on the day of termination.

You pay nothing, you get nothing. Don’t be a cheapskate.

In Demone v Composites Atlantic ( 2014 NSLB 163) it was held that a release which gave the ex employee both his statutory minimum notice of 8 weeks plus an extra 19 weeks pay was not sufficent to displace the employees right to seek reinstatement under Section 71(1) of the Labour Standards Code of Nova Scotia.

This section provides for statutory  tenure for employees with over 10 years service, subject to various exceptions, notably just cause or a legitimate layoff . This can only be waived if the employee obtains a benefit from the employer greater than his statutory rights, including the right of reinstatement.

This is what the Board said:

24. The Respondent’s letter also refers to what is described as a payment offered to the Complainant on a ‘gratuitous basis’. Section 71(1) of the Code provides a ten year employee with statutory tenure which means that termination may only take place where the employer is able to demonstrate “just cause”. The Code does not contain a pay in lieu of notice provision for employees whose period of employment is ten years or more. Consequently, as Board jurisprudence has shown, an employee of ten years or more who has been wrongfully terminated may seek to be reinstated. It rests with the Board to determine the appropriate remedy where wrongful termination has been established. In the absence of just cause or an exemption under section 72(3) which has not been alleged by the Respondent, the Board is left to ask does the ‘gratuitous payment’ provide the Complainant with a benefit or benefits greater than those provided under the Code? The Board is of the opinion that, based upon the information as presented, the offer of 19 weeks pay is not a benefit greater than the statutory tenure conferred on the Complainant by the Code.
25. It is the finding of the Board that the Complainant in signing the Full and Final Release gave up his rights under the Code and as such the Release, for the purposes of the Code, is invalid pursuant to section 6 of the Code.
VI Disposition
26. Based upon the Board’s finding on the preliminary issues the Complainant is entitled to pursue his complaint under the Code. A hearing will be scheduled in due course to determine the substantive issues arising from the Complainant’s termination.

When that case was ultimately heard by the Labour Board on its merits, it was found that the dismissal was a legitimate layoff ( his job duties were divided between  four existing employees ) and thus reinstatement  was not available. Moreover they seemed to question the validity of the aforementioned Preliminary Order as set out in following quote from 2015 CarswellNS 695.

71. Given the findings of the Board, arising from a full hearing of this matter and despite the preliminary ruling, it is evident that the facts and arguments of this particular case do not lend themselves to making a determination on whether a Release is binding in a situation where an employer is unable to establish that an employee had been permanently laid off by the elimination of a position and was therefore entitled to reinstatement. This, therefore, remains an issue to be determined in a different case based upon the appropriate facts and full argument. Consequently, the Board’s preliminary ruling in DeMone v. Composites Atlantic Ltd., 2014 NSLB 163 (N.S. L.B.) in so far as it relates to this particular issue is varied in accordance with the Board’s findings as set out above.

As this provision is similar to the Unjust Dismissal section of the Canada Labour Code, could this logic also be applied to settlements in the federal sector where an employee receives a common law settlement, signs a release and then pursues a claim for reinstatement ?

One way to avoid this situation may be to only settle the case after the 90 day limitation period in the Canada Labour Code after insuring that no prior complaint has been filed.

 

 

In Sproule v Tony Graham Lexus Toyota et al ( 2016 ONSC 2220) the Court held that operating companies can be common employers but that is not the case for pure holding companies .

The Court said as follows:

20. The defendants have conceded that there is a potential for a finding at the conclusion of the trial that the operating companies were one “common employer”. The evidence may potentially lead to the conclusion that they all had “effective control over the employee”. However, the defendants’ position with respect to the holding companies is that there is no genuine issue for trial, in that there is no evidence that could possibly give rise to a finding that the holding companies are common employers.
21. I agree with the position advocated by the defendants. The fact that these companies are intermingled financially, even to a great extent, will not result in a finding that they had effective control over the employee. They are holding companies — nothing more, nothing less. They do not exercise directly or indirectly any control over the employees. The doctrine of common employer has no application to them on any analysis of the evidence. As such there is no genuine issue for trial.

Furthermore there is no claim against the individual owners of the companies, even when they are the controlling minds of the employer companies unless there is an allegation of fraud, deceit, dishonesty or want of authority against the individuals.

In Cabot v Urban Systems ( 2016 YKCA 4) the plaintiff was employed for only 14 months as a Professional Planner. Her age seems to be in the late 40’s.

The trial judge awarded her 6 months notice but the CA reduced it to 4 months.

This is what they said about notice periods for short service employees:

23. For a short term employee the useful starting place in discussing range is the two to three months spoken of in Saalfeld and Hall. The only feature of this case that would extend that range (there being no special circumstances such as inducement, bad faith or a poor labour market) is a level of responsibility not present in those cases.
24. Adjusting the judge’s finding that six months was a reasonable notice period to take account of his erroneous reference to Ms. Cabott’s hope of returning to British Columbia, and considering the range for this type of case which I would put generally at three to four months, I would allow the appeal, set aside the order and grant judgment to Ms. Cabott based upon four months’ notice.

It should be noted that two of the judges in this case ( Mr Justice Goberman and Madam Justice Saunders) are on the BC Court of Appeal , so in essence this could easily be viewed as the BC view of notice for short service cases.

The BC Court of Appeal in Munoz v Sierra Systems Group ( 2016 BCCA 140) commented on the burden of proof in the Bardal Factor of availability of other employment .

The Court commented as follows:

48) The employee bears the burden of proving that the notice period should be longer because of the lack of availability of suitable work. As Madam Justice Baker said in Desaulniers v. Wire Rope Industries Ltd., [1995] B.C.W.L.D. 1332 at para. 14 (S.C.):
“If the plaintiff asks the court to depart from the general range of notice periods recognized by other courts in respect of plaintiffs of similar age, seniority and position, she must establish an evidentiary basis for such a departure.”
49) In the present case the trial judge found that “neither party produced cogent evidence of similar employment at the time of termination”. Since it was Mr. Cuesta’s burden to prove a lack of availability of work, this failure falls to him.
50) Typically the burden is met by a plaintiff demonstrating his efforts to find work through job postings and applications made. In this case that evidence was not available because Mr. Cuesta chose to focus on his existing private IT company. There is no suggestion that he did not pursue other work because none was available. Mr. Cuesta deposed that this seemed to be the sensible thing to do:

At first blush it looks like the failure of the Plaintiff to lead this type of evidence would be fatal, however the Court recognized that the burden of evidence is satisfied where the Plaintiff simply shows that his diligent job search has not resulted in a job.

This case reminds us of how important it is for the Plaintiff to present a thorough and comprehensive job search record to not only show the Court that he reasonably mitigated his damages but to  further provide an evidentiary basis to find  that the lack of available jobs is a factor that should extend the notice period.

In my experience as a mediator of employment matters,  comprehensive evidence of this type of mitigation evidence is seen in perhaps 50% of the cases. This failure of the Plaintiff to properly document their job search costs the Plaintiff money at the mediation as it gives the Employer a bargaining chip to reduce the notice period.