Accusing Employer of ” Major Fraud” = Just Cause

In Hicks v Len Dubois Trucking ( CarswellNat 6591), an adjudication under the Canada Labour Code, Adjudicator Deeley had a situation where a truck driver with 2 years service had a dispute with his employer regarding a shortfall of $1,140  in a series of 34 pay checks.

When his employer did not get back to him in what he thought was a reasonable timeframe, the driver sent the following email to his boss:

Of the 34 pay periods I have my sheets for, only 6 were actually correct. Even the last pay I got was wrong and I was shorted crossings and picks/loads, again. If a driver got that many loads wrong, we’d be fired long ago. Two weeks to sort out the sloppy accounting Is more than enough time to pay me for the work I’ve already done. I think, considering its obviously been going on for years and you didn’t seem particularly concerned when we talked. If It isn’t sorted out by then, the courthouse and the Labour Board can deal with the issue, plus damages, as they’ve both already sent me the appropriate forms. In legal terms, this is fraud, and I doubt I am the only one being shorted regularly on my pay. That’s major fraud over $10,000.
This email was found to be just cause. This is what the adjudicator said:
61      Mr. Hicks was not fired because he questioned his pay. He was terminated because of the way or manner in which he questioned his pay. He assumed that he had been and would be treated unfairly. Even though in his original April 14th, 2017 meeting with Mr. Sawatzky it was pointed out to him that two of his areas of concern could not be sustained, namely the basis on which he had calculated his claim for mileage, and the fact that he had already been paid for some of his drops or deliveries to Loewen Windows, he still persisted in his belief that his other calculations were absolutely correct, and that the employer would not be able to offer any reasonable alternative explanation. Before even giving his employer an opportunity to review his revised claims, he wrote a totally inappropriate email on April 28th, 2017 that accused his employer of significant misconduct and threatened further action against them. These were serious allegations which amounted to gross insubordination. They were unreasonable and uncalled for at the time in question. They invited and called for significant disciplinary action on the part of the employer, I therefore find the actions of the Respondent to be reasonable on the facts of this case, and that the Complainant, Tim Hicks, was dismissed from his employment for just cause. This complaint is therefore dismissed.
My Comments:
The Employee’s email in essence  threatened two actions against the employer;
One, that he would bring either a civil action or a ESA complaint for unpaid wages and,
Two, that he would lay criminal charges if he was not paid the  sums he said were owing.
Hopefully the Adjudicator did not consider the threat of civil or administrative actions as insubordination. Every ESA statute contains an anti- reprisal section which allows employees to either assert their rights under the act or to state  their intention to do so.
However the veiled threat of the Employee to lay criminal charges unless he was paid what he felt was owing would not only be just cause but may also be also a criminal offence in itself, namely extortion under Section 346 of the Criminal Code, which reads  as follows:

 

Extortion

  • 346 (1) Every one commits extortion who, without reasonable justification or excuse and with intent to obtain anything, by threats, accusations, menaces or violence induces or attempts to induce any person, whether or not he is the person threatened, accused or menaced or to whom violence is shown, to do anything or cause anything to be done.

  • Saving

    (2) A threat to institute civil proceedings is not a threat for the purposes of this section.

In a subsequent Wage Recovery adjudication before the same Adjudicator ( 2019 CarswellNat 6592 ) it was found that the Employee was owed $312 for unpaid wages .

 

Another Huge Costs Award For a Motion:

In Joshi v. Allstate Insurance Company of Canada,( 2019 ONSC 5934) Justice Himmel set the costs to the plaintiff in an Anti-SLAPP motion brought on by Allstate ‘s counterclaim for defamation.
This is what the Judge had to say about her reasoning :
“I will begin by acknowledging that very significant amounts of time have been spent by the lawyers on both sides and that this was justified because the legislation is relatively new. The law remains in flux with the Court of Appeal having released recent decisions for which leave to appeal to the Supreme Court of Canada has been granted, and this is the first identified example of an Anti-SLAPP motion under s. 137.1 involving a counterclaim.”
The Plaintiff asked for $126,499. The Defendant said that there full indemnity was “only” $95,173.
The judge awarded the Plaintiff $95,173, exactly what the Defendant paid their own lawyers.
This is what she said :
I find that the appropriate amount of costs to award to Ms. Joshi in this case is $95,173.26.  This is an amount that Allstate could reasonably have expected to pay as the losing party since it is the full indemnity amount of costs charged by Allstate’s counsel.  While below the full and substantial indemnity costs claimed by plaintiff’s counsel, it is in the range of what was asked for and is a significant amount of costs that is consistent with one of the identified purposes of s. 137.1(7), which is to ensure that plaintiff’s counsel, who may be working on contingency, are compensated fairly for their work as an incentive for them to represent parties who might otherwise not have sufficient means to retain counsel.  (see Anti-SLAPP Advisory Panel October 28, 2010 Report to the AG).  

[23]           Further, the amount is significant enough to serve as a deterrent against plaintiffs resorting to the courts to shut down public debate.  (see Niagara Peninsula, at para. 12)  I find this to be a fair, reasonable and proportionate award of costs for a motion in a proceeding that is continuing and in which it is reasonable to infer that some of the fruits of the work done will be of use to the plaintiff in the pursuit of her action and were not exclusively incurred in relation to the dismissed counterclaim.

Andrew Monkhouse was the lawyer  for the Plaintiff, Seann McAleese was the lawyer for Allstate.

Court Upholds Severability Clause in Termination Provision:

In Waksdale v Swegon North America ( 2019 ONSC 5705) Morgan J. had a situation where the employment agreement had two separate termination clauses; one for just cause terminations which violated the Employment Standards Act and one for without cause terminations which did not violate the ESA.
There was also a severability clause applicable to the entire contract.
The plaintiff was terminated without cause and paid out in accordance with the contract. The Plaintiff argued that the illegality of the just cause clause made the entire termination provision, including the without just cause part, illegal and unenforceable.
The Judge said no, the clauses were distinct and only the just cause clause was void and since the defendant was not relying on that clause, its illegality was irrelevant.
I am advised by Plaintiff’s counsel that they will be appealing.

SCC Just Heard case of Matthews v. Ocean Nutrition Canada Limited. My First Impressions :

This morning the SCC heard this case which deals with exclusionary clauses in employment contracts. In essence the plaintiff would have received over one million $ had he been permitted to work through his 15 month notice period but for the language of the contract. The employer had been found to have acted in bad faith.

The SCC seemed to be thinking about the various issues.

1. If the contract language itself did not purport to allow the employer to act in bad faith , would the exclusionary clause itself even apply?

2. Can a contract even purport to allow one party to act in bad faith ?

3. If the essence of a wrongful dismissal action is the failure to allow the employee the right to work through the notice period , then should not the calculation of the damages be the same as if the employee had been permitted to so work?

4. It is not in dispute that an employer may limit the length of the notice period, but can they also exclude certain items of compensation from being considered in that time frame?

5. Is extending Bhasian to the performance of an employment contract, not just to the manner of the dismissal, too big a step at this time ?

Kudos to Howard Levitt, Andrew Monkhouse , Stacey Ball and Tim Lawson for their very interesting arguments .

More comments to follow in future blogs

Employee Presumptively Entitled to Back Pay to Date of Hearing Under CLC:

In Curran v MAG Aerospace ( 2019 CarswellNat 4803) Adjudicator Sinding was called upon the determine the proper remedy for an unjust dismissal where the employee did not seek reinstatement.

He made a few interesting findings:

1) Adjudicators are not limited to only awarding common law reasonable notice.

2) There is a presumption that the employee is entitled to be compensated up until the date either the hearing or the decision.

3) The calculation of the lost wages takes into account the deduction of mitigation earnings, even if the underlying contract was a fixed term.

4) To prove damages beyond this date requires real proof of lost future earnings and will always have a end date.

Wallace Damages Has Two Components :

In Headley v City of Toronto ( 2019 ONSC 4496 ) Sanderson J. awarded 18 months notice to a 40 year old Shift Supervisor at a homeless shelter who had been employed for 15 years .
Having found that the Plaintiff was unjustly dismissed due to false allegations of theft, the judge also awarded Wallace damages on two separate grounds:
First, $15,000 for the mental distress raising from the manner of dismissal.
Second ,$50,000 for the tangible financial loss caused by the manner of the dismissal as the false accusations of theft impaired his ability to find comparable employment . This is what the judge said :
Wallace Damages for Loss of Income
402      I am satisfied that the unfair allegations that Headley had committed theft, the City’s unfair dismissal on unsubstantiated suspicion of theft, fraud and wilful dishonesty, Anstett’s refusal to respond to his calls so he could request a letter of reference from his immediate supervisor and the inevitable cloud created by that unfairness have foreseeably led to tangible financial loss of income in the ensuing years. Hopefully this Judgment will dispel that cloud.
403      Almost seven years have passed since the termination. Despite having made what I have found were reasonable efforts, Headley has not succeeded in finding a comparable managerial position. At the time of the trial he was still earning roughly half the total income he was earning in June 2012. With the cloud lifted, I expect that Headley will now be able to find a comparable managerial position.
404      I have found that his employment history before the termination illustrates that he was highly motivated, consistently employed, often for more than 40 hours per week. He also volunteered and provided mentoring to others. But for the unfairness in the manner of his termination, including the unfounded allegations of theft, fraud and dishonesty, I find Headley would have had little difficulty obtaining a comparable managerial position and earning comparable income to the income he earned prior to June 25, 2012.
405      Given the guidance given by Iacabucci J. in Wallace that “if the manner of termination affects employment prospects” it may be worth of considerably more compensation” and given the direction of Bastarache J. in Keays that such damages are to be awarded, not by an arbitrary extension of the notice period but through an award that reflects the actual damages, this Court must attempt to assess the actual damages/tangible financial loss caused by the unfair manner of dismissal.
406      The financial consequences to Headley and his family of the manner of his termination have been significant.
407      Bearing in mind the need to avoid duplication by reason of his receipt of damages as a result of the dismissal under the previous heading, I award $50,000 for tangible financial loss caused by the unfair manner of his dismissal.
Lawyers often seem to forget this important aspect of Wallace Damages as they tend to focus on the mental distress element of the case. This case shows that it may be much more profitable to focus how the manner of the dismissal adversely affected the plaintiff’s employability.
I remember  reading about a US case in which the dismissed employee claimed damages for self defamation. In that case he had been falsely accused by his ex employer of theft. The Plaintiff claimed that when he went on job interviews after his dismissal and was asked why was he fired, he was forced to tell the truth by saying ” I was falsely accused of theft “. Not surprisingly, although the interviewer might have appreciated his candour, that comment turned out to be a job killer. His damages were the lost opportunity to land another job.

Doing Zilch re Mitigation Reduces Notice Period from 14 to 12 Months :

In Seykors v Rural Municipality of Lake Lenore ( 2019 SKQB 225 ) Richmond J. reduced the notice period by 2 months where the Plaintiff’s mitigation efforts were minimal and he had not applied for even one job.

Why such a minimal reduction you may ask ?

1) The Plaintiff was age 65.

2) He was a snowplow operator.

3) He didn’t finish high school.

4) He lived in a rural area and was not expected to have to move.

Release of Previous Employer Has No Effect on Termination By Subsequent Employer :

In Manthadi v ASCO Manu ( 2019 ONSC 5572) Fowler Byrne J. had a situation where a 64 year old welder had over 36 years with Company A. Company A sold its business to the Defendant. Company A paid the plaintiff her 8 weeks under the ESA and she signed a release. The defendant immediately hired her on the closing date . She was terminated a few months later.
The Defendant claimed that she was only an employee for a few months.
The judge held that in accordance with Sec 9(1) of the ESA her employment was continuous and therefore for purposes of the ESA she was a 36 year employee. The judge also held that as the Release did not name the Defendant but rather named Company A , it was no effect in regards to her dismissal from the Defendant. She was awarded 20 months notice, with no credit for the 8 weeks termination pay that she got from Company A.
The Judge commented on the common law element of the case as follows:
35      The law also supports this concept of continuous employment for the purposes of common law entitlement to damages for wrongful dismissal: Addison, at para. 22; Violo v. Delphi Communications Inc., 2014 ONSC 7008, at para. 16. Further, as stated in Ariss (ONSC), at para. 38:
If the statutory protection were not enough, Ariss also has the protection provided by the common law. There is nothing in any of the documents executed in 2002 to suggest that NORR intended that former DTM employees would not be credited for their years of service with DTM. Most important, there is nothing to that effect in the offer letter signed by Ariss. In the absence of notice from NORR that Ariss would not be credited for his years of service with DTM, recognition of that service is deemed to be part of Ariss’ contract of employment with NORR (Vinette v. Delta Printing Limited, 2017 ONSC 182, 278 A.C.W.S. (3d) 756, at para. 21).
Q: Therefore how is a purchaser supposed to protect themselves ?
A: Easy.
The new employer should have an employment agreement with the employee stating that for the sole purpose of the ESA , the employee’s prior service will be recognized but that for the purposes of determining any other issue, including their entitlement to common law notice of termination, the start date of the employment is the date of this employment contract.
Remember, now that the ESA provides for an escalation of vacation pay based on years of service, this provision also recognizes prior service.
The good news for the Vendor  is that because the service is deemed to be continuous, they have no obligation to pay either termination pay, severance pay nor common law notice to their  ex-employee.

Termination Clause Waiving Past Service Void as per ESA and a Savings Clause Does Not Help:

In Groves v UTS Consultants ( 2019 ONSC 5605) Justice Nishikawa had a situation where the Plaintiff sold his business by way of a share transaction and then entered into an employment agreement. Prior to the transaction, the plaintiff had been an employee for 22  years. He was terminated 3 years after the purchase.

The termination clause in the new employment agreement read as follows:

This agreement may be terminated in the following manner in the specified circumstances:…

b) By the Company at any time for cause without notice or pay in lieu;

c) By the Company at any time without cause provided that the Company provides you with notice in writing or pay in lieu of notice (as salary continuation) or some combination thereof equal to four (4) weeks base salary for each year of service that you have with the Company calculated from the date of this letter (and, for greater certainty, excluding any period of service you had with the Company prior to the date of this letter) with a guaranteed minimum notice or pay in lieu of notice equal to three (3) months base salary; provided that the maximum notice period or pay in lieu of notice that you will receive shall in no circumstances exceed twelve (12) months. Notwithstanding the foregoing, the Company guarantees that the amounts payable upon termination, without cause, shall not be less than that required under the notice and severance provisions of the Employment Standard Act (Ontario). In addition, the severance package will also include continuation of medical and dental benefits during the severance period. Any variable pay owing to you will be prorated for the year’s service and paid at the time of termination. For greater certainty, you agree that for purposes of calculating any entitlement which you may have arising from the termination, without cause, of your employment with the Company, any prior service with the Company is excluded and you hereby waive and release any prior service entitlements.

The validity of this clause was successfully attacked on the following grounds :

  1. As the clause purported to not count his first 22 years of service, it offended Section 9 (1) of the ESA which deems employment to be continuous notwithstanding a sale of the employer.
  2. The Plaintiff signed a resignation at the time of the purchase. The Court held that this was intended to cover only his status as a director and officer, not as an employee. Moreover as severance pay covers even non-continuous service ( see Section 65(2) ) the clause is illegal.
  3. By basing the notice only on base pay and not total compensation, it breached the ESA.
  4. The savings clause did not save these defects : As the judge said :
    e)   Saving clause

    [60]           Relying on the Court of Appeal’s decision in Amberber v. IBM Canada Ltd., 2018 ONCA 571 (CanLII), 424 D.L.R. (4th) 169 [Amberer], UTS submits that even if the Termination Provision breaches the ESA, it contains a “saving clause” that would permit this court to apply it. In Amberber, the Court of Appeal “read up” a termination provision to comply with the ESA because the provision was capable of an interpretation that would be in compliance with the ESA: Amberber, at para. 54.

    [61]           In this case, the Termination Provision states that “[n]otwithstanding the foregoing, the Company guarantees that the amounts payable upon termination, without cause, shall not be less than that required under the notice and severance provisions of the [ESA].”

    [62]           When the employer has sought to contract out of the ESA, a saving provision cannot be used to rewrite the express language in an agreement to cause it to comply: Rossman v. Canadian Solar Inc., 2018 ONSC 7172 (CanLII), 300 A.C.W.S. (3d) 69, at paras. 67-70. The Termination Provision cannot be interpreted to comply with the ESAbecause, contrary to s. 9(1), it specifically precludes an interpretation that would include Mr. Groves’ prior service with UTS. As a result, the saving clause does not assist and the Termination Provision cannot be read up in order to bring it into compliance with the ESA.

This to me is the most important part of this case because up until now there seemed to be some confusion as to whether nor not these types of clauses could fix an otherwise broken illegal termination clause.

There were two other arguments that the Judge did not feel had to be dealt with:

  1. The Just Cause argument :
    (c)   Just cause

    [58]           A single breach of the ESA is sufficient to invalidate a termination provision: Cormier v. 1772887 Ontario Ltd., 2019 ONSC 587 (CanLII), 302 A.C.W.S. (3d) 767[Cormier]. Since I have found that the Termination Provision is contrary to the ESA and since Mr. Groves was not terminated for cause, I need not consider whether the ability to terminate for cause without notice or pay in lieu of notice also violates the ESA. I note, however, that in Plester v. PolyOne Canada Inc., 2011 ONSC 6068 (CanLII), 216 A.C.W.S. (3d) 654, at paras. 53-56, aff’d, 2013 ONCA 47 (CanLII), 225 A.C.W.S. (3d) 1024, the court held that the ESA requires that notice and severance be paid unless the employer can demonstrate “wilful misconduct… that is not trivial and has not been condoned by the employer.”

  2. The Salary Continuation argument:
    (d)   “Salary continuation”

    [59]           Similarly, I need not consider whether the Termination Provision breaches the ESA because it allows for the payment of four weeks per year of service as “salary continuation.” Nonetheless, I note that in Wood, at paras. 60-69, the Court of Appeal held that under the ESA employees are entitled to receive severance pay in a lump sum and are not required to work in order to receive it.

    It seems that the judge probably favoured both these arguments but didn’t want to decide more than was strictly necessary. Perhaps another case will consider these arguments.

And finally the Judge considered whether the Release that the Plaintiff signed upon the sale would disentitle him to a consideration of his prior 22 years service when calculating his common law notice entitlement upon his termination in 2017.

In connection with the sale of UTS, the Plaintiff signed a release releasing UTS and the purchaser from:

all claims, demands, actions, causes of action, debts… which the undersigned in any capacity whatsoever (including, without limitation, as officer, director, shareholder, employee, creditor or otherwise) had, now has or hereafter can, shall or may have, for or by reason of or in any way arising out of, relating to or in connection with, any cause, matter or thing whatsoever existing up to the present time and, without limiting the generality of the foregoing, arising from: (1) the undersigned having been an officer, director, shareholder, employee or creditor of the Corporation, or (2) any Claims for unpaid remuneration, termination or severance pay. 

This is what the Judge said on this issue:

That leaves the issue of whether, by virtue of signing the Release, Mr. Groves released any claim to common law notice. In Kerzner, the Court of Appeal did not interfere with the motion judge’s decision that the employee waived common law entitlements for service prior to the execution of the release. See also Ariss, at para. 39.

[66]           In Kerzner, however, the release did not specifically waive the employee’s ESA entitlements. In this case, the language of the Release is broader than the provision in Kerzner. The Release states that it releases and discharges “any claims” for “termination or severance pay” which are not common law entitlements, but rather entitlements under the ESA. Given that this violates the ESA, it is null and void for all purposes: Cormier, at paras. 87-88.

[67]           In Kerzner, the Court of Appeal rejected the application of Biancaniello v. DMCT LLP, 2017 ONCA 386 (CanLII), an argument that UTS puts forward here, as addressing the scope of a release that was otherwise permissible: Kerzner, at para. 36.

[68]           Moreover, based on the evidence, I find that Mr. Groves did not release his claim to common law notice. Based on the terms of the SPA, he understood that his employment with UTS would continue. There was no break in service, and none was contemplated. Had the employment relationship with UTS been clearly severed, Mr. Groves may have turned his mind to what claims or entitlements he was foregoing by signing the Release. Given that Mr. Groves’ resignation was a formality, I find that he did not agree to forego his entitlement to common law reasonable notice.

I think that there is a much simpler way of dealing with this issue.

The Release only deals with issues ” existing up to the present time”, in other words at the time of the sale, not the termination of his employment, which occurred 2 years later. The only effect this Release would have on his employment would be that after the sale he could not complain that he was owed vacation pay or bonuses for service prior to the sale. It did not effect a possible future event.

 

 

 

Court Confirms No Obligation on Employer To Provide Benefits to Employees on LTD or STD:

In City of Toronto v CUPE Local 79  (2019 ONSC 4045) Justice Swinton judicially reviewed an arbitrator’s award which held that it is a breach of the Ontario Human Rights Code for the City to only provide part time benefits ( as opposed to better full time benefits ) to an employee who was being accommodated with part time work because he could no longer work time due to his disability .

In finding that the arbitrator’s decision was not reasonable, she said the following:

The arbitrator correctly stated that she was bound by the Court of Appeal’s decision in Ontario Nurses’ Association v. Orillia Soldiers Memorial Hospital (1999), 1999 CanLII 3687 (ON CA), 42 O.R. (3d) 692 (“Orillia Hospital”).   However, she candidly expressed her preference for a different approach that had developed in the arbitral jurisprudence, but was rejected by the Court of Appeal in Orillia Hospital.

[20]           In that case, the Court of Appeal held that the Code does not require an employer to make contributions to benefit programs for a disabled employee who is off work, since contributions to benefit programs are a form of compensation.  At para. 27, the Court stated,

Disabled nurses do not receive this compensation because they are not providing services to their employer.  It is not prohibited discrimination to distinguish for purposes of compensation between employees who are providing services to the employer and those who are not.

[21]           The Court also held that even if a disabled employee is the subject of constructive discrimination within s. 11 of the Code because he or she does not receive employer contributions to benefits, “[r]equiring work in exchange for compensation is a reasonable and bona fide requirement” (at para. 58).  The Court explained that accommodation refers to workplace adjustments to allow the employee to work (at para. 55):

The duty is on the employer to take all steps short of undue hardship to accommodate the needs of the person discriminated against so that they can compete equally with the other employees.

At this point of her reasons, one would have thought that the logical conclusion would be that the grievance must fail.  Employees in the full-time unit receive greater benefits than those working part-time hours.  For example, the City pays 100% of the cost of benefits for full-time employees in the full-time unit, while the City pays a pro-rated percentage for those in the part-time unit.  As well, some of the benefits are different in terms of payment for shifts missed because of sickness and injury.   In accordance with Orillia Hospital, the employer does not discriminate by failing to provide the added benefits to which a full-time employee is entitled to a person working part-time hours, even if the person is working part-time because of disability.  The difference in treatment with respect to compensation and benefits is because of the number of hours worked, not because of disability, and the employer is not required to compensate the disabled employee for time not worked.  

This case would apply equally to a non-union environment.

Of course an employer may, as part of its STD and/or LTD policy, agree to provide benefit coverage to those employees not able to work because of their disability, but the OHRC does not require them to do so .

Similarly it would seem that there would be nothing to prevent an employer from agreeing to provide benefit coverage for a limited period of time. For example the Employer may agree to provide benefits during the STD period but not the LTD period.

This raises an interesting issue that I often see in my mediation and arbitration practice, that is whether to terminate an employee who is on LTD for a lengthy period and claim that the contract is frustrated. Of course under the Ontario Employment Standards Act this triggers an obligation to pay both termination pay and severance pay, but not common law notice.

I have often wondered why employers feel the need to terminate employees in these situations when it often generates a severance obligation that could have been avoided if no termination  took place.

When I have asked this question I am often told that one the reasons for doing this is to end the costs of providing benefits to disabled employees

Well it now seems that there is nothing in law that would prevent an employer from including a provision in their STD or LTD plans which imposes a time limit on how long the benefits will continue.

Therefore there would be no financial cost in simply continuing the status of the disabled employee as an employee of the Company.

Of course, under the ESA, either party can claim that a contract is frustrated, thereby triggering the obligation to pay termination pay and severance pay. Therefore the disabled employee could trigger their own termination even if the employer did not wish to terminate the employment relationship .