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Most indefinite-term employees who are fired without just cause are entitled to reasonable notice of the termination or pay in lieu of notice as determined by the common law. Usually, this type of case can be settled. When it can’t however, the employee is entitled to commence a lawsuit for damages for wrongful dismissal. Most people assume that damages consist only of the employee’s salary during the notice period. There is however, a myriad of other types of damages available. Let’s examine a few of the more usual types of damages potentially available in a wrongful dismissal action.
For employees who earn commission income, the courts must determine what future commissions which might have been earned during the notice period, if any. To do this, the court will review previous earnings and often will look at commission earnings during the same months in which the notice period falls. At other times, the court will take an average of the commission income and award that during the notice period. If the employer’s revenue drops through the notice period, the presumption is that commission income might also have been less. In some cases, if an employer does not diligently pursue an opportunity, which would have garnered commission income to the employee through the notice period, the court may award commission income that is presumed to have been earned.
Loss of fringe benefits such as medical, dental and health benefits do have value, according to case law. The Ontario Court of Appeal has held that the dismissed employee is entitled to the value of lost benefits flowing from the dismissal. The pecuniary (monetary) value of those benefits has been determined based on the employer’s contribution to maintaining those benefits.
Bonuses, profit sharing and stock options are treated much like medical benefits provided they are integral to the employee’s remuneration. For example, a non-discretionary bonus that has become part of the employee’s income is usually awarded through the notice period. To determine the amount of the bonus to be paid through the notice period, the court will consider whether the employer would have paid the employee had he/she worked throughout the notice period. If the employer paid bonuses to other employees during the notice period, courts have generally awarded it to the dismissed employee. Some cases have said it is unconscionable for an employer to deny a bonus to an employee during the fiscal year for the reason that the employee was not in active service when the bonus was paid out. Courts have held that it is suitable to pro-rate a bonus over the notice period. If an employee is deprived of exercising a stock option he/she would have had, had reasonable notice been provided, the court will assess and award damages based on the loss of opportunity.
Sometimes an employee is scheduled for a pay raise but the employer fails to pay it because it falls during the notice period. The cases have been quite clear that employers are liable for pay increases that are set to occur during the notice period provided the increases were part of the employment contract. Where a salary increase was negotiable or discretionary, it is usually not awarded during the notice period.
With respect to a company car, the courts treat it differently depending on the circumstances. For example, a taxable car allowance that is considered as income, is generally awarded during the notice period. If the employee is given a car to use during employment, the courts have awarded the value of the personal use of the car including any related expenses paid by the employer. If a car allowance was used strictly for business use of the car, the value of that is not awarded during the notice period since no loss has occurred during that time.
Housing benefits and real estate losses can sometimes be recovered during the notice period. Mortgage subsidies that would have been paid had the employee worked throughout the notice period have been awarded as part of pay in lieu of notice. In one case, an employer was required to pay the employee losses on the sale of his property, sales commissions, carrying costs and interest when the employee was required to move to a different city to continue working and then once he moved, was dismissed. The key to this kind of recovery however, is whether the losses were reasonably foreseeable as flowing from the breach of the employment contract. A few cases have allowed moving costs so that new employment could be commenced.
Damages for loss of reputation and compromise of competitive position will usually only be awarded where the dismissal itself was done in such a manner as to cause the employee harm in the workplace. There is some traditional case law that prevents recovery under this head of damage but it is not impossible.
I have provided a summary of the few more popular heads of damages obtainable in a wrongful dismissal action. There are certainly other types of damages available that space does not permit examining.
If you have been fired and need a severance package reviewed or a lawsuit commenced, please call me at 905-845-0767 to discuss your situation.
The above is not legal advice and should not be relied upon. You should consult a lawyer to have your specific situation analyzed.
When an employee commits an act that requires discipline, can an employer institute progressive discipline such as an unpaid suspension without it being considered a constructive dismissal?
Firstly, progressive discipline is widely understood to mean the process by which an employer evaluates, measures performance and addresses any deficiencies in performance with the employee. The objective of sincere progressive discipline programs, is to raise the employee’s level of competence or correct disruptive behavior, for example. It is also to ward off any allegations of condonation should the employee reject the discipline, resign and claim damages for constructive discipline.
Despite what seems like a practical solution to an employee problem, the employer who engages in progressive discipline often finds themselves being sued for constructive dismissal. The typical argument by an employee who is suspended without pay as an example, is that an unpaid suspension was never an express term of the employment contract.
In the recent Ontario Court of Appeal decision of Haldane v. Shelbar Enterprises Ltd., however, there appears to be an evolution in this area of law. In the Haldane case, the employee was suspended for three days for being “obscenely insolent” with her employer. Haldane suggested that the employer deduct three days pay from her vacation instead or suspending her. When the employer refused that proposal and ordered Haldane to commence her suspension, she resigned and claimed constructive dismissal.
The trial judge found that Haldane had been constructively dismissed. Of note is the fact that at trial, Haldane did not argue that her employment contract did not permit suspensions. The Ontario Court of Appeal agreed with the trial judge but commented that a term permitting reasonably imposed unpaid suspensions could be implied into an employment under three circumstances: 1. through custom and usage; 2. in accordance with the presumed intention of the parties; and 3. as a matter of law by the courts. The Court however, left the decision on whether and when such a term should be implied to a later case when the issue could be fully argued. Thus, it appears that the Court has opened the door to an employer to argue that an unpaid suspension could be viewed as an implied term of the employment contract by way of custom and usage, by presumed intention of the parties or as a matter of law by the courts.
In an opt-quoted case McKinley v. BC Tel, the Supreme Court of Canada (“SCC”) made comments similar to the Ontario Court of Appeal in Haldane. The SCC stated that there may be situations where a lesser form of discipline other than termination, may be appropriate for an offending employee. The SCC’s comments were obiter (they were made as an aside) however and were not made in directly addressing the pre-existing common law that asserts that unpaid suspensions are a form of constructive dismissal.
The case law on this issue is mixed and evolving. Accordingly, if you are an employer considering using this form of discipline, you are well advised to consult a lawyer before employing progressive discipline and unpaid suspensions.
Most employees are hired as “indefinite-term” employees meaning that when their employment commences, there is no identified end-date to the employment. At common law, this type of employment may only be terminated upon reasonable notice provided there is no just cause for summary dismissal. In contrast, fixed-term contract employment implies that at the beginning of the term the parties agreed upon the “notice” by agreeing upon the term or length of the employment.
But what happens when long-term employment is governed by a series of fixed-term contracts? What amount of notice upon termination of employment is fair in this situation? Let’s look at a specific example: Ceccol v. Ontario Gymnastic Federation (Ontario Court of Appeal, 2001). In this case, Ms Ceccol was employed for 16 years pursuant to fifteen consecutive one-year contracts. Her yearly contracts concluded at the end of June each year. The contracts stated that any entitlement to notice of termination employment without cause would be governed only by the Employment Standards Act, which provides a minimum amount of notice upon termination of employment without cause. In December 1996, her employer advised her that in June 1997 her contract would not be renewed or extended. She was paid until June 30, 1997 and the company paid her ex gratia payments of three months of her salary provided she signed a release. She declined this offer and sued her employer hoping to have the Court find that she was really an “indefinite-term” employee and thus was entitled to reasonable notice as determined by the common law as opposed the minimum amount provided by the Employment Standards Act. The case turned on the characterization of the employment: whether “indefinite” or “term”.
The trial Court found that both Ms Ceccol and her supervisors believed and acted as if she was in fact a “full-time” permanent employee. In short, the Court looked behind the successive term contracts and found that Ms Ceccol was an “indefinite term” employee. She was awarded reasonable notice in accordance with the principles of common law, which the Court found was sixteen months. This was reduced by four months because she failed to properly mitigate her damages.
The employer appealed the trial Court decision to the Ontario Court of Appeal. The Court of Appeal stated that employers should not be able to avoid the traditional protection of the common law by “resorting to the label of ‘fixed-term contract’ when the underlying reality of the employment relationship is something quite different, namely continuous service…” In addition, the Court found that the language contained in the contract as it related to the extension of the contract was not clear enough to satisfy the Court that the contract was intended by the parties to be for a fixed term only.
If you have any questions regarding your fixed term employment contracts, please contact me at my office.
Very few employees are secure in their jobs in today’s marketplace, which makes for an overall feeling of anxiety. Sometimes, this anxiety can build to such an extent that the employee “melts down”. Some people internalize stress becoming physically or emotionally ill. Other employees externalize stress resulting in untoward comments or outbursts at the workplace. In such a case, can the employer dismiss the employee without notice? Let’s take a look at some general principles on this issue.
Firstly, I am addressing here the concept of “insolence” within the workplace. Put simply, being insolent usually involved making remarks or exhibiting behavior in the workplace that is clearly offensive and inconsistent with a professional work atmosphere. “Insolence” is sometimes also described as conduct so extreme as to interfere with the safe conduct of the employer’s business. In the case of Laird v. Saskatchewan Roughrider Football Club, an equipment manager was found to have been properly dismissed without notice on the grounds of “insolence” because he repeatedly make profane remarks and verbally abused officials, opposing players and head coaches despite being warned not to.
In attempting to determine whether the employer was justified in summarily dismissing an employee on the basis of “insolence”, the court will review the employer’s responsibility in contributing to the behavior. For example, a manager who was oppressive and a faultfinder has been held to be partially responsible for an employee’s outburst made in frustration.
Some cases indicate that a single incident of insolence can be sufficient to amount to just cause. These cases typically involve an employee who attacks the honesty, integrity or authority of a supervisor in front of other employees. In one case, the court held that an employee who called his supervisor a “f_____ liar” was properly fired without notice.
Case law also indicates that repeated occurrences of insolence can amount to just cause for summary dismissal. For example an employee who repeatedly insisted upon receiving instructions in writing and made references to psychiatric testing of his supervisor, was properly dismissed without notice.
Courts will also consider whether an employee’s offending remarks are made in the presence of more than one co-worker.
In short, just because an employee is fired without notice for the stated reason of insolence does not mean that the employer will be successful at trial asserting that defence. If you have been dismissed without notice or pay in lieu for the stated reason of insolence, please contact me to review all of the facts and circumstances. Things are often not what they appear on the surface, particularly in employment law.
One of the implied terms of any employment contract is that the employee will not do anything which is prejudicial or detrimental to the interests or reputation of the employer. Certainly, if an employee does something while in the course of his or her employment that is prejudicial (embezzling funds, for example), then no one is surprised by that employee’s summary dismissal without notice or pay in lieu. Are there any instances however, where an employee’s activities scope of employment and of working hours will justify the employee’s summary dismissal?
The basic premise is that it will only be in a rare case that an employee’s activities outside of his/her employment will justify a summary dismissal. In determining this issue, the Courts consider the nature of the position of the employee and the impugned misconduct. Let’s look at one examples.
In Whitehouse v. RBC Dominion Securities, a 2006 Alberta case, an employee who was an investment advisor and a senior executive with RBC, got drunk and brought a prostitute to the employer’s premises after work hours one night, as he had done previously. The employee and the prostitute got into an argument about the prostitute’s fees. She refused to leave the office. The employee left the office, leaving the prostitute in the lobby of the office where she had access to documents. The prostitute used the lobby telephone and left a message on the voice mail of a random employee in the building and then left. The next day the prostitute called the employer demanding the balance of her fees. The branch manager asked the employee twice whether he had brought the prostitute into the office. The employee, by this time sober, denied it until he was confronted with the video tape evidence. The branch manager dismissed the employee without notice or pay in lieu of notice. The employee brought an action for damages and the employer counter-claimed for damages for damage to its reputation. The employee’s action was dismissed. The Court found that the employer was justified in doing so for several reasons; the employee’s conduct demonstrated lack of integrity, deficient judgment, dishonesty, untrustworthiness and a careless disregard for client and corporate confidentiality; the employee lied to the employer at a time when he was sober and knew what he was saying; this was part of a pattern of similar conduct and the employer was justified in requiring a strict code of conduct by those who are leaders in the company.
In some cases, the Courts have required that there be a nexus or connection between the off-duty conduct and the employment relationship. The conduct must either detrimentally affect the employer’s reputation or cause other employees not to want to work with the individual or render the employee unable to carry out his/her obligations properly or adversely affect the employer’s ability to efficiently manage its business. Conduct that does not really affect the employer’s reputation will not normally justify summary dismissal. For example, in a 1986 Ontario case (Rhodes v. Zehrmart Ltd.) an employee who purchased a narcotic from another employee outside working hours, was found to have not prejudiced the employer or its reputation. Equally, another case held that an assault on a co-worker off company premises did not justify summary dismissal.
If you have been dismissed without notice or pay in lieu of notice for conduct outside of your employment, please contact me for a consultation.
Many employees are required to sign Non-Competition and Non-Solicitation Agreements either when they are hired by a company or at the end of their employment. Most employees want to know whether and how such agreements will restrict them in pursuing a career following their employment.
Although the Courts generally view Non-Competition Agreements as a restraint on trade and therefore unenforceable, there are plenty of case where such agreements have been held enforceable. Let’s look at a few cases.
In a 2004 Ontario case, a martial arts instructor was prohibited from teaching at, owning or operating a martial arts school within a ten-mile radius of his employer’s business for one year. After his employment concluded, the instructor and his girlfriend opened a martial arts school half a block from his former employer. The Court awarded the instructor’s former employer $10,000 damages for the employer’s loss of business and the instructor’s gain of competitive business.
In a 2005 Manitoba case, an investment agent employed by the plaintiff-company was prohibited from directly or indirectly approaching or soliciting away any investment business from the plaintiff’s clients. The covenant was for one year for non-solicitation of any of the plaintiff’s clients and two years in respect of the clients the agent dealt specifically with. The agent left the defendant and sent a letter to his clients advising that he had joined another firm. The Court found that there were several features of the letter expressing appreciation for their business, which amounted to a solicitation. The Court awarded an interim injunction against the agent.
In a 2001 Ontario case, a traffic logistics company sued its former Director of Marketing who as an independent contractor. The covenant restricted the defendant (Director of Marketing) for two years, from contacting any of the plaintiff’s employees. The covenant further provided that if the defendant breached this provision and if the company lost any one of its employees to the defendant, the defendant would pay a penalty equivalent to the employee’s yearly salary, upon demand. The defendant left the company and engaged in discussions with another employee who was still working for the company. The defendant wanted this employee to help him set up a competing business and provide computer software. The employee assisted the defendant during the employee’s employment with the plaintiff-company and then eventually left the company. Upon commencing employment with the defendant’s new business, the employee utilizing the software he had created while still working for the plaintiff-company. The Court held that the covenant was enforceable and that the amount of damages proposed in it did not amount to a penalty clause. The defendant was ordered to pay the plaintiff $66,367 representing one year of the employee’s salary.
If you are being asked to sign a restrictive covenant, please call me to discuss your situation and any potential ramifications of breaching the covenant. This area of employment law is evolving and is very fact-driven.
Within the context of Employment Law, there is an emerging claim available to employees: personal or psychological harassment. A recent case from British Columbia, Sultz v. Canada (Attorney General) (2006) illustrated the relevant principles.
The plaintiff in that case, Nancy Sultz began working for the RCMP after completing her university degree. During her first 6 years of employment, her performance was exemplary. After that, Ms. Sultz began to be subjected to severe and prolonged mistreatment at the hands of her new detachment officer and direct supervisor, Donald Smith. The problem arose when, after becoming pregnant for the second time and being assigned light duties, Sultz went on a cross-border shopping trip without obtaining Smith’s permission first. Smith believed that Sultz breached a policy that the Court found was not well communicated and was subsequently discontinued.
For two years, Smith harassed and bullied Sultz until she went on depression-related sick leave. That harassment and bullying included verbal abuse and making derogatory comments to Sultz and her colleagues about Sultz’ about her abilities and suitability for her job, being deliberately unhelpful and blocked her transfer to another unit. Smith also allowed Sultz’ colleagues to make hurtful comments about Sultz including that the was “screwing the system” by becoming pregnant and taking maternity leave; that she did not “cut the mustard” and that she was afraid of the dark. Smith and other of Sultz’ colleagues also threatened Sultz that he/they would “get her” and that Sultz would “pay” when she returned from her maternity leave. When Sultz returned from her maternity leave, Smith and others in Sultz’ unit ostracized her. Sultz attempted to resolve her problems with Smith by complaining to her divisional representative however, that backfired. Smith became even more hostile after he was faced with Sultz’ complaint about him.
After approximately 16 months of ongoing harassment and abuse, Sultz was diagnosed with major depressive disorder. Seven months after her diagnosis, Smith left her employment on another maternity leave and never returned.
Eight months after Sultz left the RCMP it conducted an internal investigation of Smith’s conduct. The RCMP substantiated Smith’s conduct but took no action against Smith due to his retirement. Sultz eventually agreed to a “medical discharge”. After her discharge, Sultz sued Smith, the federal government and the B.C. government, in tort and in contract, alleging harassment, breach of contract for failing to provide a harassment-free environment, intentional infliction of mental suffering and negligent infliction of mental suffering. Sultz sought general damages, compensation for past and future income loss, and punitive and aggravated damages.
The Court held that the RCMP did not take adequate steps to prevent Smith’s harassing conduct and it failed to provide a harassment-free workplace. The province of B.C. was vicariously liable for Smith’s conduct. The Court also found that Smith had negligently inflicted mental suffering upon Sultz, but not intentionally inflicted mental suffering.
Sultz was awarded $125,000 in general damages because of the severe impact of her depression on her ability to work and enjoy life. She was also awarded $225,000 for lost wages from the date of her medical discharge until the time of trial and $600,000 for loss of future income. No award for aggravated or punitive damages was made.
If you have been the victim of workplace bullying, this case opens the door to new claims that can be made. Please contact me to discuss your case.
Quite often, sales employees whose employment has concluded often find subsequent employment within the same field and as such, need to know whether they can continue to work with the customers that they dealt with at their former employer. Assuming they did not execute a restrictive covenant, what limits if any, does the common law place upon them?
The Ontario case KJA Consultants Inc. v. Soberman (2003) sheds light on this situation. Soberman worked for KJA for 13 years. His last position was General Manager responsible for marketing and sales. Clients dealt with him primarily. When Soberman left his employment he started a consulting business in competition with KJA. He sent a letter to his former KJA clients informing them of his new venture. Eventually, Soberman took over KJA’s largest client and 16 other customers. There was no non-competition agreement between KJA and Soberman. KJA sued Soberman claiming that Soberman had breached his fiduciary duties to KJA.
The trial court made a finding that Soberman had not solicited KJA’s customers but rather, they approached him. The court stated that the KJA customers that switched their contracts to Soberman, did so because of Soberman’s familiarity with the contract in question and with the details of the account. The court stated that Soberman was familiar with the client and the particular contract only because of his association with KJA and that without that knowledge, the client would never have retained Soberman after he had left KJA. Accordingly, the court held that Soberman breached his fiduciary duties owing to KJA when he used the knowledge that he had acquired while at KJA, “to take a significant asset away from them.”
This case is a departure from the previous position that outgoing employees could go into direct competition with their former employer or even advertising their new business venture. Previously, the only prohibition on departing fiduciary employees was that they could not directly solicit their former employer’s customers for a reasonable period of time following their departure. How long that period of time should last, has been the subject of many cases.
The KJA case states that departing employees are even more restricted in the marketplace. If they are “face” of their former employer and have knowledge of customers’ contracts or specifics on which knowledge the customer relies, they likely should not accept a customer’s solicitation that they take over their accounts or contracts.
If you are an employee who finds him or herself in Soberman’s position, please contact me to discuss your particular situation.
Where before, the Courts would view employee theft narrowly usually finding theft to amount to just cause for summary dismissal (without notice or pay in lieu), Courts are now taking a more qualitative approach. Some Courts have inquired into the quantum involved and the employee’s disciplinary history before determining whether theft constituted just cause permitting summary dismissal. Here is a brief overview of some cases in the area of employee theft.
In one case, the theft of a flashlight and improperly charging the employer’s telephone account for personal telephone calls over an extended time period, amounted to just cause. Similarly, a cashier failing to register all transactions and permitting customers to leave with merchandise that was not paid for, amounted to just cause. In some cases, Courts have found that a mere suspicion of theft will amount to just cause provided the facts reasonably support the suspicion. If however, the employee provides a reasonable explanation for his/her apparent dishonesty, cause will not be found. In such a case, the employee bears the onus to provide the reasonable explanation in the circumstances. For example, in a case involving improper commissions on the sale of a church organ, the Court held that the employee had an obligation to prove the righteousness of the transaction.
There is of course, an inherent danger in finding that a mere suspicion of theft amounts to just cause. Some employers could ruin an employee’s career by summarily dismissing him/her upon a suspicion. Thus, some jurists have roundly rejected the notion that just cause may result from a mere suspicion of theft.
In Cooper v. Sears Canada Inc., a 1991 Nova Scotia case, an employee’s act of theft was recorded on the store videotape. The employee provided an explanation that the Court found was reasonable. The Court found that the employer could not meet its evidentiary burden.
In Layton v. Co-op Atlantic Ltd., a 1991 New Brunswick case involved an employee with 15 years of service who made unauthorized long distance phone calls. The employee immediately offered reimbursement when confronted with her actions. The Court found that given her immediate offer of restitution and her length of service, summary dismissal was “a harsh reaction to what must appear as an example of poor judgment”. There are similar cases where employee theft has been called “poor judgment” by Courts and just cause has not been found to have existed.
The employer’s burden of proving that the alleged fraud or dishonesty amounts to just cause, is somewhat higher than the usual civil burden but not quite as high as the criminal burden of proof. This distinguishes this type of just cause from all others, which must be proven by the employer only on a balance of probabilities (the civil burden). It appears that some Courts are now prepared to look into and around the impugned incident to ensure that the impugned conduct is grave enough to warrant summary dismissal.
If your employment was terminated with cause allegedly for theft, dishonesty or fraud, please call me to discuss your situation.
Most people are familiar with the concept of a wrongful dismissal and how it works. Typically, the employer advises the employee that his/her employment is terminated and that they are to leave immediately. It is clear to everyone that the employment has been terminated. Less clear is a constructive dismissal, though the results are the same: employment is terminated.
A constructive dismissal occurs when the employer repudiates the employment relationship by demonstrating an intention to no longer be bound by it. Typically, this involves a unilateral change by the employer to a fundamental term of an employee’s employment, without notice. A constructive dismissal can also occur if the employer treats the employee in such a manner that continued employment is intolerable for the employee.
The Ontario Court of Appeal has opined recently that in order to establish a constructive dismissal, the employee need not show both a unilateral and fundamental change going to the root of the contract and an employer’s intention to end the relationship.
When faced with your employer’s substantial action or inaction that triggers a decision, you have two choices: 1) accept the change to the employment or the employer’s conduct or 2) not accept the change or conduct, leave the workplace and assert a constructive dismissal. Obviously, the second option is the most risky as it is not a certainty that a Court will agree with you that you were the victim of a constructive dismissal. Taking this second position is one-way street. You become unemployed and your income will be interrupted. You will likely have to wait possibly until trial, for the resolution. It is sometimes a defendant’s tactic to refuse to discuss settlement until the eve of trial even if they are in the wrong. In the interim, you are scrambling to find other work while maintaining litigation. Of course, there are situations that warrant removing yourself from the workplace regardless of the consequences. Equally, it may not be reasonable to accept the change or the employer’s conduct and so, you really do not have a choice.
Two common examples of constructive dismissal are a lay-off in a non-unionized setting and a disciplinary suspension. Within the non-unionized workplace, an employer cannot lay-off an employee without pay and benefits unless it was a term of the employment contract. In other words, absent specific agreement by the employee at the commencement of the relationship, a lay-off of this nature will usually amount to a constructive dismissal.
A company that suspends a salaried employee, absent a discipline policy that identifies suspension as an appropriate possibility or evidence of custom, usage or presumed intention of the parties, will likely be found to have constructively dismissed the employee.
If you believe that your employment has been constructively terminated, please call me to discuss your situation. Each situation is different and very dependent upon the facts.
Most people whose employment is terminated without just cause, receive a severance package based on their base salary plus benefits. There are employees however, who also enjoyed bonuses, profit sharing or stock options as part of their total remuneration. What is the current position at law with respect to these additional forms of remuneration? Are they supposed to be included in the severance package or are they excluded? Here are few general principles.
The test for whether a bonus should be paid through the notice period or as part of the severance package, is whether the bonus was an integral part of the pay structure as opposed to being an “ex gratia” payment. If the bonus was an integral part of the remuneration during employment, it will generally be awarded through the notice period. A history of a bonus tends to establish that it was “integral”. Even if there are as few as two consecutive bonus payments, the test may be met. The court will determine whether the bonus would have been paid through the notice period by assuming that the employer would have acted reasonably, fairly and in good faith in paying a bonus had the employee worked throughout the notice period.
As in trying to determine commission income through the notice period, courts have used various approaches to determine the amount of the bonus attributable through the notice period. Some courts use an average of the bonuses over several years next before termination. Other courts have calculated the bonus based on company performance during the notice period. Some courts have used past performance of the company and the employee during the year before termination of employment.
With respect to profit sharing or profit-participation programs, one court awarded the employee profit sharing on a pro-rata basis through the notice period even though the employee did not work a full year before termination of employment.
When determining how to treat stock options that are set to be “sold” as at the date of termination of employment, courts will often interpret that as meaning the date the employment would have been terminated lawfully. Where an employee would have been able to exercise an option had reasonable notice been given, the court will often assess and award damages based on the loss of opportunity.
If your employment has been terminated and you have questions regarding your entitlement to a severance package, please contact me to discuss your situation. Every case is different and must be considered on its own facts.
One of the key considerations for anyone thinking of starting litigation, is the likelihood of collecting on a judgment. The Rules of Civil Procedure, which govern civil litigation in Ontario, provide for a variety of ways to enforce an order or judgment for payment or recovery of money. Let’s look at a couple of the more common methods: writ of seizure and sale, and garnishment.
Once you have a judgment or order for payment or recovery of money, you may be able to obtain a writ of seizure and sale. This is a direction to the sheriff in the jurisdiction in which the judgment debtor has exigible assets. “Exigible” means assets that can be seized. The idea is to seize all or a portion of the judgment debtor’s unencumbered exigible property and sell it in order to satisfy the judgment. The Execution Act, Ontario, along with other legislation governs the types of property that can and cannot be seized and the execution procedures for each type of property. Insurance proceeds and pension benefits are protected from execution, for example.
A writ of seizure and sale must be renewed every 6 months. That said, a judgment creditor is entitled as of right to enforce the writ anytime within 20 years of its date, even if it has expired. The solicitor acting for the judgment creditor may bring a motion to have it renewed.
A writ binds the debtor’s lands against which it is issued. A writ on title to real property must be cleared off before the property can be transferred. Lawyers acting for purchasers of real property should check for writs registered with the Land Registry Office, well in advance of the closing date.
One can also obtain execution against personal property.
The next common method of collection is garnishment. Garnishment permits an execution creditor (the garnishor) to seize or attach a debt owed by a third party (the garnishee) to the debtor. Put differently, the creditor may seize the payment owing to the debtor before it is paid to the debtor. The obvious example of this is garnishing employment wages. Before the wages are paid to the employee, the amount to be garnished is paid to the garnishor.
The Wages Act, Ontario, states that 80% of an employee’s wages are exempt from garnishment. This amount can be increased or decreased however, by a court. Where there is an order for payment of support or maintenance under family law or divorce legislation, the exemption is decreased to 50%. The debtor may apply to the court to vary the amount and the terms of payment.
Other forms of debt that can be garnished include crown money owing to a debtor for goods or services, the debtor’s interest in a partnership, life insurance proceeds that are payable to the insured’s estate and certain RRSP funds to the extent of the debtor’s beneficial interest.
There are many other methods of debt collection. For more information, please contact me at my office to discuss your case.
This article provides information about the law and is not in any way, legal advice which is the application of law to an individuals’ specific circumstances. You are recommended to consult a lawyer to obtain professional advice with respect to a specific fact situation.
Here is a fairly common situation. An employee who is approaching his 65th birthday is told that he must retire in the month during which he turns 65. The employee is taken aback at this. He had not considered retiring when he was 65. Instead of dealing with the situation head-on the employer has subtle conversations with the employee, asking him if he had thought about retirement or telling him that he “they had heard” he was considering retirement. Or sometimes an employee will merely inquire about his pension funds and the employer will use that as justification for presuming the employee intends to retire.
The issue in these cases is whether the employee agreed at the commencement of employment or even during employment, to mandatory retirement at age 65. The basic premise at common law is that whatever terms and conditions of employment were agreed to at the commencement of employment, is what governs. Further, with some exceptions, terms and conditions of employment that are introduced after the commencement of employment are generally held not to be enforceable unless the employee specifically agrees with them.
Employers sometimes consider the older employee a problem. They have often been employed for a very long and usually on a mere hand-shake. Many employers did not have retirement policies 30 years ago but now wish to enforce retirement. If the employee is forced out the door after 30 years of employment based on the premise of a retirement policy they never agreed to, the employer is at risk of paying a large severance packages unless they can show that the employee actually agreed to mandatory retirement.
A case on point is McLaren v. Pacific Coast Savings Credit Union [2001] B.C.J. No. 118 (B.C.C.A.), a decision of the British Columbia Court of Appeal. Notwithstanding that the decision is from British Columbia (a jurisdiction known to be excessive in its awards to employees), this is a case that can be used in Ontario. McLaren stands for the proposition that an employer cannot rely upon a retirement policy that was not part of the terms of employment when it commenced. In that case, the plaintiff had made express declarations before his 65th birthday that he intended on retiring on that date. Then the company made a general announcement that at its discretion the retirement age could be extended. McLaren then decided in his own mind that he wanted to work past his 65th birthday. He had no discussions about this with his employer. Then, six months before his 65th birthday the company gave McLaren notice that his employment would be terminated on his 65th birthday or he could stay on and work in a lesser position. The court held that the company failed to advise McLaren that its policy would be exercised in his favour. The court held that the company terminated McLaren’s employment without just cause and he was awarded pay in lieu of notice. In addition, the court held that McLaren was not required to seek or accept a lower-status position and that he was not required to make any efforts to mitigate his damages.
The case law generally requires that the employee make a clear and voluntary decision to retire and communicate that decision to the company. Further, case law suggests that an employer will not be able to rely upon a mandatory retirement policy that it never drew to the attention of the employee or that the employee did not specifically agree with.
If you have been forced to retire or feel that your employer is trying to get you commit to retirement, please call me to discuss your specific situation.
Sometimes, employees are required to sign Non-Competition Agreements either at the commencement of their employment, or at the termination of it. But, if no such agreement was ever signed, does that mean that a departing employee has the right to compete head-on with their former employer?
At common law, there exists the concept of “fiduciary obligations”. These are obligations of good faith that attach to certain types of employees. A “fiduciary obligation” has been described as a duty not to act unfairly towards an employer. As stated in Wallace Welding Supplies Ltd. v. Wallace (1986 Ontario case). “…the former employee in competing with his former employer, as he has a right to do, must not exercise an advantage that he may have, by virtue of his former employment”.
A breach of a fiduciary duty following the termination of employment will be actionable regardless of whether the former employer suffers damage. The cases suggest that the nature of the corporate opportunity that needs protection must be examined. For example, it has been held that a corporate opportunity must be an opportunity or advantage that is available to the former employer and not readily available to the competition.
A fiduciary must not use specific knowledge of a former employer and its customer so as to interfere with that relationship. A fiduciary however may be permitted to use “know how” that he/she acquired at the former employment. A fiduciary may not make direct solicitations upon his/her former employer’s customers in an attempt to persuade them from discontinuing their relationship with the former employer and commencing a relationship with their new company.
The common law principles relating to fiduciary obligations are clear that a fiduciary may utilize general advertisements to the public to attract customers. A fiduciary such as lawyer, accountant or other professional, who has a personal relationship with a customer, has the right to advertise his or her move to a new firm. In fact, this type of employee may have ethical obligations to inform their clients or customers of where they are moving. In doing so, courts generally do not find a breach of fiduciary obligation.
Where a fiduciary has signed a non-competition and/or non-solicitation agreement, the courts have been influenced when deciding whether to give effect to the agreement. It is wise therefore, to seek legal advice before signing such a document.
This article is meant to alert the reader to the broad issue of fiduciary obligations. The information contained herein is a gross over-simplification of the law surrounding this area. If you are faced with having to sign a non-competition agreement or you think you may be a fiduciary, please call me to discuss your situation. This is one area of employment law that is very fact driven and about which, general comments should not be made.
When an employee of a company commits an act or omission that causes injury to a third party, that third party normally has a cause of action against his/her employer under the doctrine of “vicariously liability”, provided the employee is acting within the scope of employment. If the employee was acting outside the “scope of business” however, there may be no recovery for the injured third party depending on the circumstances. The question becomes; can an action lie against an employer where the employee is acting outside the scope of employment? The short answer is, yes. Injured third parties may sue an employer directly under the doctrine of “original liability” for, inter alia, negligent selection or retention of employees who should be qualified but who are not. Below are two cases on point.
In Van Geel v. Warrington [1928] O.J. No. 104 (Ont. Sup. Ct. App. Div.), Warrington owned a car repair garage and a separate car wash facility. One of his managers named Donovan hired a young man named “Cara”. Warrington was content with the young man’s reputation though he never checked into his background nor sought out any references for Cara. Warrington found Cara to be polite, efficient and popular with the customers. Had Warrington checked into Cara’s background however, he would have discovered that “Cara” was not his real surname. Cara’s real name was McDonald, who was a young man from Brantford with a well-known and poor reputation. Donovan stated at trial that he would never have hired Cara had he known he was “traveling under an assumed name”.
At 9 PM on August 31, 1927, Warrington instructed Cara to drive Van Geel’s car to his car wash facility. Cara set out in Van Geel’s car with another young man in the employ of Warrington. Their journey ended in Brantford, Ontario with three young women and a third young man in the car and a bottle of bootleg liquor, which Cara drank while driving Van Geel’s car into a 14′ telephone pole in Brantford. Cara was clearly acting outside the scope of his employment when he damaged the car.
The Court held that Van Geel could recover damages as against Warrington even though clearly, Cara was not acting within the scope of employment when he wrecked his car. The Court held that Warrington had been negligent in the selection of Cara as “one to whom valuable property of a third person should be entrusted.”
In a similar case, Wilson v. Clarica Life Insurance Co. [2002] B.C.J. No. 2042 (B.C.C.A.), Wilson was the dupe of a Mr. Carey Dennis, investment agent for Mutual Life (predecessor company to Clarica). Holding represented himself as an agent of Mutual, Dennis persuaded a 57-year-old widow named Wilson to invest $260,000 with Mutual. Most of the money was given to Dennis via cheques made out to him personally. Dennis invested only a small portion of that amount with Mutual and “misplaced” the rest of it. Wilson sued Mutual claiming it was negligent in supervising and/or hiring Dennis. Mutual was found liable for negligent hiring but not negligent supervising. Space does not permit a full explanation of the reasons for this decision but suffice to say that in this case, Mutual was liable for hiring Dennis who had theft and fraud in his background.
If you have suffered damages as a result of the acts or omissions of an employee of a company, please contact me to discuss your options. One of those options may be to sue the employer for negligent hiring and/or supervision.
I am three weeks away from conducting mediation in the largest file I have ever had: an acquired brain injury. If this matter does not settle at mediation, we are scheduled for a three-week trial in May 2005, so that gives you an idea of the size of this file.
At this point, the parties are very far apart. The defendant’s medical reports makes light of the injuries of my client. He struck his head as a result of a fall and suffered a fractured skull and bleeding in his brain. The frontal lobes of his brain were injured and he has been forever changed. The defendant’s position is that he will be fine with some therapy to address his apathy and depression. All of our experts say the opposite; that my client has sustained permanent impairment of a number of important functions as demonstrated by his memory loss, apathy, inappropriate behavior disinhibition, disturbed sleep and extreme loss of self esteem, to name but a few symptoms. My client has been assessed as incapable of working again. So how does a lawyer prepare the damages brief on such a file?
The thing to always remember in acquired brain injury cases is that you can’t judge a book by its cover. ABI symptoms are often not immediately obvious to the naked eye. To properly flesh out the symptoms and effects of a brain injury therefore, the client should be seen by a number of different specialists. For example, a clinical neuropsychologist will be able to run a multitude of tests to investigate cognitive, language, memory and conceptualizing losses, to name a few. A good rehabilitation clinic will provide a comprehensive snapshot of the individual’s health. Such clinics will examine and make recommendations in the areas of nursing care, physiotherapy, occupational therapy, speech and language therapy, psychological deficits, social work concerns and therapeutic recreation.
Depending on the symptoms of the client, other medical specialists should be consulted. In my client’s case, an investigation was needed into his hearing, smell and taste. There are also dedicated acquired brain injury programs that should be consulted. Such clinics will assess the patient and develop a comprehensive rehabilitation program designed specifically for the needs of a brain-injured person.
Occupational therapists that specialize in acquired brain injury will interview the patients in their home to observe their daily routine and how the injury has affected them. Interviews with family members are very important, as they are often the best source of information regarding the changes to such a patient.
Finally, after all the medical reports are gathered which reports should include costs of recommended therapies and treatments, the numbers have to be run by an economic loss specialist. These individuals are usually economists with actuarial expertise. They develop the various costs that the client has incurred and will incur as a result of the brain injury and its life-long effects. Examples of typical financial calculations are loss of shared family income (if the injured person’s spouse left them as a result of the injury and its effects), past and future lost income, cost of future care such as residential care, claims for compensation for family members who provided attendant and Family Law Act claims for family members for loss of care, guidance and companionship of the injured person.
Each brain injury case is unique and requires a comprehensive approach. Knowing which specialists to send the client to will make all the difference in the success of the file. For more information, please contact me.
When an employee of a company commits an act or omission that causes injury to a third party, that third party normally has a cause of action against his/her employer under the doctrine of “vicariously liability”, provided the employee is acting within the scope of employment. If the employee was acting outside the “scope of business” however, there may be no recovery for the injured third party depending on the circumstances. The question becomes; can an action lie against an employer where the employee is acting outside the scope of employment? The short answer is, yes. Injured third parties may sue an employer directly under the doctrine of “original liability” for, inter alia, negligent selection or retention of employees who should be qualified but who are not. Below are two cases on point.
In Van Geel v. Warrington [1928] O.J. No. 104 (Ont. Sup. Ct. App. Div.), Warrington owned a car repair garage and a separate car wash facility. One of his managers named Donovan hired a young man named “Cara”. Warrington was content with the young man’s reputation though he never checked into his background nor sought out any references for Cara. Warrington found Cara to be polite, efficient and popular with the customers. Had Warrington checked into Cara’s background however, he would have discovered that “Cara” was not his real surname. Cara’s real name was McDonald, who was a young man from Brantford with a well-known and poor reputation. Donovan stated at trial that he would never have hired Cara had he known he was “traveling under an assumed name”.
At 9 PM on August 31, 1927, Warrington instructed Cara to drive Van Geel’s car to his car wash facility. Cara set out in Van Geel’s car with another young man in the employ of Warrington. Their journey ended in Brantford, Ontario with three young women and a third young man in the car and a bottle of bootleg liquor, which Cara drank while driving Van Geel’s car into a 14′ telephone pole in Brantford. Cara was clearly acting outside the scope of his employment when he damaged the car.
The Court held that Van Geel could recover damages as against Warrington even though clearly, Cara was not acting within the scope of employment when he wrecked his car. The Court held that Warrington had been negligent in the selection of Cara as “one to whom valuable property of a third person should be entrusted.”
In a similar case, Wilson v. Clarica Life Insurance Co. [2002] B.C.J. No. 2042 (B.C.C.A.), Wilson was the dupe of a Mr. Carey Dennis, investment agent for Mutual Life (predecessor company to Clarica). Holding represented himself as an agent of Mutual, Dennis persuaded a 57-year-old widow named Wilson to invest $260,000 with Mutual. Most of the money was given to Dennis via cheques made out to him personally. Dennis invested only a small portion of that amount with Mutual and “misplaced” the rest of it. Wilson sued Mutual claiming it was negligent in supervising and/or hiring Dennis. Mutual was found liable for negligent hiring but not negligent supervising. Space does not permit a full explanation of the reasons for this decision but suffice to say that in this case, Mutual was liable for hiring Dennis who had theft and fraud in his background.
If you have suffered damages as a result of the acts or omissions of an employee of a company, please contact me to discuss your options. One of those options may be to sue the employer for negligent hiring and/or supervision.
In most constructive dismissal situations an employee is forced to resign. Many employees who find themselves in an untenable situation at work are afraid that if they resign they will prejudice their claim for damages for constructive dismissal. Let us look at how the common law views a “resignation” within the employment context.
The common law test for resignation is an objective test. “Objective” means what an outsider would consider to be a resignation as opposed to what the employee considered. The question to ask then is, given all the circumstances in the case, would a reasonable person have understood by the employee’s statement “I quit” that the employee had in fact resigned? For an employer to successfully argue that the employee had resigned, the evidence must be clear and unequivocal that the employee freely and voluntarily resigned. When faced with a client who says he “resigned” I ask him/her whether they intended to resign or put differently, would they have resigned if the difficult situation had not occurred? This often reveals the motives behind the so-called resignation.
A review of case law shows us that it is not easy to be found to have resigned. For example, an emotional outburst “I quit” by an 11-year employee was not sufficient to terminate the employment relationship. An employee who said that he no longer wished to serve in the position and would be seeking alternative employment was found not to have resigned. Handing in company property is strong indicia of resignation but the court in one case stated that that act must not be viewed in isolation to the rest of the circumstances. A lawyer’s letter arguing constructive dismissal was not found to amount to the employee’s resignation. In another case, the employee’s declaration “Don’t worry about me. I will be leaving when the appropriate times comes” did not amount to a resignation at the time the statement was made.
There is authority that at trial, the onus is upon the employer to prove that the employee freely and voluntarily resigned. An employer’s demand for an employee’s resignation amounts to a constructive dismissal. In that case, the onus lay on the employee to prove that the employer repudiated the employment contract by improperly demanding the resignation. A resignation garnered through duress and undue pressure is not enforceable. In one case, an employer forced an employee to sign a resignation letter. This was held not to amount to a resignation.
If you find yourself at work being forced to resign or sign a resignation letter, or wondering whether your resignation will prejudice your ability to claim that you were dismissed, try to call me before you do. In most case of a force quit, the court will find that the resignation was not free and voluntary and instead, that you were dismissed.
The Terry Shiavo case in the United States has everyone running out and preparing living wills, according to US news sources. In case you have not been watching the news, Terry Shiavo is a woman who is allegedly in a persistent vegetative state and was required to have a feeding tube. Over the past decade a legal battle has ensued between Terry’s parents and her husband, Michael. Michael believes that it was Terry’s wishes that she not be kept alive by extraordinary measures including a feeding tube. Terry’s parents believe the opposite. Terry did not have a living will or any other written document setting out her wishes. She had apparently told her husband and other people close to her that she did not want to be kept alive artificially. By order of a state court last week, Terry’s feeding tube was removed. Terry’s parents want the tube reinserted and have been making emergency appeals to various appeal courts but have not as yet been successful.
The Shiavo case points out the difficulties that can arise in the absence of clear written instructions regarding medical treatment or lack thereof. How can one avoid such unfortunate battles such as the one in the Shiavo case?
One way to avoid disputes as to what a person may or may not want in the way of medical treatment when incapacitated is to make a Power of Attorney for Personal Care (“PAPC”). Through a PAPC, a person called the “grantor” names another person or persons called “attorney(s)” who will make personal care decisions during the grantor’s incapacity. At the time a grantor creates a PAPC, he or she must be mentally capable of doing so. A person cannot create a PAPC after becoming incapable.
A person is considered by law as being incapable of personal care if he or she is unable to understand information that is relevant to his or her own health care, nutrition, shelter, clothing, hygiene or safety, or is unable to appreciate the reasonably foreseeable consequences of a decision or lack of decision.
A PAPC in Ontario is a pre-printed form that is filled out usually by a lawyer, upon instructions of the grantor. On this form, the grantor names the attorney(s) and has the opportunity to set out specific conditions. Some people believe that it is sufficient to name an attorney but not provide any detailed instructions regarding medical treatment. The named attorney then would be legally required to make decisions regarding the grantor’s personal care in the best interests of the grantor. Another theory is to set out on the PAPC the specific types of medical treatment that are to be withheld. Some examples of specified treatments to be withheld can include electrical or mechanical resuscitation of the heart, nutritional feedings; artificial mechanical respiration where the brain can no longer sustain breathing and radiation, chemotherapy and similar forms of treatment, to name a few.
Another option is to draft a living will, which is not a form but rather is a personal expression of one’s intentions in the event of incapacity. The Substitute Decisions Act states that an attorney must have regard to such documents when making decisions.
If you would like more information on making a Power of Attorney for Personal Care, please contact me at my office.
When an employee is dismissed from his/her employment without cause, he/she is entitled to either notice of the termination or pay in lieu of notice. What comprises the pay in lieu of notice, is simply put, all forms of remuneration the employee would have earned had he/she worked throughout the notice period, with some minor exceptions. The issue then is what forms of remuneration are awarded during the notice period? Let’s look at a few of the more common items.
If the employee earned commissions during employment, it is not always easy for a Court to determine the amount of the commissions to award during the notice period. In assessing whether commission should be paid during the notice period, the Court looks backwards to the history of the employee’s commission earnings. In addition, the Court reviews the overall viability of the market for the particular industry from which the employee was dismissed. The idea is to establish whether the employee would have earned commission had he/she worked throughout the notice period.
Many employees earn bonuses. Whether or not they are awarded during the notice period is dependent on whether the Court finds that they have become “integral” to the employee’s remuneration package. In other words, if the bonus is paid regardless of whether certain quotas are achieved, then it will most likely be found by a Court to be non-discretionary like base salary and thus payable during the notice period. If the bonus only was paid if the department achieved a certain sales goal or some other criteria must be met other than simply showing up for work, the bonus will likely be held to discretionary and thus, not awarded during the notice period. Like commissions, the employee will have to adduce evidence at trial showing that a bonus was a term and condition of the employment contract. Evidence showing the history of bonus payments would also be helpful. The Court will attempt to put the employee in the same, but not better position, had the employee worked throughout the notice period.
Some employees are compensated for working overtime. Some cases have disallowed overtime during the notice period while others have allowed it. Again, the smart plaintiff will adduce evidence as to the terms and conditions of employment to establish that overtime was a term of the employment contract and that will show the history throughout employment of overtime having been paid. The employee will then have to show why it is reasonable that overtime should be paid during the notice period.
Many sales employees have a company car or a car allowance. Generally, the Courts have awarded plaintiffs the value of the personal use of the company car during the notice period. If the company provided an allowance for the use of the company only for business purposes, then this is usually not awarded throughout the notice period as there would be no need to use the car for business purposes during the notice period.
These are just a few of the types of losses that a dismissed employee may claim throughout the notice period. If you have been dismissed you should consult an employment who will review with you all types of losses you may claim in addition to your lost salary during the notice period.
This week I thought I would tackle an interesting issue that arose recently in my residential real estate practice.
Assume that you are purchasing a new home. Before deciding to enter into a purchase contract with the builder, you inspect the model home. You go into the basement of this model and discover that the ceiling is high enough for you to finish the basement as a recreation room. This would obviously necessitate some sort of finished ceiling, either a drop or dry-wall ceiling. Being satisfied with this aspect, you purchase the home.
A few weeks before closing you discover that the basement ceiling of your unfinished home is approximately 5 inches lower than that of the model home. You wonder what your remedies are.
To answer this question, one should start first by reading the purchase agreement. In your purchase agreement the following clause is cited on one of the schedules:
“The Purchaser acknowledges that the dimensions of the Property set out in this Agreement or on any Schedule attached thereto or shown on drawings or plans made available to the Purchaser on site or otherwise are approximate only. In the event the frontage, depth or area of the Property is varied from those specified in the Agreement or on any schedule attached hereto or shown on drawings or plans made available to the purchaser on site or otherwise, as aforesaid, or any or all of the foregoing and provided the Property complies with municipal and other governmental requirements including zoning by-laws, the Purchaser agrees to accept all such variations without claim for abatement in the Purchase Price and this Agreement shall be read with all amendments required thereby. In addition, if minor variations to the size of the dwelling including internal dimensions of any areas are made to the dwelling the Purchaser shall accept such minor variations without any abatement to the Purchase Price.”
This clause says three important things. Firstly, dimensions on plans, drawings etc., are approximate. Secondly, as long as the finished product meets zoning and by-law requirements the Purchaser agrees to accept any variations from the plans, drawings etc., without abatement of purchase price. Finally, if “minor variations” to the size of the dwelling including internal size are made the Purchaser shall accept the variations.
In a 1983 Ontario Court of Appeal case, the Court was required to consider a similar situation. A basement ceiling turned out to be 3 inches lower than indicated on the plans. The Court found that 3 inches was not significant enough to treat the variation as something other than minor. At the same time the Court made a practical observation: whether the ceiling was 3 inches lower or higher, a tall person would not be able to move about without having to duck his head.
In your hypothetical case, absent a finding that the basement ceiling height fails to meet zoning by-laws, you will most likely be out of luck.
I have been on several mediations in the past few weeks and one of them I found particularly interesting. What was interesting was how the mediator spoke to my client about her lawsuit. Before I get into that however, I will briefly explain how mediation works.
Firstly, the point of mediation is to craft a settlement that all parties can live with, without having to conduct an expensive trial. For the most part, it works quite well. The parties with their lawyers usually start the day in one room. Each side has an opportunity to present their side or case. The mediator will have already read each party’s Mediation Brief prepared by their lawyer however, some mediators want to hear directly from the clients in addition to their lawyer.
After each party has had a chance to make some remarks, each side is then taken into their own rooms with their lawyer. The mediator then employs “shuttle diplomacy” meaning that the mediator will receive an offer to settle from one party and then take it down the hall to the other party.
A good mediator will “sell” the first offer to the other side and if necessary help the other side recognize the validity of the position and the offer. The mediator will tell each side that anything that is discussed while the mediator is in the room can be divulged to the other side unless the mediator is asked not to.
The other side then considers the offer usually in the absence of the mediator. The factors that influence the validity of an offer include any weaknesses in the other side’s case, the risk of defeat at trial and the costs of going to trial, to name a few. The other party and their lawyer will then prepare a counter-offer that the mediator will present to the other side. Once again, the mediator may attempt to sell the counter-offer. Some mediators do not do this, but some do.
It goes on like this for several hours and it really does take around 3 to 4 hours to arrive at a settlement. What I have observed having done quite a few mediations, is that the client’s attitude will dictate how long it takes. If a client goes into mediation feeling indignant or stubborn about settlement, it will take longer or it might not happen at all. It is best to avoid arriving at mediation in this stance.
On this particular mediation I recently attended, the mediator started the day by describing my client’s lawsuit as a “product” that my client wished to sell. He made these remarks in absence of the defendant and his lawyer. This mediator told my client that the defendant was the only person who wanted to “buy” the product and that the product has no value to anyone other than the defendant. My client understood that if the defendant doesn’t “buy the product”, there will be no “sale”. I thought that was a very good way of relaying the economic realities of litigation and the necessity of being reasonable with offers.
Please contact me if you are contemplating starting a lawsuit, to discuss your options including mediation.
The Limitations Act, 2002 came into force on January 1, 2004. This Act completely changes what was formerly a patchwork quilt of limitation periods. A limitation period is a deadline by which certain actions must be started. Prior to the new Act, limitation periods depended on the particular type of occurrence. For example, the limitation period for a breach of contract or a tort action was six years within the date the cause of action arose. An action against a municipality for damages arising from disrepair of a road must have been started within three months of the cause of action arising. An action in negligence against a hospital had to have been commenced no later than two years after a patient discharge.
The whole purpose of a limitation period is to ensure that lawsuits are brought within a reasonable period of time. The underlying principle is that without a limitation period, an individual or company could be under threat indefinitely of being sued. Even worse, the passage of time brings with it a real possibility of deterioration of evidence. Witnesses die, disappear or lose an accurate recollection of the facts. Documents disappear or the parties lose control over them. In short, a limitation period is a proper component of litigation.
As of January 1, 2004, the previous limitation periods pertaining to trusts and personal actions were repealed. Also, the part of the previous legislation dealing with real property matters was renamed Real Property Limitations Act. The result is that there are now two limitation statutes in Ontario.
Section 2 of the Limitations Act, 2002 states that it applies to claims pursued in court proceedings other than those specified in that section. Your lawyer should review that section to determine if your action is exempt from this Act.
The most important thing to know is that the Act imposes a two-year limitation period commencing from the discovery of the claim. This new and shorter limitation period replaces many of the limitation periods set out in the previous legislation and found in numerous other Ontario statutes. This “two-year discoverability rule” will apply to all claims unless explicitly excluded. Thus, the six-year limitation period relating to contract and tort claims is now shortened to two years.
Section 5 of the Limitations Act, 2002 defines how a claim is “discovered”. “Discovery” of a claim occurs the day on which the person with the claim knows or ought to have known that: injury, loss or damage had occurred; knows the identity of the person who caused that injury, loss or damage; and that, having regard to the nature of the injury, loss or damage, a legal proceeding would be an appropriate remedy to it.
If you have a potential action of any kind, you are well advised to consult a litigation lawyer as soon as possible after the occurrence for advice.
Under the Employment Standards Act in Ontario, there are three types of leaves of absence available for employees: Pregnancy Leave, Parental Leave and Emergency Leave. What is significant is in the Act, is what could happen to an employer if it intimidates, dismisses or otherwise penalizes an employee because the employee is or will become eligible to take a leave of absence. Firstly, let’s review in basic terms the three types of leave.
Pregnancy Leave is available to a “pregnant employee” provided she has worked with her employer for longer than 13 weeks. The leave must begin on the earlier of 17 weeks before her baby is due to be born and the day of birth. The leave is as long as 17 weeks in length and is on a without-pay basis. There are provisions in the Act relating to when to provide notice to the employer, when the leave ends, and changing the dates of a leave.
Parental Leave is available to a parent of either sex who is a parent of a child born to him/her or to a child “coming into the employee’s custody, care and control for the first time.” One may end a pregnancy leave and go immediately into a parental leave. Parental Leave lasts up to 35 weeks if the employee also took a Pregnancy Leave and 37 weeks if no Pregnancy Leave was taken. An employee wishing to end his/her employment at the end of a Parental Leave must provide similar the employer with 4 weeks notice. There are additional provisions relating to changing the dates of a leave and notice periods.
Emergency Leave is available to an employee whose employer regularly employs 50 or more employees. One may go on such a leave because of illness, injury or medical emergency to themselves; death, illness, injury or medical emergency to one’s spouse, or family members (defined by the Act) or because of an “urgent matter” concerning an individual defined in the Act. This kind of leave is available for up to 10 days. Notice should be provided prior to taking the leave or as soon as possible after beginning a leave. The employer may require evidence “reasonable in the circumstances” that the employee is entitled to take the leave.
Section 74 of the Act states that no employer shall intimidate, dismiss or otherwise penalize an employee who is or will take a leave of absence. The employer bears the burden of proving that they did not contravene these provisions. Section 132 of the Act states that if an employer contravenes the Act or regulations or fails to comply with an order, direction or other requirement, is “guilty of an offence and on conviction is liable, if a corporate employer, a fine of not more than $100,000. Section 133 provides that in addition to any fines, the employer may be ordered to pay the employee any wages that are owing to him/her or reinstate the employee or compensate the employee for any loss incurred as a result of the contravention.
If you are an employee who is or will be entitled to take a leave of absence and believe that your employer has breached its obligations in the Act, please do not hesitate to contact me to review your specific situation. There is much that can be done.
One of the key considerations for anyone thinking of starting litigation, is the likelihood of collecting on a judgment. The Rules of Civil Procedure, which govern civil litigation in Ontario, provide for a variety of ways to enforce an order or judgment for payment or recovery of money. Let’s look at a couple of the more common methods: writ of seizure and sale, and garnishment.
Once you have a judgment or order for payment or recovery of money, you may be able to obtain a writ of seizure and sale. This is a direction to the sheriff in the jurisdiction in which the judgment debtor has exigible assets. “Exigible” means assets that can be seized. The idea is to seize all or a portion of the judgment debtor’s unencumbered exigible property and sell it in order to satisfy the judgment. The Execution Act, Ontario, along with other legislation governs the types of property that can and cannot be seized and the execution procedures for each type of property. Insurance proceeds and pension benefits are protected from execution, for example.
A writ of seizure and sale must be renewed every 6 months. That said, a judgment creditor is entitled as of right to enforce the writ anytime within 20 years of its date, even if it has expired. The solicitor acting for the judgment creditor may bring a motion to have it renewed.
A writ binds the debtor’s lands against which it is issued. A writ on title to real property must be cleared off before the property can be transferred. Lawyers acting for purchasers of real property should check for writs registered with the Land Registry Office, well in advance of the closing date.
One can also obtain execution against personal property.
The next common method of collection is garnishment. Garnishment permits an execution creditor (the garnishor) to seize or attach a debt owed by a third party (the garnishee) to the debtor. Put differently, the creditor may seize the payment owing to the debtor before it is paid to the debtor. The obvious example of this is garnishing employment wages. Before the wages are paid to the employee, the amount to be garnished is paid to the garnishor.
The Wages Act, Ontario, states that 80% of an employee’s wages are exempt from garnishment. This amount can be increased or decreased however, by a court. Where there is an order for payment of support or maintenance under family law or divorce legislation, the exemption is decreased to 50%. The debtor may apply to the court to vary the amount and the terms of payment.
Other forms of debt that can be garnished include crown money owing to a debtor for goods or services, the debtor’s interest in a partnership, life insurance proceeds that are payable to the insured’s estate and certain RRSP funds to the extent of the debtor’s beneficial interest.
There are many other methods of debt collection. For more information, please contact me at my office to discuss your case.
A lot of companies believe that there is an implied probationary period at common law allowing them to fire an employee without notice during the alleged probationary period. Equally, a lot of companies fire employees without providing them with any notice or pay in lieu believing that they have “just cause” to do so. Let’s look at what the law has to say about both these issues.
Firstly, the case law states that the existence of a probation period is a question of fact to be established with the rest of the terms and conditions.
The employer wishing to rely on a probation period must discuss this fully with the employee before he/she accepts the position. In particular, the employee must understand what can befall him or her during the probation period. With or without a written contract the employer should advise the prospective employee of the length of the probation period and the fact that employment may be terminated at the discretion of the employer at any time during the period for any reason and upon a set amount of notice or pay in lieu of notice or upon no notice, if that is what is desired.
That said, the case law has been evolving over the past few years such that even during a probation period, assuming the court finds that one exists, there is an obligation on an employer to warn the employee before summarily dismissing them. Put differently, the concept of a probation period at law is eroding. The point here is that if your employment is terminated during an alleged probation period, you should have your situation reviewed by an employment lawyer.
Perhaps the single most important issue to any employee is what rights and obligations exist at the termination of his/her employment. There is an implied obligation at common law that an employer may terminate indefinite (no end-date) employment only upon reasonable notice or pay in lieu of notice. The exception to this rule is when the employer has “just cause” to terminate employment without notice or pay in lieu. What then constitutes “just cause” permitting an employer to terminate employment without notice or pay in lieu of notice?
The case law is very clear that summarily dismissing an employee with no notice is a serious matter not to be done lightly. To establish just cause, the employer must satisfy the court that the alleged misconduct of the employee was such as to interfere with and to prejudice the safe and proper conduct of the business of the company, and, therefore, to justify summary dismissal.
The issue is always whether the impugned conduct is so serious in the circumstances that it amounts to the employee’s repudiation of the employment contract and that the continued presence of the employee will harm the employer. This is determined having regard to the facts and circumstances of the particular case and the societal morays of the day.
The more obvious types of “just cause” are gross incompetence, insolence, insubordination and dishonesty. Each one of the aforementioned types of misconduct has its own particular common law test and requirements that must be proven at trial in order to satisfy the court that dismissal without notice or pay in lieu was justified in the circumstances.
“Gross incompetence” is quite difficult to establish at trial. To succeed on this defence the employer must at a minimum, have provided a written warning to the employee outlining the areas of weakness that need improving, a detailed list of the reasonable standards that must be met, a reasonable time-frame within which to meet the standards and an unambiguous statement that if the employee fails to meet the standards by the required time, employment will be terminated.
“Insolence” refers to an employee displaying defiant or disagreeable behaviour such as using profanity or verbal abuse, or extreme criticism of the employer. Again, the court will only support “insolence” as just cause when it is satisfied that in the circumstances, the behaviour was so extreme as to demonstrate the employee’s repudiation of the employment contract. Here, the court will examine the circumstances in light of present day standards of conduct.
“Insubordination” is the intentional disregard of a reasonable directive of the employer. An isolated act can constitute cause for dismissal if it amounts to a repudiation of the contract of employment. The employee must “wilfully” disobey an unambiguous and unequivocal directive necessary to the performance of his/her duties.
“Dishonesty” has traditionally been viewed as justification for summary dismissal because of the breach implied obligation at common law of the employee’s duty and faithfulness. Certain employees will be held to a higher standard than others. In attempting to discern whether the alleged dishonest act destroys the foundation of the employment relationship, the court will examine all of the circumstances of the case.
If you have any questions related to employment law whether as an employee or employer, please do not hesitate to contact me. In employment law, an ounce of prevention is often worth more than a pound of cure.
In most constructive dismissal situations an employee is forced to resign. Many employees who find themselves in an untenable situation at work are afraid that if they resign they will prejudice their claim for damages for constructive dismissal. Let us look at how the common law views a “resignation” within the employment context.
The common law test for resignation is an objective test. “Objective” means what an outsider would consider to be a resignation as opposed to what the employee considered. The question to ask then is, given all the circumstances in the case, would a reasonable person have understood by the employee’s statement “I quit” that the employee had in fact resigned? For an employer to successfully argue that the employee had resigned, the evidence must be clear and unequivocal that the employee freely and voluntarily resigned. When faced with a client who says he “resigned” I ask him/her whether they intended to resign or put differently, would they have resigned if the difficult situation had not occurred? This often reveals the motives behind the so-called resignation.
A review of case law shows us that it is not easy to be found to have resigned. For example, an emotional outburst “I quit” by an 11-year employee was not sufficient to terminate the employment relationship. An employee who said that he no longer wished to serve in the position and would be seeking alternative employment was found not to have resigned. Handing in company property is strong indicia of resignation but the court in one case stated that that act must not be viewed in isolation to the rest of the circumstances. A lawyer’s letter arguing constructive dismissal was not found to amount to the employee’s resignation. In another case, the employee’s declaration “Don’t worry about me. I will be leaving when the appropriate times comes” did not amount to a resignation at the time the statement was made.
There is authority that at trial, the onus is upon the employer to prove that the employee freely and voluntarily resigned. An employer’s demand for an employee’s resignation amounts to a constructive dismissal. In that case, the onus lay on the employee to prove that the employer repudiated the employment contract by improperly demanding the resignation. A resignation garnered through duress and undue pressure is not enforceable. In one case, an employer forced an employee to sign a resignation letter. This was held not to amount to a resignation.
If you find yourself at work being forced to resign or sign a resignation letter, or wondering whether your resignation will prejudice your ability to claim that you were dismissed, try to call me before you do. In most case of a force quit, the court will find that the resignation was not free and voluntary and instead, that you were dismissed.
An employer may terminate indefinite (not term) employment at any time upon reasonable notice or pay in lieu of notice. Once fired, an employee is required at common law to make reasonable and diligent efforts to “mitigate” or cut their losses, as this is required by the common law. Mitigation income is deducted from any damages for wrongful dismissal at trial. The question then is how does one mitigate his/her losses in this situation? What steps must one take in order to avoid the finding at trial that they “failed to mitigate” their damages?
Firstly, the common law requires a dismissed employee to make “reasonable and diligent efforts” to replace their income. At trial, the employer is the one charged with the onus of proving a “failure to mitigate”. A court will find someone failed to mitigate if he/she refused to accept an offer of alternative employment that was reasonable for him/her to have taken. The other way to fail to mitigate is to make no efforts to replace their income. The employer bears the burden at trial to prove a failure to mitigate.
The most obvious way to mitigate one’s damages is to become similarly employed elsewhere. But what about employees who start their own company or change careers following their dismissal both of which options often involving a delay in earning replacement income. And is the employee required to re-locate in order to mitigate?
In determining the issue of mitigation the court will carefully examine the employee’s reasons for starting a company or changing careers. The court wants to know whether the decision was reasonable in the circumstances. The court will inquire into the employee’s rationale. Where the employee is older or has less marketable skills, the courts usually find that starting a company was acceptable. An employee facing a very poor job market and few similar positions in their particularly field will not be penalized by starting a company.
The same reasoning applies for changing careers. Courts are more apt to not reduce damages at trial where the economy is slow or where there are very few positions available for the particular employee. That said, some courts have reduced the damages for wrongful dismissal where the employee used the notice period to re-qualify to earn future income.
The cases on whether an employee must relocate to mitigate have similar results. The courts will examine whether it was reasonable for the employee to re-locate. In one case involving an engineer in an industry where relocation was customary, the court found that the plaintiff should have moved from Vancouver to Calgary to take a position offered to him. In another case, an employee who was offered a position that required a taxi-ride costing much of her pay-cheque was not required to accept such position. Much will depend on what the court finds is reasonable in the circumstances.
If you have been fired and need information on your next steps, please contact me.
One of the more interesting challenges for the employment lawyer is to find ways given the facts of the case, to argue for additional damages. There are many ways to increase damages for individuals who were fired with or without just cause. This article will canvass a few ways to do that.
I start with the concept of “improper cause allegations”. This is a head of damage that arises when a company fires an individual without notice or pay in lieu claiming just cause, where none actually exists. The theory behind awarding additional damages in this instance is enunciated in Clark v. Horizon Holidays Ltd. a 1993 Ontario case:
“Employers know or ought to know that such allegations of misconduct, when reported to prospective employers, make the finding of subsequent employment exceedingly difficult. In my view, such loss may be reasonably foreseeable at the time of the formation of the contract.”
In the Clark case, the court found that additional damages for improper cause allegations could only be awarded if the loss was foreseeable at the commencement of the employment. The Newfoundland Court of Appeal (Trask v. Terra Nova Motors Ltd., (1991) however, found that it was improper to go through the fiction of what may have been considered at the outset of employment before awarding such damages. In that case, the employee was accused of theft during his employment. In a different case from Ontario, the court increased the notice period by 50% under this head of damage because it the improper allegations of cause were found to be likely to bear upon the employee’s chances of finding another job.
Another way that an employee can argue for additional damages, is when the employer fails to provide a reference letter or provides a ‘perfunctory’ reference letter. In a 1992 Alberta case, Gillman v. Saan Stores Ltd., the court increased the notice period by 50% where the employer failed to provide adequate references.
A further reason for additional damages is known as “diminution of future prospects of employment”. This occurs when an employer fails to provide the training it promised due to the employer firing the employee before the training commenced. A case to refer to in this area is Dunk v. Geroge Waller & Son Ltd. [1970] 2 Q.B. 163 (C.A.).
Finally, a fairly common situation arises when an employee who is fired is not in the best of health. The employee may not have been on a disability leave when fired, but for whatever reason is unable to make an all-out job search or is not able to be fully employed due to poor health. Cases go both ways in this area. For instance, if an employee’s health become poor after being fired and the employer did not know of the condition at the time of the dismissal, that employee may not be awarded additional damages.
If you have been fired and are wondering whether there is any justification for an increased period of notice or pay in lieu of notice, please call me to discuss your case.
Most employees are hired as “indefinite-term” employees meaning that when their employment commences, there is no identified end-date to the employment. At common law, this type of employment may only be terminated upon reasonable notice provided there is no just cause for summary dismissal. In contrast, fixed-term contract employment implies that at the beginning of the term the parties agreed upon the “notice” by agreeing upon the term or length of the employment.
But what happens when long-term employment is governed by a series of fixed-term contracts? What amount of notice upon termination of employment is fair in this situation? Let’s look at a specific example: Ceccol v. Ontario Gymnastic Federation (Ontario Court of Appeal, 2001). In this case, Ms Ceccol was employed for 16 years pursuant to fifteen consecutive one-year contracts. Her yearly contracts concluded at the end of June each year. The contracts stated that any entitlement to notice of termination employment without cause would be governed only by the Employment Standards Act, which provides a minimum amount of notice upon termination of employment without cause. In December 1996, her employer advised her that in June 1997 her contract would not be renewed or extended. She was paid until June 30, 1997 and the company paid her ex gratia payments of three months of her salary provided she signed a release. She declined this offer and sued her employer hoping to have the Court find that she was really an “indefinite-term” employee and thus was entitled to reasonable notice as determined by the common law as opposed the minimum amount provided by the Employment Standards Act. The case turned on the characterization of the employment: whether “indefinite” or “term”.
The trial Court found that both Ms Ceccol and her supervisors believed and acted as if she was in fact a “full-time” permanent employee. In short, the Court looked behind the successive term contracts and found that Ms Ceccol was an “indefinite term” employee. She was awarded reasonable notice in accordance with the principles of common law, which the Court found was sixteen months. This was reduced by four months because she failed to properly mitigate her damages.
The employer appealed the trial Court decision to the Ontario Court of Appeal. The Court of Appeal stated that employers should not be able to avoid the traditional protection of the common law by “resorting to the label of ‘fixed-term contract’ when the underlying reality of the employment relationship is something quite different, namely continuous service…” In addition, the Court found that the language contained in the contract as it related to the extension of the contract was not clear enough to satisfy the Court that the contract was intended by the parties to be for a fixed term only.
If you have been employed for several or many years pursuant to a series of fixed-term contracts, you should have your situation reviewed by an employment lawyer.
About once a year I get the following type of case. An employee becomes disabled and begins receiving long-term disability benefits. After going on disability the employee is fired and the employer attempts to reduce any pay in lieu of notice it intends to pay the employee by claiming it as a set-off as against any disability benefits received. To properly research this situation, one must review the disability policy. But let’s look at a couple of cases.
In the Ontario Court of Appeal decision (2001) of Sills v. Children’s Aid Society of the City of Belleville et. al. an employee of the Children’s Aid Society, City of Belleville was fired without cause. She was offered 14. 5 months of working notice. In other words, she was offered the opportunity to work during the notice period which she accepted. Two months into this working notice period she became ill and applied for short and then long-term disability benefits. The facts are involved, but suffice to say that the principle of this case revolved around the deductibility of disability benefits as against pay in lieu of notice. The employer attempted to deduct the “salary continuance” during the 14.5-month notice period from the disability benefits the employee was receiving.
The Court upheld the trial Court’s view that an employer is not relieved of its obligation to pay damages for wrongful dismissal (without-cause dismissal upon insufficient notice). The Court stated that because disability payments are contractual in nature, the question of their deductibility turns on the terms of the employment contract and the intention of the parties. In this case, the Court stated that it was reasonable to assume that an employee would not pay for a benefit (i.e. make contributions to a benefits policy during employment) that would ultimately enable the employer to avoid responsibility for a “wrongful” act (not providing reasonable notice upon termination of employment without just cause).
Now let’s look at the same situation from the disability insurer’s point of view. In Re Canada Life Assurance Company and Donohue (Superior Court of Justice, 1999), where the insurance company sued the employee. In this case, Donohue went on disability and then two days later was fired without cause. He received a lump sum of pay in lieu of notice in the amount of 24 months of salary. The insurance company found out about this and sought the Court’s opinion regarding the following clauses in the insurance policy: “If the Employee is entitled to receive any income from any other source listed below…. and the amount of an Employee’s monthly gross income from all sources listed below exceeds the Integration Level (defined as 85 per cent of his indexed net pre-disability monthly earnings), we will reduce our Benefit to the extent necessary so that his total monthly amount of gross income from these sources is equal to the Integration Level”. One of the listed sources was “any continuation of salary from his Employer” and “income from any employment, other than as described in the other sections”. The employer sought a declaration from the Court that the integration provision of the group policy applied to the lump sum severance package. The insurer in this case, attempted to use the severance money to reduce its obligation to pay disability benefits.
The Court found that the severance pay did not constitute “continuation of salary” or “income from any other employment”. It was not meant to compensate the employee for having performed work. There are however other cases which state the reverse.
If you are claiming severance pay and disability benefits and are having difficulty doing both, call me to discuss your case. This type of situation requires careful scrutiny of the facts and relevant insurance policies.
Let’s assume that you are a sales person in a company earning strictly commission. You have been quite successful and have had excellent performance appraisals. For some reason your employer removed your largest account and over night, your income was cut in half. There is no way you can make this income up off your other accounts. What are your options?
You can do nothing, accept the situation and continue working for your employer. Or you can refuse to accept this position, “resign” and claim as against your employer for damages for constructive dismissal.
A constructive dismissal has the same effect as a firing, but occurs differently. It typically involves a situation where the employee feels it would be untenable to continue working for that employer. Examples of constructive dismissals include employer-harassment, wrongly being accused of theft, a change in reporting structure, a demotion or being placed on probation during your employment, to name just a few examples. A constructive dismissal is defined at law as a unilateral change (by the employer) to a fundamental term of the employment contract. In the hypothetical case outlined as the beginning of this article, the fundamental change was the drastic reduction in your employment income which change you did not agree with.
When you are considering whether to advance a claim for constructive dismissal, there are a few things you must understand. If you continue to stay within the changed environment for any length of time, you may be estopped from later suggesting that you were fired when the company changed the terms of your employment. In other words, time is of the essence when considering advancing a claim for constructive dismissal. Further, claiming constructively dismissal is a one-way street. When you claim that the company terminated your employment constructively, you no longer work there. You do not return to your office and your pay cheque will likely be stopped. You may well be without any funds unless a quick settlement can be achieved. Sometimes however, companies will play hard ball in constructive dismissal cases. Your position at law may be strong but the company refuses to settle until just before trial. All these things should be considered before you advance a claim for constructive dismissal.
Finally, if you advance a claim for damages for constructive dismissal you will be required to make reasonable and diligent efforts to “mitigate” your damages or replace your income. You need to understand how to do that and keep track of it, should your matter go to trial.
If you believe that you have no alternative but to resign or your employer has made an unacceptable change to a significant term of your employment contract, please contact me before making any rash moves at work. Not all changes to your employment contract will result in a constructive dismissal so you are well advised to discuss it with me first.
At common law, an employer has an absolute right to terminate an employee’s employment at any time upon reasonable notice or pay in lieu. The exception to the rule that notice should be provided is when there is “just cause” for dismissal without notice. One type of “just cause” is “fraud”. It sounds simple but it often is not.
The starting point for any discussion about fraud as “just cause” is that there is an implied obligation at common law that employees will not steal or commit criminal acts against their employers. When an employee does commit fraud it is both a breach of their employment contract and a clear demonstration that the employee’s character is incompatible with continued employment.
There have been some cases where a mere suggestion of fraud was sufficient justification for dismissing without notice. Where however, it is not clear whether fraud was committed, the employer should conduct a thorough investigation and then provide the employee with a fair and reasonable chance to know the details of the investigation and to explain his/her actions and intentions. If an employer takes any short-cuts in procedure and depending on the nature of the impugned behaviour, it will likely not succeed on its defence at trial and will find itself having to pay damages.
The employer wishing to terminate employment without notice claiming employee fraud should give serious consideration as to whether it really has justification. If the allegations turn out to be unfounded, the employee may have grounds for claiming additional damages at trial for bad faith dismissal and loss of reputation resulting from such allegations. Employers considering such a move should seek advice from an experienced employment lawyer before alleging fraud and firing the employee without notice.
Some examples of what courts have found to amount to fraud include theft of a flashlight; improperly charging the employer’s telephone account for personal calls over an extended period of time and a cashier failing to register all transactions such that customers left the store with unpaid merchandise. On the contrary, a long-term employee found to have made unauthorized long distance phone calls and who immediately offered reimbursement upon confrontation was found not to have engaged in fraud warranting dismissal without notice.
The point in fraud cases is that careful scrutiny of the facts, circumstances, the employee’s intentions, the investigation and the employee’s opportunity to answer the charges must be undertaken early in the case by the lawyer. But as I said, it is best not to make any assumptions before such scrutiny.
If your employer terminated your employment without notice alleging fraud, do not assume that your case is hopeless before seeking legal advice. Please call me to discuss your situation.
The above is not legal advice.
One of the more interesting challenges for the employment lawyer is to find ways given the facts of the case, to argue for additional damages. There are many ways to increase damages for individuals who were fired with or without just cause. This article will canvass a few ways to do that.
I start with the concept of “improper cause allegations”. This is a head of damage that arises when a company fires an individual without notice or pay in lieu claiming just cause, where none actually exists. The theory behind awarding additional damages in this instance is enunciated in Clark v. Horizon Holidays Ltd. a 1993 Ontario case:
“Employers know or ought to know that such allegations of misconduct, when reported to prospective employers, make the finding of subsequent employment exceedingly difficult. In my view, such loss may be reasonably foreseeable at the time of the formation of the contract.”
In the Clark case, the court found that additional damages for improper cause allegations could only be awarded if the loss was foreseeable at the commencement of the employment. The Newfoundland Court of Appeal (Trask v. Terra Nova Motors Ltd., (1991) however, found that it was improper to go through the fiction of what may have been considered at the outset of employment before awarding such damages. In that case, the employee was accused of theft during his employment. In a different case from Ontario, the court increased the notice period by 50% under this head of damage because it the improper allegations of cause were found to be likely to bear upon the employee’s chances of finding another job.
Another way that an employee can argue for additional damages, is when the employer fails to provide a reference letter or provides a ‘perfunctory’ reference letter. In a 1992 Alberta case, Gillman v. Saan Stores Ltd., the court increased the notice period by 50% where the employer failed to provide adequate references.
A further reason for additional damages is known as “diminution of future prospects of employment”. This occurs when an employer fails to provide the training it promised due to the employer firing the employee before the training commenced. A case to refer to in this area is Dunk v. Geroge Waller & Son Ltd. [1970] 2 Q.B. 163 (C.A.).
Finally, a fairly common situation arises when an employee who is fired is not in the best of health. The employee may not have been on a disability leave when fired, but for whatever reason is unable to make an all-out job search or is not able to be fully employed due to poor health. Cases go both ways in this area. For instance, if an employee’s health become poor after being fired and the employer did not know of the condition at the time of the dismissal, that employee may not be awarded additional damages.
If you have been fired and are wondering whether there is any justification for an increased period of notice or pay in lieu of notice, please call me to discuss your case.
Sometimes, employees are required to sign Non-Competition Agreements either at the commencement of their employment, or at the termination of it. But, if no such agreement was ever signed, does that mean that a departing employee has the right to compete head-on with their former employer?
At common law, there exists the concept of “fiduciary obligations”. These are obligations of good faith that attach to certain types of employees. A “fiduciary obligation” has been described as a duty not to act unfairly towards an employer. As stated in Wallace Welding Supplies Ltd. v. Wallace (1986 Ontario case). “…the former employee in competing with his former employer, as he has a right to do, must not exercise an advantage that he may have, by virtue of his former employment”.
A breach of a fiduciary duty following the termination of employment will be actionable regardless of whether the former employer suffers damage. The cases suggest that the nature of the corporate opportunity that needs protection must be examined. For example, it has been held that a corporate opportunity must be an opportunity or advantage that is available to the former employer and not readily available to the competition.
A fiduciary must not use specific knowledge of a former employer and its customer so as to interfere with that relationship. A fiduciary however may be permitted to use “know how” that he/she acquired at the former employment. A fiduciary may not make direct solicitations upon his/her former employer’s customers in an attempt to persuade them from discontinuing their relationship with the former employer and commencing a relationship with their new company.
The common law principles relating to fiduciary obligations are clear that a fiduciary may utilize general advertisements to the public to attract customers. A fiduciary such as lawyer, accountant or other professional, who has a personal relationship with a customer, has the right to advertise his or her move to a new firm. In fact, this type of employee may have ethical obligations to inform their clients or customers of where they are moving. In doing so, courts generally do not find a breach of fiduciary obligation.
Where a fiduciary has signed a non-competition and/or non-solicitation agreement, the courts have been influenced when deciding whether to give effect to the agreement. It is wise therefore, to seek legal advice before signing such a document.
This article is meant to alert the reader to the broad issue of fiduciary obligations. The information contained herein is a gross over-simplification of the law surrounding this area. If you are faced with having to sign a non-competition agreement or you think you may be a fiduciary, please call me to discuss your situation. This is one area of employment law that is very fact driven and about which, general comments should not be made.
When an employee is dismissed from his/her employment without cause, he/she is entitled to either notice of the termination or pay in lieu of notice. What comprises the pay in lieu of notice, is simply put, all forms of remuneration the employee would have earned had he/she worked throughout the notice period, with some minor exceptions. The issue then is what forms of remuneration are awarded during the notice period? Let’s look at a few of the more common items.
If the employee earned commissions during employment, it is not always easy for a Court to determine the amount of the commissions to award during the notice period. In assessing whether commission should be paid during the notice period, the Court looks backwards to the history of the employee’s commission earnings. In addition, the Court reviews the overall viability of the market for the particular industry from which the employee was dismissed. The idea is to establish whether the employee would have earned commission had he/she worked throughout the notice period.
Many employees earn bonuses. Whether or not they are awarded during the notice period is dependent on whether the Court finds that they have become “integral” to the employee’s remuneration package. In other words, if the bonus is paid regardless of whether certain quotas are achieved, then it will most likely be found by a Court to be non-discretionary like base salary and thus payable during the notice period. If the bonus only was paid if the department achieved a certain sales goal or some other criteria must be met other than simply showing up for work, the bonus will likely be held to discretionary and thus, not awarded during the notice period. Like commissions, the employee will have to adduce evidence at trial showing that a bonus was a term and condition of the employment contract. Evidence showing the history of bonus payments would also be helpful. The Court will attempt to put the employee in the same, but not better position, had the employee worked throughout the notice period.
Some employees are compensated for working overtime. Some cases have disallowed overtime during the notice period while others have allowed it. Again, the smart plaintiff will adduce evidence as to the terms and conditions of employment to establish that overtime was a term of the employment contract and that will show the history throughout employment of overtime having been paid. The employee will then have to show why it is reasonable that overtime should be paid during the notice period.
Many sales employees have a company car or a car allowance. Generally, the Courts have awarded plaintiffs the value of the personal use of the company car during the notice period. If the company provided an allowance for the use of the company only for business purposes, then this is usually not awarded throughout the notice period as there would be no need to use the car for business purposes during the notice period.
These are just a few of the types of losses that a dismissed employee may claim throughout the notice period. If you have been dismissed you should consult an employment who will review with you all types of losses you may claim in addition to your lost salary during the notice period.
Employees who are fired and wish to claim against their former employers for damages for wrongful dismissal must make reasonable and diligent efforts to replace their income. Under the usual circumstances, this means that the fired employee leaves the workplace and begins looking for work from their home. As you may know, failure to mitigate (obtain alternative employment income) will knock out a claim for wrongful dismissal. It is the employer who must prove at trial that the employee has “failed” to mitigate. Generally speaking, a failure to mitigate will only be proven if the employer can show that the employee was offered a job that was reasonable under the circumstances to accept, and that the employee refused to accept it. Not many employers are successful at proving “failure to mitigate”.
But what is the employee’s obligation to accept a different job from the same employer? This situation will arise most often when the employer constructively dismisses the employee by making a change to a fundamental term of the employment contract and then offers the employee continued employment doing that altered job. If the employee refuses to accept the altered position, will the Court find that he or she “failed to mitigate” and knock out their claim for damages? Put differently, does an employee have to remain with the employer after being constructively dismissed?
A 1989 Ontario Court of Appeal case (Misfud) stated that an employee might have an obligation to mitigate a constructive dismissal by continuing to work for the employer. Failure to do so would therefore mean that the employee has failed to mitigate and his claim for wrongful dismissal would thus be compromised. This view however has not been completely embraced by other jurists. In one case (Rose v. Shell Canada Ltd.) the Court found that it was unreasonable to require an employee whose contract was repudiated by demotion to carry out the very position that effectively was the breach.
The answer to this question depends very much on the facts of the case. For example, when determining whether the employee should continue to work for the employer, Courts will examine various factors such as whether the employee must then work in an atmosphere of “hostility, embarrassment or humiliation” (Campbell v. Merrill Lynch Canada Inc.). The case for not continuing to work for the employer is stronger where the employer lowers the employee’s remuneration either through a reduced salary or change in bonus. In one case, an employer demoted a general sales manager to sales representative. The Court held that there was no obligation for the employee to stay on with the employer and suffer a substantial loss of prestige (Wilding v. Quest Foods Ltd.). An executive was held to have no obligation to mitigate a constructive dismissal by accepting a position when the position was not adequately presented with enough detail to analyze it or know with certainty what remuneration he would be paid (Stevens v. Globe and Mail).
If your employer has presented you with a change to a fundamental term of your employment contract and has offered to employ you in the “new” position, call me before you decide whether to accept the new position.
There is a wonderful saying the best defence is a good offense. This is particularly prudent advice if one senses that he or she is about to be fired from their job. The question this week is therefore, what strategies can an individual employ in order to protect his/her legal position if it appears that dismissal from his/her employment is imminent?
The first thing to do before being fired is to consult a lawyer specializing in employment law. If you have talked to counsel before being fired, you will have confidence during the termination interview to not be pushed into signing improvident agreements or inadequate settlement packages. There is much to be gained by saying at an exit interview that your lawyer will be reviewing the situation and will get back to them. This gives you a psychological boost and puts the company on notice that you are not going to go quietly into the night. Also, being armed with information about your rights and obligations will put your mind at ease.
If just cause for your imminent dismissal is likely, a discussion with your counsel before hand is advised. Your lawyer will tell you what company documentation will be needed. You can then collect whatever is needed before your presence on the premises is no longer permitted. This is not to say that you should confiscate company property. But you should make copies of any employment contracts or any documents that relate to the terms and conditions of your employment at a minimum.
If your relationship with your employer is going downhill, keep a daily diary as to what is happening. Include in your diary a summary of any conversations, with whom, what you said and what was said to you. This is very helpful for your lawyer who will be able to reconstruct the “atmosphere” you were living through before being fired. Making contemporaneous notes about how the work environment is affecting you emotionally, physically or mentally, is also very helpful evidence.
If you have been given a memorandum relating to your performance and you are asked to respond, you should consult a lawyer before replying. Your response may well make or break your case.
Now let’s jump ahead to the termination interview. Now is the time to ask for a letter of reference. The person conducting the interview will likely be feeling sheepish enough and may well commit to giving you one. This is good as a letter of reference has the effect of weakening your employer’s later argument that you were dismissed with cause.
You should also ask for reasons as to why your employment was terminated. Providing written reasons will make it very difficult for your employer to add more reasons after your termination unless the employer can show the trial judge that it knew about these reasons before you were fired. Finally, take careful notes during the interview.
There is nothing like being prepared for life’s left hooks. You can be better prepared by consulting a lawyer if you think your employment is in jeopardy.
If I had taken the time I would have prepared an interesting article about the developments of law in this country since 1900. This would have seemed appropriate given the New Year that is upon us. What I have been doing instead is seeing people who have just been fired from their jobs.
I realize that companies have the right to organize their affairs and make corporate decisions regarding staffing. But, must companies dismiss people one week before Christmas? Could there be a worse time of the year to get fired? I don’t think so.
I am reminded of that wonderful line in the movie “Jerry McGuire” where Jerry says after being fired, “You know. There is such a thing as manners”. Perhaps there used to be but in some of the dismissal cases I have dealt with this year, that point seems to have been lost on certain companies.
Many times this year I have reviewed termination letters that failed to cite reasons for termination, leaving the employee confused and angry. Or the company alleges poor performance but never warned the employee beforehand. Or an employee will be fired five minutes before the end of his/her shift and then forced to leave the premises immediately without collecting personal belongings. Or they are escorted off the premises like an accused person is escorted by a police officer in and out of a courtroom.
Our courts have become less and less tolerant of this type of corporate bad manners. Thanks to the case of Wallace v. United Grain Growers, a 1997 Supreme Court of Canada decision, employment lawyers have ammunition where corporate “bullying” has taken place. The Wallace case ruled that an inappropriate manner of dismissal (callousness, insensitivity or bad faith on the employer’s part) might result in higher damages.
A recent Newfoundland case illustrates this point. The Court in Squires v. Corner Brook relied on the Wallace principles and awarded additional damages for what they called “bullying” tactics that were designed to deprive the employee of his rights. In Squires, the employer fired its employee alleging poor performance. The employer gave no warning or details of the alleged poor performance to the employee and did not provide him with an opportunity to defend himself against the allegations. The employer forced the employee to leave his job immediately. And most notably, the employer threatened to allege cause for termination if the employee did not accept the severance package and sign a release. The Court found that the company knew from the beginning or ought to have known that there was no just cause for the termination but they continued to maintain its threat of alleging just cause in order to exhort a settlement.
If you have been the victim of corporate bullying like that described above, do not hesitate to seek assistance from an employment lawyer. It is very clear that our courts agree with Jerry McGuire…. There is such a thing as manners.
You have employed Mr. Jones for ten years in a senior position. Recently, your company decided to hire someone else, Brown, who has been doing various tasks that Jones used to do. Jones’ salary has not been reduced, but his duties and responsibilities have been. Jones’ co-workers see him as having been demoted. Jones is frustrated with this situation and decides to resign. Can Jones now sue your company for wrongful dismissal, claiming a severance package in lieu of notice, given that it was his decision to resign?
The above scenario is but one example of a common employment law situation known as “constructive dismissal”, a more subtle form of wrongful dismissal usually involving an employee resignation. To succeed in an action for constructive dismissal, the employee must prove on a balance of probabilities that his/her employer unilaterally changed a fundamental term of the employment contract without his/her consent.
Examples of constructive dismissal taken from Canadian case law include:
* the employer demoting an employee with or without a decrease in salary;
* the employer transferring an employee from a different country and then not providing the employee with the agreed upon training, performance review or bonus, as promised;
* the employee being asked to take on additional duties not originally included in his/her employment contract;
* the employer unilaterally reducing an employee’s salary without a similar reduction in job duties and responsibilities;
* the employer verbally abusing the employee and periodically threatening to fire the employee;
* the employer refusing to pay professional association fees.
In all cases of constructive dismissal, the court must determine what the terms of the employment contract were, whether these terms were fundamental, and whether the employee consented to any of the changes to the terms of the contract. This will always be a question of fact and usually involves the credibility of both the employer and employee. Accordingly, if an employer changes the terms of employment or makes an employee’s work environment so negative that the employee has no choice but to resign, that employee may be entitled to damages based on constructive dismissal. The prudent employer will therefore seek the agreement of the employee before making fundamental changes to the employment contract. In all cases, an employer should consult with a lawyer before changing the terms and conditions of an employees’ contract, as each case is decided upon its own facts.
When employment is terminated without just cause, the employee is entitled to notice of the termination or pay in lieu of notice (damages for wrongful dismissal). Normally, an employee is given pay in lieu of notice. How much or how that “pay” is calculated is based on the facts of each case and applicable legal principles. One such legal principle is known as “mitigation”. Mitigation means, in English, cutting your losses or in the case of wrongful dismissal damages, replacing your income. The law requires that you make reasonable and diligent efforts to mitigate or cut your losses as soon as possible after being fired.
Most employees after being fired immediately begin a job search. They register at the local Employment Insurance office and head hunters. They prepare a resume, answer advertisements, call companies, utilize Internet job banks or register at casual labor companies. These efforts are normally considered by Courts to be “reasonable and diligent”. Thus, an employee engaging in this type of mitigation effort will not normally be found to have failed to mitigate. Failing to mitigate will adversely affect the amount of damages for wrongful dismissal awarded at trial.
But, what does the Court say about an employee who decides to open his/her own business after being terminated from employment? Does this qualify as “mitigation” sufficient to avoid being found by a Court to have “failed to mitigate?” Afterall, opening a business is a slow process as it normally takes a long time to realize a profit from a new business.
A general review of the caselaw on this area indicates that Courts will in many instances, find that starting a business after dismissal is an acceptable form of mitigation. This however, is entirely dependent upon the facts of the case. For example, where the employee is older or possesses specialized skills that may not be marketable, the Courts usually are satisfied with this. Conversely, if the market place is shown to have plenty of opportunities for the employee, the Court may find that starting a business was unreasonable. In one case, an employee failed to establish that a business had prospects of success and was disallowed a claim for expenses in starting the business.
If a Court finds that an employee has failed to mitigate the Court may adjust the amount of damages that would otherwise be awarded. It is therefore wise to consult an employment lawyer upon being terminated from your employment. One of the issues to be discussed is how you plan to mitigate or replace your income. Whatever ideas you have in that regard should be shared with your lawyer who will then advise you as to whether that would be suitable in your situation.
As each case is decided upon its own facts, please call me to discuss your situation. We will then discuss your plans to replace your income.
Here is an interesting fact situation that probably happens with greater frequency that any of us will ever know. See if you can figure this one out. This happened to one of my clients.
After my client went to several interviews for a new job, he was called on the telephone and offered the position he sought. During this telephone call, he and the employer agreed on three things: his salary, his job title, and the date that he was to attend the workplace to start his job, some three weeks later. My client arrived on the appointed day at 8:30 am. At noon his boss entered his new office and gave him a stack of papers telling him to read, sign and return them to human resources that day. His boss left him alone in his office to do so. My client did what he was told to do. Some documents pertained to income tax, personal information, emergency contacts, etc. One document was the Company Handbook. Another document was entitled “Employment Agreement”. In that document was a paragraph entitled “Termination without cause”. It was very clear upon my reading of it, that my client’s employment could be terminated without cause during the first three years of employment, upon two weeks notice. My client admitted to reading it, but to not paying much attention to the termination clause. He stated that he signed the documents because he needed the job and had already started working so he wasn’t about to take issue with the substance of the employment agreement.
After close to two years of employment, my client was fired allegedly with cause but the company offered him a “gratuitous payment” of two weeks of salary in accordance with the termination without cause provision in the employment contract. He came to me asking whether he had received the appropriate amount of pay in lieu of notice.
The issue was whether the contract governed this situation or whether the contract was somehow unenforceable thereby allowing my client to resort to common law to establish the appropriate amount of notice. Clearly, it was in his interests to not be bound by the contract, as the reasonable amount of notice in his situation would have been in excess of two weeks. I fired up the research computer and found the following case: Francis v. Canadian Imperial Bank of Commerce (1994) 7 C.C.E.L. (2d) 1 (Ont. C.A.). The facts were almost identical to my client’s case.
In the Francis case, there had been an initial exchange of correspondence upon which the contract was founded. The Bank then attempted to vary the original agreement with its employment contract that restricted the reasonable amount of notice upon termination of employment without cause. The variation was clearly for the Bank’s benefit and to the employee’s detriment. The primary issue for the Court was whether the employment agreement was a valid and binding agreement that therefore varied the implied term of reasonable notice on termination. Underpinning this issue was the principle of contract law, namely, that new or additional consideration is required to support a variation of an existing agreement. In other words, if the Bank was going to be able to vary the terms of the existing contract it should have provided Mr. Francis with additional consideration beyond his salary. If the Bank had wanted to rely upon the terms and conditions of the additional agreement, the Court stated that it should have stated in its original correspondence with Mr. Francis, that his employment at the bank was conditional upon his agreeing to accept the terms of the employer’s standard form of agreement, a copy of which could have been enclosed in the offer letter.
If you have been fired without cause and you signed an employment agreement that the employer now wishes to rely on, please contact me. It may or may not be enforceable.
Most people believe that the appropriate amount of notice or pay in lieu of notice they should receive upon being dismissed from employment without cause, is roughly one month of remuneration for every year of service. This so-called “rule of thumb” however, is no longer a “rule of thumb” that Courts utilize. An employee’s length of service is only one of many, many factors a Court will consider when determining the appropriate amount of notice or pay in lieu of notice upon dismissal without cause. Today we will look at one such factor that will effect the sufficiency of notice. It relates to the effect of an employer’s promise of job security.
To illustrate this point we turn to the 1997 British Columbia Court of Appeal decision in Robertson v. Weavexx Corp. In early 1993, Robertson was working at a competitor of Weavexx and as such was well known to the senior management at Weavexx. Weavexx knew Robertson was a very effective salesperson but was an individual who would not hesitate to leave an employer for a better offer. A Mr. Taylor, head of Weavexx, approached Robertson while he was working at the competitor and suggested that he consider filling a vacancy at Weavexx in the sales and marketing department. Robertson said in evidence at the trial, that he was open to hearing about the offer but had two conditions: satisfactory remuneration and recognition of prior service for pension purposes with two of Weavexx’s corporate predecessors.
There was evidence at trial of two discussions between Weavexx and Robertson in which Robertson expressed the hope that he would stay with Weavexx until he was retired some 11 years hence. The evidence at trial also indicated that Weavexx expressed its desire that Robertson not leave the company prior to his retirement. Robertson was then offered the position and commenced work at Weavexx in February 1993. There was no written contract or memorandum setting out the terms between the parties.
Five months after starting work at Weavexx, Robertson’s employment was terminated due to a corporate restructuring. Robertson was offered the equivalent of two months of his remuneration as damages for wrongful dismissal. Robertson found alternative employment two and one-half months later but at a lesser amount of remuneration. He sued arguing that his employment contract with Weavexx was for a fixed term of 11 years and thus was entitled to damages for the remainder of the term.
The Trial judge agreed with Robertson and of course, Weavexx appealed. On appeal, the Court found that the trial judge misconstrued the evidence regarding Robertson’s commitment to stay at Weavexx until his retirement. The Court found that Robertson’s expression of his desire to stay with the company until retirement did not amount to a term of the contract. Thus, the Court found that Robertson’s employment was not a fixed term contract and thus could be terminated without cause upon reasonable notice or pay in lieu. The Court found that even though Robertson’s commitment not to leave was not a term of the contract, it was sufficiently significant and in conjunction with the inducement factor, justified an increase in the reasonable amount of notice to 12 months.
The moral of this story is that there is no “rule of thumb” when determining reasonable amount of notice upon dismissal without cause. Before accepting a severance package, please call me. Most often, my clients are surprised to learn that their situation may warrant more severance pay than is being offered.
You have worked for Company A for six years doing an excellent job. In the course of this employment you meet and work with a manager of Company B. This manager is impressed with you and speaks to the president of company B extolling your virtues. The president of Company B realizing that you are just who Company B has been looking for, directs the manager to meet with you. In your first meeting with the manager and a vice president who both clearly want you to join the company, you advise them that you are not looking to leave Company A. They persist. At the end of the interview you are offered a better position than what you have now and $2,000 more than your current salary. They tell you that your “potential with Company B is high”. At the end of the meeting, you are excited and accept the new job with Company B. You give Company A two weeks notice of your resignation.
One week before starting at Company B, you are asked to meet with the Plant Manager and another vice president, so that these two people could get to know who you are. At this meeting, the VP mentions a probation period. Surprised, you say nothing in response. You later raise this issue of a probation period with the manager you met with initially. He told you not to worry about it because as he puts it, the other two people were incorrect in thinking that there was a probation period.
You start work on the appointed day and work for five weeks during which you receive positive appraisals from your superiors. Then, the company terminates your employment for the stated reason that your performance was deficient. They provide with you no notice or pay in lieu. Moreover, the company says you are not entitled to notice because your dismissal occurred during the probation period. It takes you nine months to find a new position that is not in the same industry. You sue for damages for wrongful dismissal.
What I have just described is an actual case decided in the Ontario Court of Justice in 1997: Lalingo v. A. & A. Jewellers Ltd. In this case, the Court found in favour of the employee and made a number of important points. Firstly, the Court stated that Lalingo was not a probationary employee as he did not agree to a probation period when he accepted the position. The Court restated the little-known principle that a probation period is not implied within the employment contract. It is a term of the contract like every other and must be agreed to by the parties at the commencement of the relationship.
Secondly, the Court reviewed the reasons given for Lalingo’s dismissal. Given that Lalingo was given nothing but positive appraisals during his five weeks the Court found that the company failed to make out its defence of just cause. The Court then was required to determine the length of notice that Lalingo should have received. One of the factors reviewed was Lalingo’s length of service. The Court found that he was induced from a secure position and enticed by prospects of job advancement warranting additional damages. The Court commented that it was precisely the six years at his previous position that made Lalingo attractive to A & A Jewellers. The Court awarded Lalingo four and one half months of pay in lieu of notice as damages for wrongful dismissal.
If this situation or something similar has happened to you, please call me. I have dealt with this situation many times before and have succeeded at trial on the issue of probationary employees.
Let’s assume for the moment that you have just completed your 17th year of employment as a manager at a company when all of a sudden you are fired due to restructuring. Your employer is not alleging cause for your dismissal and thus has given you a package to consider. The package provides you with 12 months of your total remuneration including benefits. You consult an employment lawyer who advises you that under the circumstances the appropriate range of pay in lieu of notice is between 14 to 17 months of your remuneration. You instruct your lawyer to write a demand letter asking for 15 months of remuneration. In due course your former employer responds saying that they think their initial offer was satisfactory and it will not be increased. What are your options? And how do you decide what to do?
Firstly, your have several options. One is to simply accept what your are being given and move on with your life. The second option is to start an action against your former employer claiming for damages for wrongful dismissal in the amount you think you should get. The third option is to have your lawyer pick up the phone and attempt to negotiate the other side up to a higher position. There are reasons for choosing all three.
When would you decide to take a company’s initial offer? Whenever you think you can replace your income well within the notice period. Why? Because damages for wrongful dismissal are subject to mitigation. In other words, if you refuse to settle your case quickly and you end up one to two years later in a court room, the judge will decide upon the appropriate notice period in your case and award you your remuneration during that notice period. But, the Court will subtract from that award any income earned during the notice period through alternative employment or self-employment. Thus, by not settling quickly in the situation where you earn alternative income soon after your dismissal, you might do yourself out of extra money. So, if you honestly believe that you can replace your income quickly you should give serious consideration to taking what is being offered and moving on even if it is not quite what a Court would award you. Remember, a bird in the hand is worth two in the bush.
Obviously, when you think you are going to have difficulty finding alternative employment, you have nothing to lose by attempting to negotiate a higher severance package or if that fails, starting an action against your former employer. If you honestly believe that your former employer will not negotiate with your lawyer, there is no point in having him or her pick up the phone and attempt to settle. It’s worth one try, but that’s all. Continuing to go back several times to an employer who is not budging, makes one appear weak and afraid of litigation and most lawyers don’t like that. In these cases you might be better off just suing your former employer at the outset.
As always, please call me if you have any questions regarding your severance package, the reasons you were fired, or the manner in which your employment was terminated. The specifics of your case will dictate how to proceed.
Have you ever wondered what would happen if you told one of your employer’s customers to go “shove it”? Well, here’s an interesting little case where someone did precisely that!
On July 23, 1996, the New Brunswick Publishing Co. Ltd., publisher of the Telegraph-Journal and the Times-Globe newspapers in Saint John, N.B. fired its executive sports editor, William J. Donovan without notice. At the time he was fired Mr. Donovan was 57 years old and had worked for the papers for 36 years. So, why was Mr. Donovan fired? For two reasons, only one of which we will focus on. The company said that he was fired for being insolent and insubordinate when he left a questionable message with the President of the Saint John Flames hockey team. Apparently Mr. Donovan had not been invited to a Flames’ reception and news conference that he had expected to attend. This upset Mr. Donovan who then left a message that the president of the Flames could take his invitation and “shove it”. Mr. Donovan did not think that he also used the “f word” as the defendant’s counsel put it. Regardless, the defendant was sufficiently miffed by that message that it summarily dismissed Mr. Donovan without notice. Mr. Donovan sued for damages. The Court was then required to determine whether the “shove it” message was sufficient reason for dismissal. If it did, then Mr. Donovan would not have recovered any damages.
In attempting to establish whether delivering the offending message amounted to just cause for dismissal, the Court referred to a dictionary specializing in slang and euphemisms. There it found that the phrase “shove it” was in fact considered a slang phrase. The Court also considered a 1993 New Brunswick case in which similar words with the same intent were found to be criminal in nature. The Court in Mr. Donovan’s case stated that the words were “intensely rude and extremely unprofessional”. That aside, the Court also found that in all of his 36 years at the defendant’s company, Mr. Donovan had never once conducted himself similarly. The Court held that this single incident of insolence (and the Court did find this to be insolence) did not justify summary dismissal without notice or pay in lieu of notice. The Court found in favor of the plaintiff and awarded him 18 months of lost wages and pension entitlements.
But it gets worse. Not being one to “let a sleeping dog lie”, the defendant appealed the trial decision with respect to the amount of damages. Rising to the occasion, Mr. Donovan cross-appealed seeking the equivalent of 36 months of notice. The Court of Appeal of New Brunswick accepted the trial judge’s decision with respect to liability. It then held that there was no longer a ceiling of 18 months for damages in wrongful dismissal cases. The Court carefully analyzed the facts: Mr. Donovan’s age, his 36 years of unblemished service, his senior position with the paper, and the fact that reasonable amount of notice is designed to give an employee a fair opportunity to obtain similar or comparable re-employment. The Court held that Mr. Donovan was entitled to 28 months of notice less all amounts earned during the notice period. Mr. Donovan eventually found alternative employment one year later but at a lower salary. The Court stated he was fortunate in finding another position otherwise it “might well have considered a longer period of notice for this skilled 36 year veteran of the newspaper business.”
While I would never suggest that anyone tell their employer or customers to “shove it” as tempting at this is at times, it seems that if you do it only once in your career you might get away with it. But I wouldn’t want to test the theory, just the same.
If you have been fired for alleging swearing at your boss, please call me. There may be something we can do for you.
Just when I thought I had read the last precis on the Wallace v. United Grain Growers decision, there was another one in the Summer 2000 issue of The Litigator, Journal of the Ontario Trial Lawyers Association. It was an excellent precis mind you but not unlike others I’ve read. It carefully went through the facts: Mr. Wallace after 14 years of satisfactory employment was terminated for just cause for the alleged reason of poor performance. This, despite being commended prior to his termination, for good performance. The company maintained its just cause argument until trial and thus offered Mr. Wallace no settlement package. The termination of his employment and the just cause allegations created such emotional turbulence for Mr. Wallace that he sought psychiatric treatment. He was 59 years of age at termination. His efforts to find another job were largely unsuccessful. He filed for bankruptcy.
The trial judge awarded a notice period of 24 months and $15,000 in aggravated damages. The Court of Appeal reduced the notice period to 15 months and struck the claim for aggravated damages. The Supreme Court of Canada restored the trial award of 24 months of notice and justified it by stating that the employment contract was a unique type of commercial contract. Accordingly, its breach could attract additional damages by increasing the notice period without requiring Mr. Wallace having to prove that he was the victim of an independent tort or wrong warranting punitive damages.
While I commend this effort by the Supreme Court of Canada, at the same time I have long felt that this is somewhat of a hollow victory. Why? Because damages for wrongful dismissal are subject to mitigation while punitive damages are not. In other words, regardless of how long the notice period is, even increased by the ‘Wallace’ factor, any amounts of money earned during the notice period by way of alternative employment are at trial, deducted from the award. So all the additional months of notice period tacked on by a Court due to ‘Wallace’ factors are often of little use to the plaintiff who found work during the notice period. Moreover, most matters settle before trial so very few employees even see the extra ‘Wallace’ factor damages.
In my view, if the Supreme Court of Canada really wanted to punish bad employer behavior they should have created a distinct form of punitive damages that would not require medical evidence of actual emotional and/or physical harm. If the Court can call the employment contract unique requiring employer’s good faith during a vulnerable time for an employee, then why not create a unique form of punitive damages that focuses less on provable harm caused to the plaintiff and more on the actual behavior of employers? At least this type of damages would not be subject to mitigation.
Naysayers will argue that it is dangerous to allow punitive damages in the absence of showing provable harm caused by the behavior. That is justifiable. But I argue that a unique type of punitive damages for bad faith dismissals will put the focus where it belongs, on the behavior, which would clearly offend people of decent feelings. At least then, employers will understand that regardless of how weak or strong the plaintiff may be, employers must behave ethically and humanely during dismissal.
If you have been the victim of a bad faith dismissal, please call me to discuss it.
Upon the rare occasion I am consulted by someone who has experienced violence at his or her workplace. Although this is a not a normal situation, I thought it would useful to provide a general review of the legal issues relating to violence at the workplace.
First of all, violence is never the answer to our problems though apparently it is often tempting to resort to it. We are human afterall, and subject to our frustrations and emotions. In the heat of the moment, it is easy for some people to lose control and resort to less civilized methods of resolving their problems. Unfortunately, that can result in being fired when it occurs at the workplace. But not in every case. Over time, our Courts have developed criteria to determine whether physical altercations constitute a serious workplace offence. Remembering that summary dismissal without notice or pay in lieu is considered a serious move by an employer, the Courts go out of their way to consider the facts of each case. For instance, our Courts will consider, among other things, the identity of the person attacked, whether the assault was a one-time flare-up or a premeditated attack and whether there was an apology for the attack. Other factors Courts will review are whether there was provocation and what was the disciplinary record of the employee. In short, if you were fired because of a physical alteration at work, you may have an argument that your dismissal was not justified. Check with a lawyer before coming to your own conclusions.
If you are an employee who has been the victim of workplace violence, there are few things you can do. Firstly, you should complain immediately to your human resources department or manager. Do not hesitate to lay a complaint against your aggressor. Within the employment context, there is an implied obligation on your employer to ensure that the workplace is safe and free of hazards. This would include safety from your fellow employees. Failing to ensure a safe workplace is a serious breach of the employer’s implied obligation.
For federally regulated workplaces, the Canada Labour Code also provides protection. Some cases decided involving the Code have held that if a worker has a reasonable cause to believe that a danger existed, then the worker has the right to refuse to work. Other cases have found that the danger must be present, immediate and real and not merely an expected happening.
Another avenue of recovery for an employee who has been victimized by a fellow worker, is through the law of tort, or civil wrongs. Based on the general principle that employers are vicariously liable for the acts of their employees, an injured employee can sue his/her employer when assaulted by a fellow employee. Intrinsic in this situation, will be the issue of whether, during the assault, the employee was acting within the scope of employment.
As always, I recommend that whenever you are unsure of your legal rights, consult a lawyer who practises in the area. If you have been the victim of violence within the workplace, or you have been fired for committing an assault at work, please call me for advice.
Although most of my employment clients are employees, I do act for several small companies. One such client fired one its sales representatives last year for a number of reasons that are irrelevant to this article. Within three days of being fired, the employee had another sales job with a competitor of my client. Almost immediately, my client noticed that certain of its customers were not calling to place orders. Total revenue had dropped dramatically as these customers never again did business with my client. Through the grapevine within the industry, my client learned that its former employee was making direct solicitations of my client’s customers away from my client, to the obvious economic harm of my client.
This employee eventually brought an action against my client claiming damages for wrongful dismissal. Although we are attempting to settle the employee’s claim, my instructions have been to make it quite clear that if we cannot settle the file, my client will bring a counter-claim against the employee for loss of profits due to his solicitation. The employee’s counsel keeps telling me that we will not be successful with this because the employee never signed a non-solicitation covenant either on the way in or on the way out employment with my client. Is this (Toronto) counsel correct?
In a word, no. The common law imposes an obligation on departing employees, regardless of how or why they left employment, to refrain from taking confidential property or utilizing confidential information, to the detriment of the employer. This common law duty exists regardless of whether or not there was an agreement signed prohibiting such activity. Honest intention of the departing employee, is no defense to this type of claim. Nor is there any justification on the grounds of real or imagined mistreatment by the former employer.
Senior employees of a company have an even higher duty to the employer. This higher duty is referred to as a fiduciary duty. A fiduciary is someone who because of his/her position with the company, in this example, is imbued with a higher trust and higher duty to ensure the well-being of the company. For example, directors, officers, presidents and other high-level managerial employees have a legal obligation not to do what my client’s former employee did; directly solicit business away from the former employer to its detriment. This is particularly so if the employee was involved in any negotiations with departing customers, prior to leaving his/her former employer. Courts are particularly intolerant of employees who plan the taking of customers or use confidential bidding information to under-bid to the same customers after starting their own company upon leaving employment.
Some cases make a distinction between junior and senior level employees in deciding whether the particular use of confidential information or a solicitation of customers will be tolerated. The bottom line seems to be that an ex-employee must not make an “unfair use” of his former employer’s information at the expense of that employer.
If you have left employment to commence a new job with your ex-employer’s competitor and you plan on making full use of confidential information at your new job, think again. Better yet, visit an employment lawyer as each case is decided upon its facts and you may be able to execute some or all of your plans. But you should understand in your situation, what is and is not acceptable.
