Probationary Employee Dismissed: Out of Luck Says ON CA

Is a probationary employee entitled to wrongful dismissal damages?  Can an employer contract out of these damages?  Until now, most Canadian court decisions have held that even a probationary employee is entitled to wrongful dismissal damages.  The exception is where the employer uses a properly worded contract.  Generally, the contract must specify the length of the period and what, if anything, the employee will be paid if dismissed during the probationary period.  An employee must be paid at least one week’s damages if the probationary period is longer than three months, since that is the amount specified by the Ontario Employment Standards Act, 2000.  But the contract must specify how much the employee will be paid if dismissed after three months, while still on “probation.”

Surprisingly, this was not the conclusion of the Ontario Court of Appeal in a recent decision.  In Nagribianko v. Select Wine Merchants Ltd., the Court reviewed a case that had been to the Ontario Small Claims Court and the Divisional Court.  The employee had signed a contract that referenced a six month probationary period.  But the contract does not appear to have specified a payment that the employer was required to provide if dismissed after the first three months.  This should have made the contract null and void in accordance with the Supreme Court of Canada’s powerful decision in Machtinger v. HOJ Industries Ltd. [1992] 1 S.C.R. 986.

The employee had worked for the employer for just less than six months.  He was dismissed on a without cause basis.  He sued for damages and was awarded four months’ compensation in the Ontario Small Claims Court.  The judge ruled that he had been induced to join the employer and that the clause did not effectively oust the employee’s common law entitlement.  This seems consistent with most of the case law.

The Ontario Divisional Court reversed the decision and held that the trial judge had failed to give effect to the probationary language.  The Ontario Court of Appeal upheld the Divisional Court’s decision and held that the term “probation” was not ambiguous. It ruled that “probationary status enables an employee to be terminated without notice during the probationary period if the employer makes a good faith determination that the employee is unsuitable for permanent employment, and provided the probationary employee was given a fair and reasonable opportunity to demonstrate their ability.”

The Appeal Court went on to conclude that the employer could not contract out of the minimum standards required by the Ontario Employment Standards Act, 2000 and that therefore the employee was entitled to one weeks’ pay, which the employee received, even though this one week’s pay was apparently not specified in the contract.

This analysis all would have been correct if the contract had specifically stated that the employee could be dismissed after three months but before six months with the payment of one week’s pay and the continuation of one week’s benefits.  However, if the contract did not say that specifically, it should have been viewed as a contract that would violate the common law case law as set out in Machtinger v. HOJ.  The contract appeared to specify that the employee could be dismissed at any time during the six months as a probationary employee with no notice or payment.  The fact that the employer paid the minimum one week’s compensation required by the ESA 2000 ought not to have fixed a poorly drafted contract.

Here, in contrast to the Brake v. PJ-M2R Restaurant Inc. that I looked at last week, the Ontario Court of Appeal weighed in heavily on the side of employers and was quite unsympathetic to what should have been a reasonable employee claim.  The decision is good news for Ontario employers, even those with poorly drafted contracts, who may now find it easier and cheaper to dismiss probationary employees.  The decision also demonstrates, as I indicated previously, that the outcome of a case at the Ontario Court of Appeal may well depend on the particular panel that is hearing the decision.  In this case, justices LaForme, Hourigan and Paciocco have issued a ruling that strongly favours employers and provides quite the contrast with the previous decision that I examined in Brake v. PJ-M2R Restaurant Inc., which went the other way.

Other recent Ontario Court of Appeal decisions have also gone in different directions and I will review two or three more of them in coming blogs.  The most significant take-away is probably a strong measure of uncertainty, which underscores the risks inherent in civil ligation and, particularly, in employment law cases.

20 Month Wrongful Dismissal Award for Employee Upheld

The Ontario Court of Appeal has released several wrongful dismissal decisions over the past few months.  It has also released some employment law cases that are not specifically wrongful dismissal.  This is a first of a group of blogs to review those cases and provide some commentary.  There is no clear pattern to the decisions.  In some cases, the Ontario Court of Appeal has been very sympathetic to employees and to employee rights.  In other cases, the Court has shown a willingness to side squarely with employers, particularly when dealing with certain contractual clauses.  Ultimately, these cases seem to be dependent on the particular facts – as well as the particular panel of judges hearing the appeal.

Brake v. PJ-M2R Restaurant Inc. (2017) ONCA 402, is one of those wrongful dismissal cases in which the Court has sided with the dismissed employee completely.

Esther Brake was a McDonald’s restaurant manager for more than 25 years.  She had been working with a specific franchise owner for more than 20 years.  For most of her career, she had been given excellent performance reviews.

After years of receiving excellent reviews, she was given her first negative review in late 2011.  She was then transferred to a poor-performing location, one of the worst locations of all the McDonald’s in Canada.  Ostensibly, this was done to enable her to improve her performance.  After three months at the new location, she was called into a meeting and told that she was being put on a 90 day performance review program due to her poor performance.  The program included goals that were found to be “arbitrary and unfair” and very difficult to meet.  At the end of the 90 day program, in mid-2012, the employer gave Ms Brake a choice between accepting  a demotion and being fired, claiming that she had “failed” the program.  Ms Brake refused the demotion.  She brought a lawsuit for constructive dismissal.  She was successful at trial.  The trial judge held that this was a wrongful dismissal and awarded Ms Brake 20 months’ pay plus legal costs.

The trial judge had ruled that Ms Brake had not been given a sufficient and reasonable opportunity to correct issues that the employer may have had with her performance.  She was “set up to fail.”  The decision to demote her was “substantial and fundamental” and was a constructive dismissal.

The employer appealed on several grounds, all of which were dismissed.

The Court of Appeal came to the following conclusions, some of which will be quite helpful to other dismissed employees.

  1.  If a trial judge reviews the evidence carefully, articulates the relevant legal principles and applies those principles to the facts, the trial judge’s decision will be entitled to reasonable deference from the Court of Appeal;
  2. A demotion from a managerial or supervisory position to one that is non-supervisory is a constructive dismissal and does constitute a substantial or fundamental change to a an employee’s position;
  3. Despite the Supreme Court of Canada’s decision in Evans v. Teamsters, Local 31, an employee is NOT obliged to mitigate damages after being dismissed by accepting an offer of continued employment with the same employer in an atmosphere of hostility, embarrassment or humiliation.  In this case, it would have been unreasonable to require Ms Brake to continue working in the demoted role.
  4. A credit letter provided by the employer confirming years of service can be relied upon to demonstrate the length of service of the employee. The trial judge in this case was entitled to award 2o months to a 20 year McDonald’s employee.  The notice award was well within the reasonable range.
  5. With respect to mitigation – the Court of Appeal noted that any amounts earned during the statutory notice and/or severance period are NOT deductible from the dismissal award.  In other words, a 20 year employee would be entitled to 8 weeks’ statutory notice pay and 20 weeks’ statutory severance pay under the Ontario Employment Standards Act.  Any earnings during those first 28 weeks would NOT reduce the amount owing to the employee.
  6. The Court also noted that part time income that the employee was earning or could have earned while working in the previous position is not necessarily deducted from damages, especially in cases where the part-time employment is a continuation of part-time employment that the employee had while working in her or his old position.
  7. The Court concluded by noting that some income earned during the notice period need not be deducted from the damages award if the income is not really a “substitute” for the original loss of income.  The Court noted that the income earned was part of the income that the employee could have earned anyways, even if she had still been working for the employer.  The Court expressly stated that EI payments are NOT to be deducted from the amount owed by the employer in a wrongful dismissal case.

Having dismissed all of the grounds of appeal, the Court of Appeal awarded costs in the sum of $19,500 for the appeal, which would be in addition to the costs awarded at trial.

For the most part, these points are not particularly new.  Much of this decision is a review by the Court of Appeal of the trial judge’s factual findings and the trial judge’s application of wrongful dismissal and constructive dismissal law to those factual findings.

However, the case does illustrate that the Court of Appeal can be very sympathetic to employees in specific cases.  In this case, Justices Gillese, Feldman and Pepall were wholly supportive of the decision of the trial judge and have provided a decision that fully vindicates the rights of the dismissed employee.

As I will note in my other blog posts, some other employees who have come before the Ontario Court of Appeal recently have had measurably less success.  Of course the panels have been different.  Aside from the specific factual details of the particular case, it is quite clear that the specific judges who form part of any particular Court of Appeal panel will also have a major effect on the outcome of almost any employment law case.

SCC: Unjust Dismissal: Big Win for Employees

The Supreme Court of Canada has issued a landmark employment law decision.  The case of Wilson v. Atomic Energy of Canada focused on the definition of “unjust dismissal” under Part III of the Canada Labour Code.  In a nutshell, the Supreme Court has held that the vast majority of federally regulated employees can access the unjust dismissal provisions of the Code.  These employees can seek reinstatement or significant compensation on dismissal.

In other words, a Federally regulated employer, for example a bank or cable company, cannot simply dismiss an employee on a “without cause” basis and provide severance arrangements.  Dismissed employees in these circumstances can file unjust dismissal complaints and seek reinstatement.

The Wilson v. Atomic Energy decision considered the circumstances of a four and a half year employee with a clean disciplinary record.  The employee was dismissed on a “without cause” basis and provided with a severance package.  He challenged the decision and filed an unjust dismissal complaint.  Although successful at adjudication, the decision was overturned at the Federal Court and Federal Court of Appeal levels and worked its way up to the Supreme Court of Canada.

Writing for herself and five other Supreme Court justices, Abella J reviewed the history of the Canada Labour Code’s unjust dismissal provisions, which were enacted in 1978.  She concluded that the purpose of these enactments was to ensure that non-unionized Federally regulated employees would be entitled to protection from dismissal without cause.  Federally regulated employees, she concluded, enjoy “fundamental protection from arbitrary dismissal” even with pay.

Although there are certain exceptions including situations involving the “discontinuance of a function” or a “lack of work,” this Supreme Court decision makes it abundantly clear that employers in the Federally regulated sector cannot simply terminate the employment of most employees.

This decision could greatly increase the number of unjust dismissal complaints in Federally regulated workplaces.  For example, any non-managerial employee, with one year or more of service, working for a Canadian bank can seek reinstatement if the employee is dismissed on a “without cause” basis, even if a severance package is provided.  This would, of course, invalidate the minimum type severance provisions that some Canadian banks have tried to use in their employment contracts with employees.

Employees who have been dismissed by a Federally regulated employer must file the unjust dismissal complaint within 90 days of the dismissal.  If not, it appears from the decision that the employee loses the right to this statutory framework and is left with common law remedies alone.

Three of the Supreme Court justices endorsed a vigorous dissent in which they would have held that the Canada Labour Code is, essentially, procedural and does not override Canadian common law.  The minority interpretation would have gutted the Code of any real meaning for Federal employees.

The dissenting justices correctly highlighted the fact that a Federally regulated employee can lose his or her protection if the employee misses the 90 day timeline.  Perhaps a future court decision will enable employees to use the civil courts, if necessary, to enforce the unjust dismissal provisions if the deadline has been missed.  However, for now, dismissed employees and their counsel should ensure that they file an unjust dismissal complaint within the 90 day time period.

It is interesting that the Supreme Court, in both the minority and majority reasons, chose to comment on the common law standards of dismissal by way of obiter.  The court noted that, at common law, employers can dismiss employees “for whatever reason they want so long as they give reasonable notice or pay in lieu of notice.”  This suggests that, for the time being, the court is not about to add in a “good faith” obligation as a requirement for dismissing a non-federally regulated employee.

This decision reinforces the wide gap between employees in the Federal sector and employees in most other provincial jurisdictions.  An employee dismissed on a without cause basis in Ontario can file a wrongful dismissal complaint and sue for dismissal damages in the court system.  In some cases, the employee may also have a valid claim for other damages or remedies.  But reinstatement is not an option, nor is the court required to consider why the employee was dismissed, if the dismissal was on a “without cause” basis.

But in the federal sector, it is now clear that the vast majority of dismissed employees enjoy “union-like” protection.  They can file unjust dismissal complaints and seek reinstatement or significantly increased damages.  Non-managerial employees with more than one year of service who have been dismissed from Canadian banks, telephone and cable companies, radio stations and other industries have significant negotiating leverage and may demand reinstatement or negotiate significantly higher severance packages.

Damages under the Canada Labour Code can be exponentially higher since employees can be awarded reinstatement and compensated for the time that they were out work.  Overall, this is an extremely helpful decision for federally regulated employees.

 

 

 

 

 

CBC Fires Evan Solomon for Conflict of Interest: Just Cause?

The CBC continues to provide wonderful material for Canadian employment lawyers.  Its very public employment disputes are fascinating case studies.  The most recent case involves allegations of conflict of interest against prominent host Evan Solomon.  Mr. Solomon was apparently dismissed by the CBC.  Do the allegations warrant a finding of just cause?  We don’t know yet, since the case has not yet been adjudicated.  But it is worth considering some aspects of conflict of interest cases.

In Canada, employees do owe a duty of fidelity to their employees.  This does not mean that employers can control an employee’s extra-office activities.  However, if personal activities can be linked back to the employer and can be seen to create a conflict of interest, employers may have legal grounds for concern.

In Mr. Solomon’s case, the Toronto Star has printed a story alleging that Mr. Solomon was engaged in brokering the sale of high end paintings and masks, accepting significant commissions for these activities, and failing to disclose the fact that he was earning commissions to the purchasers of the art.   The article alleges that Mr. Solomon came to know the buyers and sellers in the course of his role as a journalist working for the CBC.  The apparent suggestion is that he used his CBC access to certain individuals to further his private art brokerage business.  These allegations have not been proven in a court.  However, the Star has also referenced a public statement by Solomon in which he stated that he never “intentionally” used his position that the CBC to further his art business.

To make things a bit more interesting, the Star also quotes CBC spokesman Chuck Thompson as having stated that Mr. Solomon had disclosed his involvement in the art business and that CBC had not had any concerns.  Thompson supposedly stated that Mr. Solomon had not “traded on his journalistic contacts.”

It seems that the Star was not satisfied with this response and set out to push the matter further with the CBC by disclosing further results of its own inquiries.

There may well be significant factual disputes between Mr. Solomon, the Star and the CBC over these allegations.  It is impossible to know, at this point, what facts will emerge.

If all of the allegations as stated in the Star report were proven true and the CBC were to be able to demonstrate that Mr. Solomon was using his journalistic contacts to further his personal art brokerage business, this could well be the type of conflict of interest violation that would substantiate a dismissal for cause.

However, If Mr. Solomon were to show that he disclosed his activities in a truthful manner to the CBC and that the CBC had approved, even implicitly, Mr. Solomon could have a reasonable case.  Any examination of the facts will involve a careful review of the details that Mr. Solomon disclosed to the CBC compared to the actual facts and activities that can be proven.

In this picture, it appears that cracks in the paint started to appear when one of Mr. Solomon’s art deals became acrimonious.  Apparently there was a dispute over commissions owing with respect to one of Mr. Solomon’s sellers.   The story involving allegations of conflict of interest broke subsequently.

Although only a few Canadian employees might have the opportunity to broker high end artwork with the connections that they meet at the workplace, there are many other types of conflict of interest.  Hundreds of reported cases have looked at a wide range of conflicts and considered guidelines.  Many of these cases, for example, involve bank employees, who enter into deals with clients outside of bank auspices.  There are many other examples as well in other workplaces.

Here are few key points that both employers and employees should consider in conflict of interest cases:

1.  Employer Policy:  Employers should certainly have detailed conflict of interest policies in place that spell out expectations with respect to gifts, private activities with clients and other related matters.  Employees should be provided with these policies when they first commence employment.

2.  Disclosure:  Employees who would like to run a private business that might be viewed as a conflict are well advised to ensure that they have employer approval for their activities.  It may make sense to get legal advice first but, ultimately, full disclosure to an employer of the type of business activities that the employee intends to operate, coupled with explicit or, at least, tacit approval from the employer can have a prophylactic effect.  Having a paper record of these disclosure, even in email form, can be crucial.

3.  Honesty and Legality:  Even if the employer is aware of the activities, that does not give an employee carte blanche.  If the employee’s business veers into the realm of illegal activities or activities that otherwise create exposure for the employer, the employer may still have grounds to terminate employment for cause, even if some of the activities were disclosed initially.  In the CBC case, if the CBC were able to prove that any of Mr. Solomon’s activities were actually illegal (for example, earning a secret commission or tax evasion), this could put Mr. Solomon in a very difficult spot.  At this point, there is certainly no basis for believing that Mr. Solomon was involved in anything in this category.

As with the situation involving Mr. Ghomeshi, it will be fascinating to follow this case and see the ultimate outcome.  If a confidential deal is reached between Mr. Solomon and the CBC, Canadians may never really find out how the situation was resolved.  For now,  it certainly looks as though Mr. Solomon will require the services of an entirely different type of broker to arrange for a settlement that may well be worth far more than many of the pieces of art that he was allegedly involved in trading.

 

 

Fired for Off-Duty Conduct: Should that hold up?

Can inappropriate off-duty conduct be used by an employer to dismiss an employee for just cause?  The answer is far from clear.

By now, you have probably read about or seen a video of the incident at BMO field.  A CityNews reporter was heckled with the obscene phrase “FHRITP” by a guy looking to grab some attention and get himself on the news.  One of the guys with him defended the vulgarity and expanded on it.  The reporter, Shauna Hunt, fired back.  She professionally pushed these guys, on air, to explain why they would act in such demeaning fashion towards a female reporter.  This was not the first time she had been faced with this harassment and she decided to push back.  The video made its way through cyberspace.  Shortly afterwards, HydroOne fired one of the guys involved in the incident.  Here is the video of the incident.

I am not looking to defend the behaviour of these louts.  There should be little societal tolerance for those who wish to attack and delegitimize women reporters by yelling obscene sexual phrases at them.  Perhaps a complaint could be filed with the Ontario Human Rights Commission and damages could be awarded.  Maybe some type of civil lawsuit would be appropriate.  Or perhaps there are other avenues for dealing with this.

But the question in an employment law blog – is whether this justifies the loss of employment for the obscene heckler and his off-duty conduct.  Even though this happened after a soccer match rather than a basketball game, The answer is still no slam dunk.

If these individuals had been employees of MLSE, for example, and had yelled out these phrases, on air, at an MLSE event, the connection would be clear.  They would have been acting as representative employees of MLSE and there would have been little doubt that dismissal would be the appropriate remedy.  Or if they had been fellow reporters, at the scene while conducting other interviews.

But the guy who was fired was an employee of HydroOne which had nothing to do with this incident.  So the individual was fired for off-duty, obscene conduct, which had no connection to his employment.  He was not charged.  The public would not have associated him with HydroOne, unless he was in a position in which he would regularly deal with public.  If for example, he was in a customer relations position at HydroOne, or a human resources role, the case might be a bit different.

HydroOne has stated that this was a violation of their “Code of Conduct.”  It is certainly admirable of the company to take a strong stand against sexual harassment in the workplace and in society in general.  It is understandable and legally supportable that HydroOne would take steps to ensure that nothing like this occurs in its workplace or in connection with its workplaces.

But off-duty conduct that violates a “code of conduct?”  What are the limits of that code?  Lots of activities might be violations.  Does an employer have the right to follow employees around, off hours, and check up on whether their off-duty activities may or may not violate a code of conduct?  Will HydroOne send representatives to its employees’ private, off-duty parties to monitor what happens once their employees have a few drinks?  Will HydroOne start firing employees for behaviour at their kids’ hockey games, where many parents yell all kinds of obscene things?  Where is the line?

In response, HydroOne might say that they did not need to follow anyone anywhere nor do they intend to do so.   This incident simply became so public that the association with HydroOne caused public embarrassment – to the employee and to the employer.  HydroOne had to act to send a public message that it takes sexual harassment seriously.

While I can certainly understand the embarrassment to the employee, I’m just not sure that anyone would have drawn a tie in between the employee and HydroOne if HydroOne had not identified the protagonist as a HydroOne worker.

If the employee was in a non-unionized position, the issue would simply be whether or not there was “just cause” for terminating his employment.  He would probably bring a wrongful dismissal lawsuit – and there is a reasonable likelihood that a settlement would be reached at some point, though it would be confidential.  But he would not get his job back and he would have few other remedies, aside from some compensation for the loss of his position.  If he could show that HydroOne’s conduct had violated the Ontario Human Rights Code in some way or if he could convince a judge that this was “bad faith” conduct, he might get additional damages.  But that seems like a stretch.  If successful, he would probably wind up with a decent severance package, perhaps in the range of one month per year worked.

On the other hand, if the employee was unionized, he could file a grievance and ask to be reinstated to his position.  He could argue that some action short of dismissal would have been appropriate.  A public apology, a short suspension or some other disciplinary measures.  Or perhaps, even, none at all.  An adjudicator will have to decide whether the employment relationship became so damaged that he could no longer continue as an employee.

In either case, the employer will argue that the employee’s very public behaviour was a violation of its code of conduct and caused the employer public embarrassment.  The employer had to make it clear that sexual harassment, by its employees, while not be tolerated even if the incidents in question involve off-duty conduct.

I have to conclude that this could be a frightening precedent.  Not because I am trying to defend this guy’s conduct, which I am certainly not.  But because I would have concerns about the extent to which a person’s unrelated off-duty conduct, even if reprehensible, can lead to termination of employment in a position that has nothing to do with the conduct.  If it is conduct for which someone is criminally charged – and perhaps even convicted, that becomes a different story.  Or if the conduct is somehow related to the type of position.  For example, if this guy had been a teacher.  One can easily see that parents would be wary of having their children taught by a teacher who conducts himself in this fashion.

But if the type of employment has no relationship whatsoever to the type of incident, the link becomes far more questionable.

We have already seen stories of employers scouring the Facebook pages of potential employees and even asking for Facebook passwords to be able to gather information about job candidates.   It has become clear that no conduct, these days, is truly private when everyone is equipped with a cell phone with a video camera and the ability to instantly upload movies.  But are there any limits as to how employers and potential employers can use all of this information and media?  This is probably an area of law that will continue to develop, quite rapidly.  But the incident does emphasize the point that any inappropriate conduct can become public extremely quickly.  Certainly police offers across Canada and the U.S. have been learning that lesson.

Maybe it is ultimately beneficial for society that people can suffer significant consequences for highly inappropriate behaviour.  Such behaviour might include public instances of harassment, racism, anti-Semitism and other demeaning behaviour.  But I’m just not sure that summary dismissal with no compensation, the “capital punishment of employment law” and being left without a job or an income is the correct remedy here.

It will be interesting to hear what Canadian courts have to say about this.  We will have to watch and see how this case develops.

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