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.

Huge Aggravated Damages Awards For Reprehensible Conduct Upheld

Punitive and aggravated damages in employment cases are alive and well in Canada, thanks to a recent decision of the Ontario Court of Appeal.  The ground-breaking decision in Boucher v. Wal-Mart (2014) ONCA 419 upheld significant findings of a trial decision even while reducing some of the amounts awarded.  The end result was that an Ontario employee was left with a court award of more than $400,000 after proving the tort of intentional infliction of mental suffering.  It is a tremendously useful decision for employees, particularly those who are subjected to workplace abuse.  For employers, the decision demands increased vigilance in dealing with complaints of inappropriate workplace treatment made by employees.

The plaintiff, Meredith Boucher, worked for Wal-Mart for a total of 9 years.  She had a strong employment history and had been promoted on a number of occasions.  By the time the relevant events occurred, Ms Boucher was working as an assistant manager at a Wal-Mart location in Windsor.

According to the trial court decision and the decision of the Ontario Court of Appeal, Ms Boucher refused to go along with her manager’s request to falsify a temperature log in the store that tracked produce and dairy product temperatures.  After this refusal on her part, her manager, Jason Pinnock, became irate and vindictive.  Mr. Pinnock proceeded to launch a “torrent of abuse” against her which included belittling, humiliating and demeaning conduct.

Ms Boucher complained to the district manager.  Rather than deal with the complaints properly, the district manager shared the complaints with the manager, who became even more vindictive.  Ms Boucher complained again.  She was told that her complaints were “unsubstantiated,” (despite overwhelming evidence) and she was threatened with consequences for continuing to undermine her “manager’s authority.”

At trial, a jury awarded $1M in punitive damages to the plaintiff, payable by Walmart.  It also awarded a host of other damages including damages for intentional infliction of mental suffering and punitive damages against the manager, Mr. Pinnock, personally. It awarded aggravated damages against Wal-Mart.  In total, the trial award came to more than $1.4M.

In a 2-1 majority decision, the Court of Appeal upheld some of these awards, while reducing the punitive damages awards.

The Court had little difficulty upholding the finding that the actions of the manager and of Wal-Mart were “reprehensible.”  In the case of Wal-Mart, the Court upheld findings that Wal-Mart had refused to take the complaints seriously, dismissed them as unsubstantiated, threatened to dismiss the plaintiff for making the complaints, refused to discipline the manager and, overall, acted in a “reprehensible” manner.

However, the Court was still left with the question of what this is all worth under Canadian law.  While it upheld an award of $100,000 for damages for “intentional infliction of mental distress” against the manager personally, the Court reduced the award of punitive damages against him from $100,000 to $10,000, seemingly out of concern for the appearance of a double recovery.  This total of $110,000 against a manager for intentional infliction of mental distress is still one of the higher awards of its type in Canadian employment law.

The Court also upheld an award of $200,000 for aggravated damages against Wal-Mart, finding that some of Wal-Mart’s actions, including its threat of a reprisal, were particularly vindictive.

However, the Court refused to uphold a jury award of $1M in punitive damages against Wal-Mart, finding that this would be too high.  Instead, it reduced the award to $100,000, which is still a very significant amount in all the circumstances.


The bottom line here is that an employee facing abusive treatment wound up with an Ontario Court of Appeal award of more than $410,000 plus legal fees – in addition to damages for severance.

This case is of tremendous significance.  Some of the previous Canadian cases have involved facts that are far more extreme.  For example, in one case, Pate Estate, the plaintiff had been the subject of a wholly unsubstantiated criminal trial.

In this Wal-Mart case, the facts, unfortunately, are far more common, at least in my experience.  It is not always easy for employees to prove that they were subjected to abuse.  But many Canadian employees are faced with somewhat similar treatment.

Here, fortunately for Ms Boucher, the co-employees apparently testified and provided evidence that bolstered her claims.

It is also fair to say that Canadian employers, more often than not, when faced with these types of claims, will attempt to deal with them properly and fairly.  It is rare that an employer will take no action whatsoever and instead threaten the employee who has made the complaint.  However, this certainly does occur more often than one might think.

I regularly represent clients who face abusive scenarios at work, even if many of those scenarios are not quite as extreme as what occurred in the Wal-Mart case.  Employees will now have a much wider range of options available, including the possibility of obtaining much greater damages awards.

For employers, this decision will really serve as a serious warning that complaints of workplace harassment must be investigated and handled appropriately.  The consequences of not responding properly can be dramatic and very costly.

While Wal-Mart may well ask the Supreme Court of Canada to hear this case, it is far from certain that the Supreme Court would see any reason to intervene.  If the Supreme Court does choose to hear the case, it may well consider a cross-appeal to reinstate the $1M in punitive damages that had been awarded at trial, given all of the harsh factual findings in this case.  It seems unlikely to me that the Court would interfere with the aggravated damages awards that were upheld by the Ontario Court of Appeal.

Constructively Dismissed Employee Not Required to Return to Work

Is a constructively dismissed employee required to return to work to “mitigate damages?”  This issue has attracted a great deal of judicial attention across Canada.  Since the Supreme Court of Canada decision in Evans v. Teamsters Local Union No. 31, courts across the country have held that employees can be required to return to work after being dismissed, if asked to do so by their former employers, as a way of mitigating damages.  If they refuse to do so, they risk losing all of their wrongful dismissal damages.

In a recent Ontario decision, the Court of Appeal weighed in on this issue with a decision that is quite helpful for constructively dismissed employees – finally.  In Farwell v. Citair Inc., a decision released on March 7, 2014, the Court of Appeal upheld a trial court decision that the plaintiff was not required to return to work after being constructively dismissed in order to mitigate his damages.

The plaintiff, Ken Farwell, had worked for the defendant for 38 years.  He was 58 years of age and was working as the Vice President of Operations.  The defendant restructured and transferred the plaintiff to the role of Purchasing Manager.  The plaintiff took the position that he had been constructively dismissed.  He resigned and brought a lawsuit.

The trial court judge held that the plaintiff had been constructively dismissed.    The new position would have involved a significant demotion and loss of prestige and status.  Monetarily, it would have left the plaintiff with a lower bonus even though other component of his compensation would have remained the same.  Overall, the demotion from VP Operations to Purchasing Manager was held to have been a constructive dismissal.

The defendant argued that the plaintiff failed to mitigate his damages by refusing to work out the notice period in the new position after having been constructively dismissed.  The trial court judge rejected this argument.  Morissette J. held that an employee is not required to work in “an atmosphere of hostility, embarrassment or humiliation.”  The court considered factors including “work atmosphere, stigma and loss of dignity.”  It concluded that it would have been objectively humiliating for the plaintiff to have returned to work.

On appeal, the defendant challenged several rulings of the trial court judge.

The Ontario Court of Appeal had little difficulty in concluding that the plaintiff had been constructively dismissed when he was demoted.  It also upheld the 24 month notice period quite summarily.

The real issue for the Court of Appeal was whether the plaintiff should have been required to return to work to mitigate his damages after having been constructively dismissed.  If the Court of Appeal had agreed with the defendant, it would have become virtually impossible to bring a constructive dismissal lawsuit successfully.

The Court of Appeal begins its discussion with a favourable interpretation of the Evans decision as one which promotes the efficient breach of contract.  The Court of Appeal lauds the effects of this decision, in general.

However, the Court then declines to overturn the trial court ruling on mitigation.  It grudgingly accepts that the plaintiff was not required to work in a lesser role after having been constructively dismissed since the trial court judge had held that this would have been “objectively humiliating.”

The crux of the matter, however, according to the Court of Appeal, is that the plaintiff was not asked to return and work out the notice period after having been constructively dismissed.  If the employer had asked him to return to the same position he had held, for the balance of the notice period, he would have been required to do so.  Here, the Court of Appeal held that there was no evidence of an appropriate return to work offer, after the plaintiff had been constructively dismissed.

This is quite a helpful case for constructively dismissed employees after a string of stinging defeats in courts across Canada. The decision suggests that if there is a constructive dismissal of the type that involves a significant demotion, the employee will not be required to mitigate damages by working out the notice period in the lesser role.  This contrasts with cases like Evans where the employee is asked to return to work in the same position – after being dismissed – actually or constructively.

The Farwell decision means that constructive dismissal lawsuits are still alive in Ontario.  If there is a provable case of demotion, loss of status, loss of prestige and perhaps, embarassment, the employee will not be required to return to work.  That being said, this may not be the last word on this line of cases.  Stay tuned and tread carefully.




Forced Sick Leave: Is it Constructive Dismissal?

Can an employer insist that an employee take sick leave?  Or is this a constructive dismissal?  A recent decision of the Manitoba Court of Appeal sided with the employee on this issue and awarded the plaintiff more than $340,000 as damages for constructive dismissal.

The case of  Irvine v. Gauthier (Jim) Chevrolet Oldsmobile Cadillac Ltd. (2013 MBCA 93) involved a senior long service employee who was fighting diabetes.  Kelly Irvine had worked for the defendant car dealership for 19 years, mostly as the general manager for new car sales and as a vice-president.  Mr. Irvine was diagnosed with diabetes and lost eyesight in one of his eyes.  He was called into a meeting with the dealership’s owner and told to take a sick leave of indefinite duration.  The dealership then circulated an announcement stating that Mr. Irvine was going on a leave of absence to address his health problems.  The dealership paid Mr. Irvine for two weeks, provided him with long term disability forms and then replaced Mr. Irvine with a new general manager within a month.

Mr. Irvine was not interested in pursuing disability benefits.  Instead, he looked for work.  Four months later, Mr. Irvine located alternate employment with a different company but that employment only lasted for 8 months.  Meanwhile, Mr. Irvine sued his former employer for wrongful dismissal.  The defendant car dealership took the position that Mr. Irvine had resigned.  At trial, the court accepted that the employer had told Mr. Irvine to take time off, apply for disability insurance and convalesce.  However, the judge concluded that based on all of the circumstances, including the fact that Mr. Irvine went and found alternate employment, he had resigned and had not been dismissed.

Mr. Irvine appealed the decision.  The Manitoba Court of Appeal assessed the main issue as being whether or not Mr. Irvine had been constructively dismissed.  After tracing the law of constructive dismissal, it adopted the proposition that forcing an employee to take a leave of absence without a sufficient basis for doing so may constitute a constructive dismissal.  The court noted that if the employer has sufficient medical information or a reasonable plan for reintegration, a forced leave of absence may be sustainable.  But the onus is on the employer to prove that the employee cannot perform the duties of the position.  Key factors include the anticipated duration of the employee’s illness, the nature of employment, the prognosis for recovery, the availability of sick leave and pay, the length of service and other related points.

In this case, the employer did not obtain any of this information.  It simply met with Mr. Irvine and told him that he was being placed on a sick leave.  It then filled his position permanently within a month.  This was a forced leave of absence which constituted a constructive dismissal.  The employer had not obtained any documentation about the plaintiff’s prognosis and had no meaningful discussion with the plaintiff about his ability to perform his duties.  The Court of Appeal reversed the trial decision and held that Mr. Levine had been constructively dismissed.  He was awarded more than $340,000 in damages.

This decision shows that it can be very tricky for both sides to deal with a disability situation.  Employees who are facing medical challenges or other challenges that may require accommodation should be prepared to provide their employers with information about any restrictions they may be facing or any required accommodation.  Employees have the right to refuse to take a leave of absence if they do not feel that it is medically warranted.

Employers have the right to request some information from employees about the need for accommodation if there is evidence that an employee is medically unable to perform the duties of the position.  However, employers may not simply tell the employee to take a leave of absence without having a provable basis for making that request.  If a leave of absence is required, employers should discuss some reasonable plan with the employee based on the employee’s prognosis for a return to work and should hold the position open.  Employers who fail to meet these requirements can be faced with significant damage awards as this case demonstrates.


Former Manager Awarded $100,000 in Constructive Dismissal Suit

Constructive dismissal lawsuits can be very challenging.  Many judges seem to feel that employees should continue to work for their empl0yers even if significant employment terms have been changed.  Nevertheless, where an employee is faced with a significant reduction in compensation or a clear demotion, a constructive dismissal suit may be appropriate and successful.

In a recent Ontario Superior Court decision, Jodoin v. Nissan Canada Inc. a former employee of Nissan Canada was awarded more than $100,000 in wrongful dismissal damages as a result of a successful claim for constructive dismissal.

Harry Jodoin had been working for Nissan for more than 10 years.  Just before his demotion, he was a Senior Manager in charge of retail sales and sponsorships.  He controlled a budget of more than $30 Million.

In December 2010, Mr. Jodoin was told that he was being moved into the role of Senior Manager of Vehicle Preparation Programme.  There was no job description for this position.  No employees would report to Mr. Jodoin.  There was no private office, no budget and no long term goals in place.  In fact, Mr. Jodoin was initially moved from an office into a cubicle in a high traffic area with little privacy.

The court accepted all of this evidence and concluded that Mr. Jodoin had been constructively dismissed by Nissan.  In coming to this conclusion, the court held that since Mr. Jodoin had been demoted, he was not required to continue to remain in the position (as a way of “mitigating his damages.”).  The court noted that Mr. Jodoin continued to work for about a month and a half before taking the position that he had been constructively dismissed.  However, the court concluded that this was a reasonable time period.

The court awarded Mr. Jodoin damages for the full time that he was out of work, which in this case amounted to approximately 9 months.  The damages included compensation for base salary, benefits, the company vehicle, the incentive plan and the RRSP plan.  This all added up to more than $100,000 plus interest and legal costs.

This case demonstrates that constructive dismissal law suits are still alive and well in Ontario.  However, an employee bringing this type of claim will need to demonstrate an objectively clear demotion or a significant reduction in pay.  Job changes that do not amount to a demotion may not be sufficient.  Fortunately for Mr. Jodoin, he was able to convince the court that a reasonable, objective person would agree that he had been demoted.  Many employees who allege constructive dismissal are not as fortunate.

Bringing this type of lawsuit in the wrong circumstances can be a very costly mistake.  It can be come even less worthwhile if the dismissed employee is able to find new employment quickly.  Nevertheless, employees who are out of work for some significant time period may find it quite worthwhile to proceed with this type of claim.


Dismissed Employees Must Return To Work if Recalled

Last year, the Ontario Superior Court held that a wrongfully dismissed employee may be required to go back to work if recalled by his or her employer.  I discussed that case here.

This past week, the Ontario Court of Appeal upheld the trial court decision and dismissed the appeal in Chevalier v. Active Tire & Auto Centre.

The Ontario Court of Appeal acknowledged that the plaintiff had been wrongfully dismissed when he was improperly put on a “lay-off.”  The  lay off came about after the employer tried to performance manage the employee before it put him on lay-off.

The plaintiff sued right away for constructive dismissal after being put on lay off.   Right after he began his lawsuit, the employer recalled him to work.  He refused to return and took the case to trial, arguing that the workplace had become “poisoned.”

However, at trial, the Ontario Superior Court held that there was no “demeaning, objectionable or retributory conduct” by the employer and that the constructively dismissed employee should have returned to work.

The Ontario Court of Appeal has upheld this decision.  In doing so, it has reinforced the idea that when an employer tries to implement a performance improvement plan, this will not necessarily create a poisoned work atmosphere.  But more importantly, the Court of Appeal has reinforced the Supreme Court of Canada jurisprudence in Evans v. Teamsters Local Union 31 which states that wrongfully dismissed employees may be required to return to work if recalled by their employers.  This can apply even after the employee files a lawsuit.  Failing to return to work can lead to a finding of “failure to mitigate damages.”  The dismissed employee can lose the case completely in these circumstances.

Dismissed employees who are recalled to work will need to consider the recall notice very carefully.  Continuing on with a lawsuit after an employer purports to call the employee back to work can be risky and ultimately, very costly.



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