Steps to Take When You’re Fired

No one likes the word “fired.”  It seems to somehow connote an “at fault” dismissal.  But realistically, under Canadian law, whether you have been downsized, restructured, dismissed, let go or “rightsized,” it all really adds up to the same thing.  Your employment has been terminated and you will no longer be working for your employer.  Here is a list of some things to consider if you are in that position:

1.  Remain Calm and Professional

This is one of the hardest things for many people. That is quite understandable, particularly if the termination has been handled poorly or is a bad faith termination.  For many dismissed employees, it will simply be a short meeting with the boss and an HR representative, or perhaps, just your supervisor.  Often, these meetings are very short and little is said.  Perhaps you are not even provided with a reason for the dismissal other than “the company is making a change.”  In any case, it is rarely helpful to argue or debate the issue.  It is almost always an irreversible decision and you will now have to move forward in the best way possible.  You should avoid the urge to do anything rash or impulsive.  Nasty emails sent around to company personnel or clients are almost never helpful, although a short and sweet goodbye note may sometimes be appropriate, if acceptable to the employer.

2.  Review the Termination Letter But Don’t Sign

Dismissals in Canada will generally be “with cause” or “without cause.”  If you are being dismissed “with cause,” you may not be offered a severance package.  If you are offered one, it may be one that is greatly reduced as compared to what you might have been entitled to receive in a without cause situation.  If the dismissal is “for cause,” it may be helpful to try to ask questions at the dismissal meeting about the allegations that are being made, the basis for the allegations and other related questions.

If the dismissal is “without cause,”  you will almost certainly be provided with a severance package.  In most cases, the employer will ask you to sign a release or some other agreement accepting the package.  You should never sign this type of document immediately.  You may well be entitled to significantly more than you are being offered by the employer.  If the termination letter references an “employment contract” that you signed when you first started, you should ask for a copy of it if you do not have ready access to it.   The employment contract may well set out the employer’s severance obligations and you may or may not be able to challenge this type of contract.  If you can’t find it, you may want to get a copy from HR, especially if it is referenced in your termination letter.

Whether a dismissal is for “cause” or “without cause,” it can still be considered a wrongful dismissal if you have not been given full proper compensation.

3.  Avoid Publicizing Immediately and Help Yourself

Although it might be tempting to immediately announce your departure on Facebook, LinkedIn and other social media, you should tread carefully.  It is usually not helpful to begin telling everyone immediately that you have been fired.  Consider contacting some close former colleagues or supervisors who may be prepared to provide you with a helpful reference or ideas about suitable job openings.  Consider some other contacts who may have ideas about the types of positions that would best suit you going forward.  Of course if there are people close to you, a spouse or partner, close friends, parents or others, it can be very helpful to share everything with these people, discuss your feelings and emotions and get support.  If you feel that your health has been affected, you should not hesitate to speak with your physician or, if appropriate, other health care providers such as a psychologist or psychotherapist.  Some people may find comfort in confiding in clergy, many of whom can be very empathetic.  Others may find it helpful to ramp up an exercise routine.  Whatever works best for you, take steps to keep yourself on a solid emotional footing.

4.  Meet With a Lawyer

Whether you have been dismissed for cause or without cause, this is still important.

If your dismissal is for cause, this may be something that you can challenge.  You may be entitled to significant compensation, even though the employer has claimed that it has “just cause.”  The law in Canada is quite favourable to employees.  It is very difficult for employers to succeed with a just cause defence, particularly if the defence is based solely on poor performance.

If your dismissal is “without cause,” you may well be entitled to significantly more than the employer has offered.  Have a look at what is included in the severance package.  There may be items missing such as bonus, benefits, outplacement or the severance may simply be too low.

Most employment lawyers will charge a consultation fee for this type of review.  The fee is tax deductible and often employers will pay it.  This advice may be quite valuable.  After a proper review, if you are advised that everything is in order and the package is reasonable, this may be money well spent.  Some lawyers offering a “free consultation” will avoid providing detailed advice and will try to get you to commit to providing a large deposit without really providing a proper assessment of what you should expect.  With a proper legal consultation, you should leave the meeting with a good sense of the likely range of improvement in your package if you proceed, the anticipated legal fees and an understanding of relevant legal issues.  You should not commit to anything other than a reasonable initial consultation fee for a first meeting with a lawyer.

If you had a non-competition or non-solicitation agreement in place with your former employer, this is also something that should be reviewed with legal counsel so that you can understand your rights and obligations going forward.

5.  Outplacement and a Resume

If your severance package includes outplacement assistance, you should verify whether or not it is being provided unconditionally.  If so, you should get in touch with the outplacement provider early on in the process.  Don’t hesitate to ask questions.  Will the meetings be confidential?  Will the outplacement provider be reporting back to the employer?  Does the outplacement provider have experience in your field?  If you are not satisfied with the answers, you should consider asking the employer to permit you to use a provider of your choice.  If the outplacement assistance is only being provided conditional on a signed release, you should discuss the best strategy with your legal counsel.

6.  Employment Insurance

In most cases, you should contact HRDC to file for Employment Insurance as soon as possible.  Even if you have been dismissed for misconduct or other “just cause,” you may still be entitled to EI.  Sometimes you may have to go through an appeal process to ensure your entitlement.  If you are being provided with severance, you may not receive any EI payments until two weeks after all of the severance payments have been paid.  Nevertheless, you should still register early.

7.  Health, Dental and Insurance

Your severance package may continue benefits for some period of time.  You should make sure that you and/or your family members, if applicable, are up to date with dental care, health prescriptions, eye glasses, and other items that may be covered by your extended dental plan.  If your life and/or disability insurance coverage are going to be terminated, you should consider getting quotes as quickly as possible.  In some cases, you may have 30 days to convert over your life insurance policy from a group policy to an individual policy.  This may be important if your medical tests are problematic.

8.  Be Forward Looking

Being dismissed is never easy.  This will usually involve a significant life change as you will now have to shift careers.  But most people go through this transition successfully.   You will need to do your best to stay positive, consider the types of roles that you envision yourself in and put together a personal transition plan.  You should make sure that your resume is professional, free of any errors, and eye catching.  When attending job interviews, you should remain positive and avoid bad mouthing your previous employer or boss.  You should consider dealing with the that fact that you were dismissed upfront and summarily.  Honesty will almost always be the best policy even though that does not mean telling potential employers about all of your weaknesses.

9.  Keep Track of Efforts

It will be helpful and often legally required for you to track your job search efforts.  Put together a spread sheet listing all activities. This should include formal and informal contacts.  Include lunch meetings, phone calls and discussions with friends, colleagues and former co-workers.  Track dates, people contacted, positions applied for, interviews and outcomes.  Keep this file up to date.  It may be important in proving “mitigation” if your severance entitlement has not been resolved quickly.  Or it may be required for EI purposes.  It will also be a useful part of tracking your personal progress.

10.  Carefully Consider any New Contract

When you have been offered a new position, you may well be given an offer letter or employment contract.  Don’t assume that the contact is a standard form or that it is non-negotiable even though you may really want to take the position and move on.  The proposed employment contract may limit or reduce your legal rights significantly.  Make sure you understand all of its terms properly.  You might consider having it reviewed by an employment lawyer.

These are some of the key points to consider. Certainly there are many career transition books that are quite helpful.  People often recommend What Color is Your Parachute?  Another favourite, on a lighter note, is Dr. Suess’ “Oh The Places You’ll Go.”  

There are also numerous job search websites and resources of every kind available on the internet.  Brush up your linked in profile with details of your work, references and endorsements.  Try to remain positive.  For many people, a dismissal may well lead to opportunities or new situations that might even be better for you that the role you have just left.

 

Wins Wrongful Dismissal: But Fails to Mitigate

In another blow to dismissed employees. a B.C. court has reduced the wrongful dismissal damages that would have been owing to an employee after the employee failed to return to work when “recalled.”  This follows a number of decisions across Canada including cases in Ontario, B.C. and even at the Supreme Court.  It has become quite clear that if an employee refuses to return to work when asked to return, even after being wrongfully dismissed, it may be very risky for the employee to refuse.

In the case of Hooge v. Gillwood Remanufacturing Inc., the plaintiff was a 36 year employee, working as a production supervisor at the time of dismissal.  He was put on a “lay off” by his employer without any advance notice or pay.  The defendant company claimed that it had the right to “lay off” the employee under the B.C. Employment Standards Act.  The plaintiff alleged that he had been dismissed and sued for wrongful dismissal.  One week after he filed his lawsuit, the employer purported to “recall” him back to work.

At trial, the B.C. Supreme Court held that the employee had in fact been constructively dismissed. The plaintiff had not had a written employment contract in place.  When he was put on a lay off, he was told that it was “indefinite” and that there were no plans to recall him.  He was given an ROE that said “shortage of work.”  The B.C. court agreed with the plaintiff that there was no term of his employment that would have permitted a “lay off” without pay after all of these years of employment.  He was, in fact, constructively dismissed and was entitled to eighteen months’ compensation.

However, the Court proceeded to look at the issue of mitigation.  “The law is clear that in certain circumstances an employee who declines an offer of re-employment from the same employer after having been dismissed, whether actually or constructively, may be found to failed to mitigate his damages, and have any award reduced on account of such failure to mitigate.”  As long as it would have been “reasonable” in all of the circumstances for the plaintiff to return to work, he or she may be obligated to do so.  The court discussed Evans. v. Teamsters Local Union No. 31  as well as other B.C. cases including Davies v. Fraser Collection Services Ltd. 2008 B.C.S.C. 942 and Besse v. Dr. A.S. Machner Inc. 2009 BCSC 1216.

Ultimately, the court concluded that the evidence did not establish acrimony, mistreatment, belittling, embarrassing actions or undermining of authority in the workplace.  The court concluded that the plaintiff should have returned to the same position, on the same terms and conditions, at the same rate of pay.  Here is the court’s reasoning:

“It seems to me that an employer who has laid-off an employee, or wrongfully terminated an employee without due notice, may very well come to the conclusion, particularly with the benefit of legal advice that its actions constituted a wrongful dismissal and may seek to mitigate its own exposure to the payment of damages by offering to re-hire the employee.”

Here, the court held that the plaintiff should have returned to work.

Fortunately, in this case, all was not lost for the plaintiff.  The defendant locked out its unionized employees and ceased operations approximately seven months after purporting to recall the plaintiff.  The court held that the plaintiff would not have been paid during the lock-out, so he would not have been able to mitigate his damages during that time period.  Nevertheless, he was docked 7 1/2 months’ pay for the time period during which he would have been able to work if he had returned to work when recalled.

This case, from a B.C. perspective, reinforces the interpretation of Evans that has become the law across Canada.  Employees who are fired, laid-off or otherwise dismissed – and then offered a return to work – even after they file a lawsuit, must be very careful in deciding how to answer the employer’s offer.  Refusing to return to work and then continuing a lawsuit can be very costly.

There is something to be said for the notion that employers might have made a mistake and should be entitled to reverse a decision and have an employee come back to work.  After all, in the unionized context, an employee can be reinstated.

However, more often than not, this type of case will simply be used by a range of employers looking to play games.  Employers can try to “lay off” employees without offering anything.  Then, if the employee sues, they can “recall” the employee.  This gives employers a way to try firing someone while minimizing the risk of owing any severance.  It seems to open up the door to all kinds of abuses by the types of employers that might choose to act unethically.  Certainly, there are situations in which employers may have a good faith “change of heart” or are otherwise justified in changing their minds and reversing a decision to dismiss an employee.

But that does not necessarily seem to be the case in many of the situations I see.  This line of case law creates uncertainty, economic and emotional stress for employees, and also makes it difficult to settle some cases reasonably, both from an employee and employer perspective.  Nevertheless, employees who ignore these decisions may be making a very costly mistake.

 

 

Just Cause: Employer Fails to Prove Allegations of Anti-Semitic Remarks

How difficult is it for employers to prove just cause for dismissal in Ontario?  The recent decision of the Ontario Superior Court in Ludchen v. Stelcrete Industries Ltd. demonstrates, yet again, that the bar is set very high.

Richard Ludchen was a plant superintendent working for the defendant Stelcrete Industries, which is a precast concrete company.  Ludchen had worked for the defendant for 11 years and was earning an annual income of $61,000 at the time of dismissal.  He had a clean disciplinary record.

In 2008, the company made a decision not to recognize Ontario “Family Day” as a day off but to pay employees for an extra day of holiday time in December instead.  In reaction to this announcement, the plaintiff allegedly made some very offensive anti-Semitic remarks about the owners of the company who were Jewish.  The company investigated, determined that the remarks had been made and fired Ludchen for cause.  Ludchen sued for wronful dismissal.

At trial, the judge accepted that, if the company could prove that the remarks had been made, this would have constituted just cause for dismissal.  The court also found that the credibility of the plaintiff was questionable and did not ring true.  However, the court was even more dismissive of the evidence presented by the primary company witness, which it rejected completely.  The company relied on the evidence of its investigator and did not call to the witness stand anyone who actually heard the offensive remarks being made.

Accordingly, the court concluded that the company had failed to prove that the remarks had actually been made.  The court held that Ludchen had been wrongfully dismissed and awarded him 12 months of wrongful dismissal damages, together with compensation for the loss of benefits and his average annual bonus.  The court rejected Ludchen’s request for any kind of additional punitive, aggravated or other damages.

The Ludchen v. Stelcrete Industries decision shows that the onus is squarely on the employers to prove all of the aspects of a just cause case.  Even if the alleged misconduct is very serious and the employee’s denial or explanation does not ring true, the employer must still prove its case clearly.

For dismissed employees, the case is further assurance to plaintiffs and their legal counsel that serious cause allegations do not always hold up in court, even where it appears likely that the misconduct may have occurred.

 

 

 

Deficient Notice Clause Upheld by Ontario CA in Dismissal Case

A recent decision of the Ontario Court of Appeal, involving a deficient notice clause, illustrates the perils of attempting self-representation in a wrongful dismissal case.  In the case of Musoni v. Logitek Technology Ltd., the case appears to have been decided without some of the key arguments relating to the validity of employment contracts even being raised.

The plaintiff worked as a customer support agent from October 2005 to March 6, 2008, a total of about 2 1/2 years.  Six months after the plaintiff began his employment, he signed an employment agreement.  The agreement included a clause which provided for fifteen days’ notice in the event of dismissal.

The plantiff was dismissed and was provided with two weeks’ severance.  He did not accept this amount and sued for $70,000 in wrongful dismissal damages.

At trial, the plaintiff noted that he had not obtained legal advice at the time he signed the contract.  However, he apparently agreed at trial that the agreement was “valid and in force.”  (This is really a legal conclusion rather than a factual matter).   Instead of arguing that he was owed more notice – and that the employment agreement was not valid, the plaintiff alleged the defendant had dismissed him for improper reasons, relating to his record of offences.

The trial judge concluded that since the plaintiff was dismissed on a “without cause” basis, he was only entitled to the minimum amount provided for in the employment agreement.  The reason for his dismissal was held to be irrelevant.  The lawsuit was dismissed and the plaintiff was ordered to pay the defendant’s costs in the sum of $5,012.

The plaintiff appealed to the Court of Appeal and represented himself once again.  The Court of Appeal upheld the employment contract and dismissed the case, ordering the plaintiff to pay another $3,500.

The striking aspect of this case is the arguments that do not appear to have been put before the trial judge or the Court of Appeal or considered by one of the two levels of court.

Firstly, the employment agreement  that the defendant relied upon was provided to the plaintiff six months after he commenced employment.  There is no suggestion in the trial decision that any new consideration was provided to the plaintiff.  Based on a number of cases that have previously been decided by the Ontario Court of Appeal, the employment agreement should have been thrown out for lack of consideration (See for example Hobbs v. TDI Canada Ltd.) Interestingly, one of the Court of Appeal judges who sat on the panel that decided Hobbs v. TDI Canada Ltd., Justice MacPherson, was on the panel in this case of Musoni v. Logitek Technology Ltd.  Yet there is no mention of any consideration argument.

Secondly, even if the employment agreement had been provided to the plaintiff in exchange for some new consideration, it contained a clause that provided for only 15 days notice.  If the plaintiff had been working for the defendant for three years, this 15 days would have been less than the minimum notice required under the Ontario Employment Standards Act, 2000 (21 days rather than 15).  At four years, it would have been significantly less, no matter what type of calculation is used.  These types of clauses that will eventually amount to less than the minimum amount required by statutory provision have been held to be void by Canadian courts.  (See, for example Shore v. Ladner Downs, a decision of the B.C. Court of Appeal).

It seems likely that if this case had been argued properly, the plaintiff should have been entitled to between 3 and 6 months’ notice, based on his annual income of $47,000.  Instead, he wound up with 15 days’ notice and a bill for the defendant’s costs of more than $8,500.  The case is an illustration of a situation in which the courts will not come up with the proper arguments for the unrepresented plaintiff.  So the plaintiff is ultimately left with a brutal result and only himself to sue for professional negligence – for not having raised some key legal arguments that any competent employment lawyer would have put forward.

A final note: Given that the case was probably only worth three or four months’ compensation, the proper place for this case would have been Ontario Small Claims Court, which has a monetary limit of $25,000, rather than the Ontario Superior Court.  Ouch!

 

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.

 

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