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.

 

 

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.

 

Quitting Your Job in Style? Think Carefully!

Thinking of quitting your job in dramatic fashion?  Make sure to think things through carefully before making any rash decisions.  Many employees find themselves in very stressful positions and are looking for the right time to leave.  Many of us feel overworked and under-appreciated.  Some find themselves working for abusive bosses.  Or sometimes, a great opportunity comes a long and there is a chance to move to greener pastures.  In any of these situations, there are always things to consider when making the decision to quit.

Employees are often tempted to leave with an exclamation mark.  This can be motivated by a desire to get even or get revenge for unfair treatment.  It may be a letter circulated to the entire company and its customers, a harsh letter sent to the boss or a posting on social media.  I have seen many situations where these actions come back to haunt the employees.  While this is not to say that these actions are never a good idea, they are often more trouble than they are worth.  This post looks at some of the issues you should consider when quitting a job – from an employment law perspective.

First, a recent example of an “I quit” video by Marina Shifrin:

As you may know by now, this video, at the item of writing of this blog, has had more than 8 million hits on YouTube.  From a Canadian employment law perspective, the video is really not that bad.  Ms Shifrin mentions that she was employed at a great place.  She avoids slandering her past employer.  And ultimately, she probably helps get them lots of publicity.  She may well have generated job offers for herself in the process – and probably a variety of personal offers as well.  Sure there are some vindictive employers out there who might try to bring some kind of lawsuit in a response to a video like this, but that would probably not be the best corporate marketing strategy.

Here, the company recognized that the video might be more helpful than harmful.  So, it produced its own response, which it is also using to recruit new employees, sending the message that it is a fun place to work.  The company’s responding video does not slander the departing employee – and in fact wishes her well:

As much fun as these videos might be, not everyone is about to make an “I quit!” video or other production.  Most people would probably get themselves into quite a bit of trouble trying to do it properly and safely.

Whether you are thinking of making a video or not, here are some legal issues to consider when quitting a job in Canada:

1.  Unpaid Bonuses:  If you are with a company that has a bonus plan in place, you may not be eligible for the bonus (even an accrued portion of it) unless you are working at the time the bonuses are paid.  Some employees have received a great new employment offer  and cannot wait around with the old company to collect the bonus.  If this is the case, you may want to ask the new employer for a signing bonus to compensate for the amounts you are losing.  You might also want to check your employment contract and see whether you will be disqualified from the bonus if you leave before bonus time.

2.  Restrictive Covenants:  If you have an employment contract in place (which can even be an offer letter, from when you started or some later point in time), you may want to get that reviewed carefully by an employment lawyer before agreeing to go and work for a competitor. There may be steps you can take to minimize the potential difficulties.  The covenants may not even be enforceable.  If they are, or even if they might be, you may be able to get an indemnity for any legal fees and costs from the new employer.  But you should deal with this issue properly before accepting the new position.

3.  E.I. Eligibility:  If you are quitting and you do not have a job lined up, you may not be eligible for Employment Insurance benefits unless you can prove that you were forced to quit (or left with no choice).  Make sure you have a plan lined up for how you intend to support yourself.

4.  Constructive Dismissal:  If you believe that you have been forced to quit, either as a result of a reduction in pay, a demotion or a poisoned work environment, this is probably something that you should mention in a resignation letter.  It can harm a constructive dismissal case where an employee sends a glowing resignation letter about how wonderful everyone has been in the workplace and then tries to allege “poisoned work environment.”  If you are considering a constructive dismissal claim, you should probably get legal advice before you quit.

5.  References:  Employees quitting a job are often concerned about potential references.  If you have been severely mistreated and have a legitimate constructive dismissal claim, it may be more important to take actions that support the claim than to worry about the reference from this particular employer.  In fact, negotiating a mutually agreeable reference may ultimately be part of the claim.  But in most other cases, leaving employment in a classy way will help ensure a decent reference from your former employer.  You may even be able to get some helpful, written reference letters on your way out the door or some assurances that people will respond favourably when called.

6.  Company Property:  In most cases, employees are required to return all company property including computers, cell phones, vehicles and documentation in hard and soft copy form.  There have been cases where employees have downloaded company documentation and information to local drives or even personal devices before leaving their employment.  This can provide the basis for a lawsuit to be brought by the company you.  Not a good idea!

7. New Employment ContractIf you are going to be accepting employment with a new employer, it goes without saying that you should ensure that you have received and accepted a signed offer of employment before submitting a resignation letter.  You should consider having this new employment offer reviewed by a qualified employment lawyer.  There may be clauses in the agreement that affect your future severance or your future ability to work elsewhere. There may be other clauses that have a major impact on your legal rights.  Don’t assume that you are simply being given a “standard offer” and that is is “non-negotiable.”  This is rarely true.

8.  It’s a Small World:  In most industries, the world is a lot smaller than we might think.  Word gets around about actions that people take, especially if the actions are inappropriate.  In the vast majority of cases, it is best to leave in style, with a classy, professional note to the employer.  Who knows, you may find yourself working with, or even for, some of these people a lot sooner than you might have expected.

 

 

 

 

Does State Immunity trump Wrongful Dismissal claims?

When does state immunity apply in an employment law context?  Can a Canadian worker at a foreign embassy or consulate, located in Canada, bring a claim for wrongful dismissal?  Or will this type of claim be thrown out by Canadian courts under the State Immunity Act?  From a review of a number of different decisions, there is no clear answer to that question.

There is a general rule, under the State Immunity Act, that foreign states are immune from the jurisdiction of the Canadian courts.  However, there is an exception for proceedings that “relate to commercial activity.”  In cases that have involved employee claims for wrongful dismissal or other employment related claims, the focus of the litigation has been whether the employee’s activity should be considered “commercial activity” and therefore exempt from the State Immunity Act protection.  Some of these cases are quite interesting.

On July 17, 2013, the Ontario Superior Court released a decision in Roy v. South Africa.  This case involved a long service employee who had been working as a consular clerk for the South African High Commission.  After being dismissed, Ms Roy brought a wrongful dismissal claim against the South African High Commission.  One of the issues to be decided in the motion was whether the wrongful dismissal suit should be thrown out due to lack of jurisdiction.  The court rejected the submissions made by South Africa and accepted the plaintiff’s argument that her employment was “commercial activity.”  South Africa was therefore not immune from a wrongful dismissal lawsuit and the case was permitted to proceed.  This case was not a final determination of this issue.  It was only a preliminary motion to assess whether the case might have a chance of succeeding.  Nevertheless, the plaintiff was successful and the case was able to continue winding its way through the court system.

In 2012, in Zakhary v. United States of America, a Canada Labour Code adjudicator also held that employment was covered by the commercial activity exemption.  This decision involved a consular clerk at the U.S. consulate.  Ms Zakhary had more than 20 years of service with the United States.  After being dismissed, she filed a complaint with the Canadian Ministry of Labour and asked for reinstatement.  The United States submitted a letter but did not attend at the hearing.  After reviewing the case law, the adjudicator held that the Canada Labour Code applied to the proceeding, as opposed to provincial legislation.  The adjudicator also determined that Ms Zakhary’s work a the U.S. consulate had nothing to do with security.  There would be no interference in U.S. sovereignty if the adjudicator were to rule that this matter was covered by Canada Labour Code jurisdiction.   The adjudicator went on to find that Ms Zakhary had been unjustly dismissed.  She was reinstated to her position and awarded close to 1 1/2 years’ back pay plus $5,000 towards legal fees.

At least one Ontario Human Rights Tribunal decision has reached a different result.  In Bentley v. Barbados, a 2010 decision, an adjudicator held that type of inquiry that would be necessary to decide the case would “constitute an unacceptable interference with the sovereign right of the defendant state to control and regulate its own workforce.”   The case involved an employee who was dismissed after she indicated her intention to take maternity leave.  She filed a complaint with the Ontario Human Rights Tribunal alleging a violation of the Ontario Human Rights Code.  The adjudicator held that employment at a consulate was not  commercial activity and related more to the sovereign acts of the foreign state of Barbados.  Barbados was held to be immune from the Ontario Human Rights Tribunal’s jurisdiction.

In Morocco v. El Ansari, the Quebec Court of Appeal considered the case of an employee who had been working for the Government of Morocco for more than twenty years as a civil servant before being dismissed.  The Court of Appeal was asked to decide whether that State Immunity Act would immunize Morocco from a wrongful dismissal suit.  The Court of Appeal held that employment relationship was not “commercial activity” and was immune from the jurisdiction of the Quebec Courts.  In coming to that conclusion, it cited a number of key points:  the employee was treated as a civil servant by Moroccan law by Morocco; She had started working for Morocco in Morocco and had signed her employment contract there initially; She could not show that she had paid any taxes in Canada; and Morocco did not deducted or remit CPP or EI.  In these circumstances, Ms El Ansari could not be seen as simply carrying on “commerical activity.”  The Supreme Court of Canada refused to grant leave to hear this case.

Most of these state immunity decisions in the employment law context have referenced a 1992 case of the Canadian Supreme Court in Re: Canada Labour Code in which the Court held that the United States was immune from the “jurisdiction of any domestic labour tribunal” in respect of labour relations at a U.S. military base located in Canada  However, even in that decision, the Supreme Court of Canada had pointed out that “a bare contract for employment services…is in and of itself, generally a commercial activity” and that Canadian employees of foreign sovereign states should be able to turn to Canadian courts for enforcement of employment contract terms.

Looking at all of these decisions together, the picture is somewhat unclear.  Employees who are dismissed by foreign consulates or embassies may be able to commence wrongful dismissal lawsuits or file Canada Labour Code complaints.  They may face preliminary arguments that their case should be thrown out because of state immunity.  The determination will likely depend on the nature of the position, the nature of the employee’s relationship with the foreign government and the type of claim being made.  The court or tribunal hearing the case will need to determine whether the employment shall fall under the “commercial activity” exception to state immunity.  Based on the variety of cases decided to date, it is far from clear that foreign states will always be able to rely on immunity arguments.  But since the results can be unpredictable, these claims are likely to involve costly motions early in the proceedings.  Successful plaintiffs are likely to recover at least some of these costs if they can get past the state immunity arguments.

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