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.



Employment Law Issues in Bawdy Houses

What employment law issues might be involved in running a bawdy house? Given the Supreme Court of Canada’s recent decision in Canada (Attorney General) v. Bedford, 2013 SCC 72, Canada’s prostitution laws have been struck out as being invalid.  However, the invalidity has been suspended for one year to give Parliament an opportunity to introduce new legislation regulating prostitution. One of the Supreme Court’s primary concerns was that the current laws may limit the ability of prostitutes to work in a safe environment.

Assuming that Parliament decides to permit non-exploitive bawdy houses in some form, I thought it might be interesting to consider some of the employment law issues that may arise.  Some of these are, of course, very similar and applicable to other types of employment.

1.  Independent Contractor vs Employee:  If running a bawdy house is legal, there may be questions as to the legal relationship between the bawdy house and the prostitute.  I have discussed some issues relating to independent contractors here.  Although most prostitutes may prefer to be treated as independent contractors, that may not always be the proper characterization of the relationship.  If the prostitute is actually employed by the establishment, that would, of course, trigger income tax withholding and deductions, including CPP and EI and the various protections under the applicable emloyment standards legislation.  Prostitutes working for a legal bawdy house, as employees, would be entitled to a guaranteed minimum wage, vacation pay, termination and, if applicable severance pay and other protection under the relevant act, including various leaves.

2.  Health and Safety Legislation:

Health and Safety legislation across Canada requires employers to take appropriate safety measures to protect their employees.  The Supreme Court of Canada alluded to the issue of prostitute safety as being one of the main reasons for striking the current legislation.  Bawdy house proprietors who employ prostitutes may well be required, by law, to provide such protection as a receptionist, body guard, sound monitoring of rooms, screening measures, health testing and preventative safety measures.  Employers who do not take proper safety precautions can be fined significant sums.

3.  WSIB Protection:

Employed prostitutes who are injured on the job should be entitled to WSIB benefits and to the protection of the legislation including the right to return to work after an injury.

4.  Human Rights Protection:

Employed prostitutes should be entitled to protection from discrimination on any of the enumerated grounds under applicable Provincial human rights legislation.

5.  Common Law Notice Entitlement:

Prostitutes who are hired by a bawdy house without an employment contract (or with one that does not otherwise legally address this issue) will be entitled to reasonable notice of dismissal or compensation in lieu of that notice – just as any other dismissed employee.   There are exceptions, such as just cause.  As well, the employee would be required to try to mitigate his or her damages by finding another workplace.  Nevertheless, this could provide prostitutes with a measure of protection against arbitrary dismissal.

6.  Post Employment Restrictions: 

In most cases, it would be unlikely that an employer could prohibit  a prostitute from working as a prostitute for a certain time period after her or his employment ends with a specific employer.   An exception might be if the prostitute is a part owner of the bawdy house and is paid a significant sum of money for selling the business.   A more common scenario might be whether an employer could impose a non-solititation agreement for some period of time – to prohibit the prostitute from soliciting her clients for a period of time.  If this is set out in an enforceable employment agreement  and the time period is limited and reasonable, this type of restriction might be considered valid.

These are just some of the issues that might pop up with the new opportunity that at the Supreme Court of Canada has put forward.  It remains to be seen what type of legislation Parliament will enact and what type of prostitution regulation scheme it chooses to erect.  It may well be that Federal or even Provincial legislation could deal with many of these concerns directly in the body of the proposed act.



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.

Sabbath Observance and Workplace Discrimination: Ontario HR Tribunal Awards $4,000.

Can an employer discriminate against Sabbath observers in the course of interviews for employment in Ontario?  If not, what kinds of penalties can employers face when they discriminate in this fashion?  A recent Ontario Human Rights Tribunal case awarded an applicant $4,000 in damages for injury to “dignity, feelings and self-respect” when she was screened out of a job due to her Sabbath observance.

L.W. is a Seventh Day Adventist.  She applied for a position with the Desjardins Group.  The position was a short-term contract to work in a call centre.  Ms W was asked in the interview process if she could work on Saturdays.  She indicated that she could not since this was her Sabbath.  According to the findings of the Tribunal, she was then “screened out” from any further interview process and was not  considered for the position.

Surprisingly, the Tribunal held that it was permissible for employers to ask about work availability.  The Tribunal noted that there was no evidence in this case to indicate that the question was being asked in order to “classify” the applicant by her creed.

However, the Tribunal went on to conclude that the applicant’s inability to work on Saturdays for religious reasons led her to being screened out from any further interview process.  In other words, she was subjected to discrimination on the basis of her creed by the Desjardins Group, according to the Tribunal.  It is hard to see how this type of conduct could be prevented if the Tribunal is correct that applicants can be asked by an employer about work availability.

Nevertheless, the Tribunal found that Ms W. had been subjected to discriminatory treatment.  It awarded her the grand total of $4,000.  This hardly seems like a sufficient incentive to deter employers from discriminating on the basis of creed.  Part of the reason for the modest award was that Ms W., apparently, did not provide evidence of any steps that she had taken to try to find other employment.  But these damages are of a different type.  The $4,000 was awarded as “general damages.”  This should reflect the Tribunal’s view of the respondent’s conduct and its impact on the applicant.  $4,000 does not seem like very much of a deterrent.  I would have thought that $25,000 or $30,000 or even as much as $50,000 would have been an appropriate message to send in light of the seriousness of the impugned conduct and the findings of the Tribunal.

This aspect of the case reminds Ontario residents that even where discriminatory conduct has been proven, the Ontario Human Rights Tribunal may not award a very significant amount of money.  Further since the Ontario Human Rights Tribunal does not award payment of legal fees to successful parties, this type of hearing could be very costly for a claimant.  In many cases, it may make much more sense for a litigant to file a lawsuit in the Ontario Superior Court and to consider asking a jury for its assessment of damages.  A large jury award might serve as a much better deterrent than the modest sum that was awarded in the Desjardins and W. case.

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