Probationary Employee Dismissed: Out of Luck Says ON CA

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

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

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

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

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

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

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

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

20 Month Wrongful Dismissal Award for Employee Upheld

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Just Cause for Dismissal: Is One Incident Enough?

Is one incident of dishonesty just cause for dismissal?  What if it involves a long-serving employee?  This was the issue that was decided recently by the B.C. Court of Appeal in  Steel v. Coast Capital Savings Credit Union.  

The plaintiff, Susan Steel, was a help desk analyst.  She had been employed by the Credit Union for 21 years.  In 2008, the plaintiff accessed the personal folder of a manager.  The manager kept a folder for assigning parking spaces and the plaintiff wanted to check her status.  She was caught because the manager was accessing the folder at the very same time.  She was confronted and admitted her misconduct.  She also acknowledged that she did not have authorization.

At trial, the judge reviewed the case law, focusing on the Supreme Court of Canada’s landmark decision in McKinley v. B.C. Tel (2001) SCC 38. The court dismissed the case and found that Ms Steel had been dismissed for just cause.  The plaintiff appealed to the B.C. Court of Appeal.

By a 2-1 majority decision, the B.C. Court of Appeal upheld the trial court decision and dismissed the appeal.  As the Court of Appeal put it, “McKinley requires courts to apply a contextual analysis to determine whether employee misconduct amounts to just cause for dismissal….Following McKinley, a single act of dishonesty as a matter of law no longer gives an employer an absolute right to dismissal its employee.”

However, the Court of Appeal also noted that “a single act of misconduct can justify dismissal if the misconduct is of a sufficient character to cause the irreparable breakdown of the employment relationship.”

The majority of the court held that a breach of privacy was such a fundamental obligation in this type of employment position that the plaintiff’s action could be seen as causing a “fundamental breakdown of the employment relationship.”

In dissenting reasons, Justice Donald included this sentence:  “What is absent from the trial judge’s reasons is an explanation why a single instance of a breach of the privacy rules should end a 21 year career….The record does not show deceit, fraud, theft or stealth.  The misconduct was serious, as the judge found, but her analysis of the proportionality of the penalty left out a vital factor.”  Justice Donald would have allowed the appeal and remitted the case to the trial judge for an assessment of damages.

The McKinley decision has been cited many times and has been interpreted in different ways.  In some cases, it has been used to help dismissed plaintiffs obtain damages where many people might find the results to be puzzling and overly sympathetic.  In other cases, courts have limited the application of McKinley to minor or more limited instances of dishonesty or misconduct.

Ultimately, each judge applies his or own sense of “proportion” and reasonableness.  Here two appellate court judges held that one instance of this type of dishonesty was cause for dismissal, whereas one judge disagreed.

For plaintiffs and for employers these are risky cases.  They are fact driven.  But they also depend on sensibilities of the particular judge hearing the case as well as the appellate court panel that might hear the case if it is appealed.

For Susan Steel, this was a very costly and time consuming ordeal.  The Court of Appeal decision was released in 2015, some seven years after Ms Steel was dismissed.  Ultimately, she has been awarded nothing after 21 years of employment and may well have incurred significant legal fees.  The case is a reminder of the high stakes of pursuing just cause litigation where an undisputed instance of improper conduct is involved.

 

Use of Summary Judgment Motions in Dismissal Cases

What are summary judgment motions?  Are they effective in wrongful dismissal cases?  A recent decision of the Ontario Court of Appeal in Arnone v. Best Theratronics Ltd. has provided some helpful guidance for those who would like to use this process.

A summary judgment is a motion for judgment that bypasses the need for a trial.  It can be used where there is no “genuine issue” that requires a trial.  It can often allow parties to save time and legal costs and has been used quite often in Ontario more recently in non-cause wrongful dismissal cases.

The case involved a 53 year old employee who was dismissed without cause after 31 years.  After the parties could not come to a mutually agreeable severance arrangement, the employee sued for wrongful dismissal.  Rather than proceed to a trial, he brought a summary judgment motion in the Ontario Superior Court.  Although this process allows parties to bypass some of the more expensive procedures in other litigation cases, including extensive examinations for discovery, motions and a trial, it can still be a costly process.  Here there were cross examinations on affidavits filed in preparation for the summary judgment.

The motions judge hearing the case initially made a number of findings and awards that were challenged on appeal to the Court of Appeal.  For purposes of this note, I wanted to highlight some key findings of the Court of Appeal, which are relevant and helpful to future litigants.

1.  Summary Judgment is a Great Process for Without Cause Wrongful Dismissal Cases

The Court of Appeal had little trouble concluding that there were no “genuine issues requiring a trial.”  It noted that “a straight-forward claim for wrongful dismissal without cause, such as the present one, strikes me as the type of case usually amenable to a Rule 20 summary judgment motion.”  The defendant tried to resist the motion by arguing that it was unclear whether the plaintiff was a customer service specialist or a manager.  The defendant argued that this issue required a trial.  The Court of Appeal held that there was no issue requiring a trial.  It also noted that, in any event, “character of employment” is a “factor of declining importance.”  In other words, the factors that are far more important to consider include a dismissed employee’s age and length of service rather than the actual position that the person held.

2. Reasonable Notice

The motions judge awarded the plaintiff a notice period of 16.8 months since that was the amount of time that the plaintiff needed to bridge his pension.  The Court held that this was an incorrect approach.  However, the Court increased the notice period to 22 months, upholding the alternate finding that the motions judge had made.  The defendant argued at the Court of Appeal that the notice period should have been 14.4 weeks.  This position was roundly rejected and the Court of Appeal held that 22 months was “within the acceptable range of notice periods for employees in circumstances similar to the plaintiff.”

3.  What About Mitigation?

The Court of Appeal confirmed that any money earned by a dismissed employee during the applicable notice period is to be deducted from the amount that the employer is ordered to pay for the applicable notice period.  There is little new here as this is a statement of well settled law.   If the plaintiff starts earning a higher income during the applicable notice period, this decision suggests that the plaintiff could actually lose money by having a longer notice period.  However, the notice period in this case ensured a full pension for the plaintiff.

4.  Pension Benefits

Dismissed employees are entitled to the “present value of the loss of pension benefits during the notice period.”  This calculations should be performed by an actuary.  In this case, the assessment of $65,000 as the pension loss by an expert actuary was not challenged.

There were two other issues in this case that are less commonly contested.  The plaintiff was awarded a “retiring allowance of 30 weeks’ pay” based on a company policy that provided a retiring allowance of one week’s pay per year to retiring employees.  The court held that the “retiring allowance” policy did not clearly exempt dismissed employees from receiving the retiring allowance.  This allowance was payable in addition to the other wrongful dismissal damages.

It is also worth noting that the motions court made a cost award of $52,280 on this summary judgment motion.  The cost award was challenged by the plaintiff, who had apparently made an official “Offer to Settle” before the motion that was not seen by the motions court judge after the issue of liability was determined.  The plaintiff wanted to argue that he would be entitled to costs on a higher scale as a result of having submitted valid offers to settle before the motion.  Moreover, there would still be further costs to be awarded as a result of this appeal.  The Court of Appeal agreed that the issue of costs should be reexamined in light of the offers.

The end result is that this was certainly not an inexpensive summary judgment motion.  While it is true that the parties avoided many days of trial, there were still affidavits, cross examinations and submissions.  Nevertheless, the process seems to have worked out quite well for the plaintiff, on paper at least, who was ultimately awarded 22 months’ pay less any amounts earned during that period, a retiring allowance equal to 30 weeks’ pay, pension damages of $65,000 and a significant costs award.

Plaintiffs who have been dismissed without cause and provided with a low ball offer may be well advised to consider a summary judgment motion as the best way to advance a wrongful dismissal claim through the legal process.

 

 

google-site-verification: googlec03888379d3701bb.html