Just Cause for Dismissal? Hard to Prove.

What kind of conduct is just cause for the dismissal of a teacher?  If the teacher has been a long serving employee, the threshold will be quite high, according to a recent Ontario Superior Court decision.

In the case of Fernandes v. Peel Educational & Tutorial Services Limted, the plaintiff was awarded one year’s salary.  Perhaps more significantly, he was awarded the value of disability benefits that he would have been eligible to receive because he became disabled within a short time period after being dismissed.

Mr. Fernandes had been a teacher with Peel Educational Tutorial Services for more than 10 years.  In 2009, the school alleged that Mr. Fernandes had falsified students’ marks and committed “academic fraud” by doing so.  Mr. Fernandes conceded that some of his calculations were incorrect and that there were some issues with his submitted marks.  But he denied his conduct was “fraudulent.”

This case involved a 10 day trial, which featured the evidence of numerous witnesses.  One of the witnesses called by the school was  a “Mr. Zero,” who certainly has an interesting name for a witness in which one of the allegations is that certain students should have been given a mark of “0” for failing to hand in assignments.

In any event, after all of this extensive evidence, Justice Lemon concluded that Mr. Fernandes had been wrongfully dismissed.

The court made some interesting findings including:

  • Mr. Fernandes gave incorrect marks;
  • The marks he gave were late;
  • He allowed students to have overdue assignments;
  • Even though he was a computer teacher, his own computer program did not provide accurate marks;
  • He lied to his employers about how the marks were calculated;
  • He lied to the court about the student presentations were marked;
  • He admitted to falsifying some marks on students’ records.

These are all findings made by the court and appear in the decision.

However, the court also noted that Mr. Fernandes had been employed for more than 10 years and up to these incidents, was considered a “well-regarded teacher.”

Taking into account all of the circumstances and relying heavily on a charitable reading of McKinley v. B.C. Tel (2001) S.C.C. 38, [2001] 2 S.C.R. 161, the court concluded that “immediate termination was not the appropriate sanction for this misconduct.”  The court noted that “the defendants could have fashioned a reprimand and a warning that such conduct, if repeated, would lead to summary dismissal.”   The court awarded Mr. Fernandes one year’s compensation amounting to just over $50,000.

Mr. Fernandes had also sued for $300,000 in “intentional infliction of mental distress.”  This claim was rejected.

However, in addition, he had brought a claim for “long-term disability benefits” for $226,000.  At trial, he demonstrated that he was suffering from severe depression and other related symptoms.  The court held that he became disabled after being dismissed and during the applicable notice period.  The employer was therefore responsible for the full value of the disability benefits.  Given that Mr. Fernandes was 52 at the time of dismissal, this could mean approximately 13 years of LTD benefits, for which the defendant school would be responsible.

It remains to be seen what the Ontario Court of Appeal will do with this case.  Given the findings of the judge, there seems to be significant findings of improper conduct that may well warrant a just cause dismissal.  Although the judge was in the best position to make these findings of fact, the Court of Appeal may well review the court’s conclusion that just cause dismissal was not warranted in the circumstances.  It should provide for some interesting reading if the case is actually appealed and argued.

Irrespective of what ultimately happens with this case on appeal, if it gets there, here are some key points to consider:

1.  Establishing just cause for long service employees is extremely difficult and costly.  Many judges are willing to give plaintiffs the benefit of the doubt, even where serious misconduct is alleged.  Even were there is evidence of some misconduct, courts will consider the whole employment history of a dismissed plaintiff;

2.  Dismissed employees can and should fight employer determinations of “just cause” if there is any reasonable prospect of success and sometimes, these cases can sometimes even be won where the prospects look grim;

3.  Dismissed employees are entitled to insurance benefits during any applicable notice period.  If they are cut off from these benefits by their employer and then later found to have been wrongfully dismissed, employers will be responsible for the full value of the benefits.  This means that if an employee dies during a notice period, the employer will be responsible for the full value of the life insurance policy that had been in effect.  If the employee becomes disabled, the employer will be responsible for the full value of the disability benefits.  Employers need to consider liability very carefully before cutting of an employee from all benefits when making a termination decision.

 

 

 

Less Money for Dismissal in Tough Economic Times?

Should a dismissed employee be entitled to less severance when the employer is facing tough economic times?  This was the question facing an Ontario Superior Court judge recently in Gristey v. Emke Schaab Climatecare Inc, a case released on March 20, 2014.  According to the trial court judge, the answer was yes.

The plaintiff had worked in residential gas installation for 12 years for the defendant.  He was earning an income of approximately $55,000 annually, though it fluctuated depending on the availability of work.  He was dismissed after 12 years of service on a “without cause” basis.  A number of other employees were also dismissed at the time.

At the time of dismissal, the defendant offered to pay the plaintiff a total of 8 weeks’ pay, which was the minimum that would have been owed under the Ontario Employment Standards Act.  It asked for a signed release.  The plaintiff refused and brought a claim for wrongful dismissal.  The defendant paid out the 8 weeks’ pay.

At trial, the defendant argued that business was slow.  It took the position that the plaintiff would have have worked a very small number of hours if he had not been dismissed and that his damages would have been reduced to a very nominal amount.  The trial judge rejected the argument that there was sufficient evidence to draw this conclusion.  In other words, the court concluded that the plaintiff still would have earned an income if he had not been dismissed.

However, the trial judge expressly accounted for tough economic times in assessing the notice period.  First, the judge concluded that the appropriate notice period should have been 12 months.  This is probably a reasonable conclusion, based on all of the common law factors.  The plaintiff was 52 when he was dismissed.  Looking at all of the common law factors, including length of service, position, age, availability of comparable work and other relevant factors, a 12 month award would have made sense.

Justice Conlan then proceeded to reduce the plaintiff’s award by four months’ pay because of the “market and economic health of the [defendant]” at the time of dismissal.  In doing so, the court relied on the decision of Bohemier v. Storwal International, (1982) CanLii 1764 (Ont S.C.J.), a decision that had been affirmed by the Ontario Court of Appeal in 1983.

The Bohemier decision held that a notice period should be fair to both the employee and the employer.  However, as it has been interpreted subsequently by other court decisions, it did not say that the plaintiff’s notice period should be eviscerated because the employer is facing tough economic times.  In fact, if times are really tough, the dismissed employee will have a more difficult time finding alternate employment and could require a longer notice period.

It may be that Justice Conlan was swayed in this particular case by the fact that the plaintiff’s hours fluctuated and there might have been less work over the notice period.  Or perhaps the court was not fully convinced of the plaintiff’s mitigation efforts, even though the court expressly concluded that the plaintiff had mitigated his damages satisfactorily.  In any case, the court concluded that 12 months’ severance was too much for the plaintiff and reduced it to 8 months, expressly relying on the fact that the defendant was facing difficult economic times.

It remains to be seen whether the plaintiff will appeal this decision.  the amount at stake would be approximately $20,000.  There could also be significant legal costs at stake, depending on what types of offers to settle, if any, were exchanged between the parties before the trial.  The Ontario Court of Appeal does not like to “tinker” with notice periods if they are in a “reasonable range.”  However, the plaintiff could try arguing that the court made an error in principle by placing an overly significant emphasis on the economic challenges facing the defendant.

If this decision stands, it would be a very helpful piece of ammunition for defendants facing tough times.  Defendants can use this argument to limit severance liability in tough economic times.

For plaintiffs, it can be a real double whammy.  The employee is let go in difficult economic times, where it may well take longer to find work. Then the plaintiff faces a reduced notice period because of those same difficult economic times.  There seems to be a problem with this logic…

We will watch to see what happens with this case and how (if at all) it is applied.

Constructively Dismissed Employee Not Required to Return to Work

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

 

Not My Pot: Wrongfully Dismissed Courier Wins…

A wrongfully dismissed courier has won a lawsuit at the Saskatchewan Court of Appeal.  In Hollander v. Tiger Courier Inc. (2014) SKCA 7, the courier was dismissed when a package of marijuana was delivered to the office addressed to him.  He claimed it was not his package and he had no knowledge of it.  The employer called the police but no charges were laid.  However, the employer terminated the courier and alleged that it had just cause.  It was not clear from the decision what happened to the pot, but presumably the police confiscated it.

The case had an unfortunate twist.  The courier had worked as an employee with the company for ten years.  But after that, he had become an “independent contractor” and worked in that capacity for three years before this incident occurred.  He had signed an independent contractor agreement that provided for thirty days’ notice of any dismissal (without cause).

When the courier was wrongfully dismissed, he sued for breach of contract but he did not sue for wrongful dismissal.  He did not claim that he was really an “employee,” nor did he directly challenge the independent contractor agreement, although he claimed other damages flowing from breach of contract.  If the courier had been able to challenge the contract and prove “wrongful dismissal,” he might have been awarded a year’s pay or more.

However, he only alleged “breach of contract.”  As a result, the courier put himself in a situation where if were to win his lawsuit, he would win thirty days’ pay, as required under his contract.  If he were to lose, he would get nothing.

At trial, the lower court judge held that the package of pot, that had been sent to the courier from his brother in Vancouver, was “clear evidence of illegal or criminal conduct” and this would justify termination, even though no criminal charges were ever laid.

The Court of Appeal disagreed.  It overturned this finding and ruled that there was no clear evidence that the courier himself had engaged in any criminal or other misconduct.  Just because a family member delivers a package of illegal drugs to a person’s workplace, this does not mean that the person has engaged in any improper activity..or at least there is no clear evidence of such misconduct.

However, the Court of Appeal went on to award damages of only thirty days’ compensation, which amounted to the grand total of $2,973.70.   This was really a pyrrhic victory for the plaintiff.  He lost his courier job and got only 30 days’ compensation after 13 years of work.  He also lost the pot, which may well have been worth close to the amount of the judgment.  And we haven’t even mentioned legal fees…

 

 

 

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.

 

 

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