Just in time for the new millennium, Canadians have received some encouraging economic news that will undoubtedly boost perceptions of job security. Unemployment in Canada has reached a low of 6.9%, the lowest jobless rate in decades. The Canadian economy has been booming, leading to the creation of almost 400,000 new jobs over the past year. Many employers have begun hiring for new full-time positions after years of cutbacks.

The U.S. economy has been fueling much of this growth. In the U.S., the jobless rate hit 4.1%, a remarkable low. Although these figures are calculated differently in the U.S., the low unemployment rate is quite impressive.

The recent unemployment rates sound promising but they do not provide the complete picture. Even in times of relative prosperity, more than one million Canadians are still without work. For those out of work, fewer are eligible to collect Employment Insurance benefits as a result of the 1997 changes enacted by the federal government.

For those who are working, signs are encouraging. Canadians are far more optimistic about their jobs than they were in the mid-90s. Although some Canadians feel that their skills are underutilized, recent studies show that Canadians have a greater sense of security about their jobs than do their American neighbours.

One of the primary reasons for the higher job morale in Canada is the legal system. Canadians in non-unionized jobs know they will be given reasonable notice of termination unless their employer can show “just cause” for dismissal. Although there is no set formula to calculate the amount of notice required, the law provides some assurance of fair treatment.

U.S. employment law is completely different. In most U.S. States, employees are employed “at will.” They can be let go at any time without notice or pay, for any reason. Although there are many ways around this general rule, the end result is that American employees can usually be dismissed with much less notice or pay than their Canadian counterparts.

While Canadian employment law appears far more compassionate than U.S. law, other countries provide even greater protection for employees. Many Canadians do not realize that, even at the end of the twentieth century, an employer does not need a reason for firing an employee, as long as proper notice is provided. This comes as a great surprise to many who have been terminated. Even though they have been offered a package, and maybe a reference letter, they cannot understand why they must suddenly begin a job search.

Jack Wallace faced this difficult life experience. He worked for the United Grain Growers for 14 years. He was the top sales person in the company. Without any justification, the company fired him and then refused to provide him with a fair settlement. Wallace’s case went all the way to Supreme Court of Canada and has become one of the most important decisions of the 1990s.

The Supreme Court of Canada rejected the idea that Canadians have an unconditional right to be treated fairly by their employers. Companies may make the decision to terminate for any reason. As long as there has been no discrimination, the decision cannot be questioned. The only requirement is that the company pays the employee the proper amount and treats the employee fairly during the dismissal process.

Canadians can take some comfort in having a greater sense of job security than Americans but many still feel that the system falls short. For example, the United Nation’s Universal Declaration of Human Rights includes the right to work and the right to protection against unemployment.

Some Canadians have legal protection that approaches this U.N. standard. Unionized workers can only be fired for just cause. Otherwise, job security increases over time with seniority. Although Unionized employees face difficulties such as strikes and labour disputes, a unionized job includes a higher measure of protection.

Canadians who work in federally regulated industries such as banks or airlines also have special protection. They can file an unjust dismissal complaint under the Canada Labour Code. After a hearing, they can even be returned to their old positions. In some ways, this also approaches the U.N. standard.

For the majority of Canadians, there is no right to a job. Job security depends on many factors such as performance, the economy and the good faith of the employer. Canadians are still vulnerable. After years of loyal service, employees may still be dismissed suddenly for no reason other than “reorganization.” This uncertainty leads to ever increasing workplace stress.

The level of legal protection we enjoy greatly affects our sense of job security and our stress levels. As we move into the new millennium, legal protection of job security will evolve. Fairness and good faith must become part of every employment relationship. This dramatic change will enhance our job security and elevate our overall sense of self-worth.

Keays had worked for Honda for 11 years before being diagnosed with Chronic Fatigue Syndrome. He was off work for a period of time on disability benefits and then returned. He continued to require frequent absences from work. Honda followed up by asking Keays to meet with its own medical specialist. Keays refused because Honda would not provide an explanation of the specialist’s purpose, methodology and parameters of the intended meeting. Keays was worried that Honda was simply trying to use its own favoured doctor to assit Honda to force Keays back to work without a proper detailed review or understanding of the circumstances. After Keays continued to refuse to meet with Honda’s specialist, he was dismissed by Honda.

At trial, Keays was awarded 15 months pay for wrongful dismissal. The Trial Court also held that Honda had committed acts of discrimination, harassment and misconduct. It increased the notice period to 24 months and awarded punitive damages of $500,000, which would have set a new standard in Canadian employment law decisions. The Court of Appeal of Ontario reduced the punitive damages awarded to $100,000. Honda appealed to the Supreme Court of Canada.

In a 7-2 decision, the Supreme Court of Canada eliminated the bad faith damages and the punitive damages that had been awarded to Keays. It upheld a finding that Keays had been wrongfully dismissed and was entitled to 15 months’ compensation. However, it eliminated all other damages that Keays had been awarded at the Trial Court level.

The Keays v. Honda decision is very significant because it has redefined the damages that are available to dismissed employees. Since the Supreme Court of Canada’s decision in Wallace v. United Grain Growers in 1997, Canadian Courts have been awarding damages for bad faith conduct by employers in wrongful dismissal situations. Courts have awarded these damages by extending the notice period to which employees are entitled – where employees are treated in a bad faith manner. In Keays v. Honda, the Supreme Court has changed Wallace and has redefined when damages will be available.

The first noteworthy point is that the Supreme Court of Canada extensively reviewed the facts of the case. Although the Supreme Court has stated on numerous occasions that its job is not to review factual details of cases, Keays v. Honda is very much a decision in which the Supreme Court scrutinizes almost all of the factual findings made by the Trial Court and proceeds to reverse the Trial Court’s findings and conclusions. The Supreme Court defines the Trial Court’s findings as “palpable and overriding”. In using this wording, the Supreme Court cloaks itself with the judicial prerogative to make entirely different factual conclusions than those made by the Trial Court.

Essentially, the Supreme Court took a very different view of the manner in which Honda had treated Keays. It held that none of the “four foundations” for bad faith damages as held by the Trail Judge were valid. The Supreme Court went through its interpretation of the facts in detail. It concluded that Honda was trying to rely on expert advice and was not being “callous” or insensitive. It rejected the Trial Judge’s conclusion that Honda had set Keays up for failure or that Honda was taking a “hardball” approach. It also rejected the Trial Court’s conclusions that Honda had decided to stop accepting medical notes from Keays as a reprisal against Keays for seeking legal advice. Finally, the Supreme Court rejected the notion that Keays’ disability after dismissal was caused by the manner of his termination.

Once the Supreme Court came to such a dramatic reversal of the factual findings and conclusions of the Trial Court, Keays’ legal case had been eviscerated. With the Supreme Court’s factual findings that Honda had acted appropriately, there was no remaining basis for considering or discussing bad faith or punitive damages. Even so, the Supreme Court proceeds to analyze these types of damages and makes pronouncements that are intended to apply to future cases.

The Supreme Court makes a number of points:

Damages for mental distress should only be awarded where they were contemplated by the parties at the time the contract started. In most cases, employees expect to be dismissed eventually, so mental distress damages for hurt feelings should not be awarded simply because the employees have been dismissed.

Employers still have an obligation of good faith and fair dealing in the manner they dismiss employees. If employers breach this duty, then employees are entitled to damages – as long as they can prove that they have suffered actual damages. According to the Supreme Court, employees are no longer entitled to an extension of their notice period simply because of this type of bad faith treatment.

Punitive damages are only to be awarded where the acts by the employer are “so malicious and outrageous that they are deserving of punishment on their own”. Breach of the Human Rights Code, for example, is not sufficient on its own to warrant an award of punitive damages.

The crux of Keays v. Honda is spelled out by Justice Bastarache who accepts that the need of employers to “monitor the absences of employees who are regularly absent from work is a bona fide work requirement in light of the very nature of the employment contract and responsibility of the employer for the management of the workforce”.

The majority decision of the Supreme Court is devoid of any language that is empathetic to employees. Much like the Supreme Court’s other 2008 decisions in RBC and Hydro-Quebec, the majority focus is on the need for employers to be able to run their businesses efficiently. The Supreme Court in Keays v. Honda makes it dramatically more difficult for dismissed employees to obtain damages for bad faith – and even more difficult to ever obtain punitive damages.

Justice Lebel delivers a partial dissent to the reasons of Justice Bastarache. Surprisingly, Justice Abella sides with the majority even though she was the lone dissenting voice in both Evans and RBC. Only Justice Fish supports Lebel in the dissenting view. Justice Lebel concludes that the extended damages that had been awarded to Keays at the Trial Court level should have been upheld. Justice Lebel notes that the trial in this case lasted 30 days. The Trial Court heard extensive evidence and was best positioned to make factual findings and conclusions. Justice Lebel disagrees that the Supreme Court should overturn so many findings of fact that were “generally supported by the evidence”.

The most significant gap between the majority and the minority decisions in Keays v. Honda is the extent to which the judges are prepared to review and wholly revise factual findings and conclusions. Since Bastarache and Lebel come to such contrasting views of the factual background, it is not surprising that they have completely different approaches to the applicable law afterwards.

The minority agrees with the majority’s approach to redefining bad faith damages. However, the minority would have upheld the damages for bad faith that were awarded by the Trial Judge on the basis of Honda’s conduct and the harm it caused to Keays. The minority would have also left the door open for litigants to argue that breaches of human rights legislation can lead to awards of extended damages.

Conclusion – Effect of Keays v. Honda Yet to be Determined

The full effect of Keays v. Honda remains to be determined. The Supreme Court has dramatically altered the existing landscape. Courts should no longer award simple notice period extensions as a result of breach of the duty of good faith. But damages for breach of good faith are still available. In fact, it is arguable that the amount of damages that can now be awarded for breach of the duty of good faith may be much higher than the amounts that were previously being awarded. However, to get these damages, dismissed employees will have to have evidence to show that they have suffered losses as a result of their former employer’s actions.

Here are some of the key things to look for as part of a “reasonable” severance package.

Severance Pay or Salary Continuation:  It goes without saying that the most important component is usually the severance itself.  Employers can choose to pay over time, with or without some kind of claw back (or “mitigation”) clause, or in one or more lump sums.  In most cases, this is the most important part of the severance package and in many cases, different components are negotiable.  The severance must, at a minimum, include compensation for the relevant provincial employment standards amount.  For example, in Ontario, the severance package must provide for notice pay under the Ontario Employment Standards Act and severance pay, if applicable.   If you are Federally regulated employee (someone who works in a bank, telecommunications company, tv network etc.,) the Canada Labour Code would apply instead of the provincial legislation.  Beyond the employment standards amount, employees can negotiate the length of time, the trigger for mitigation, the payment schedule or other terms.  This is all aimed at ensuring that the employee is compensated as required by Ontario common law, which itself, can vary wildly for each employee.  This is the area on which appropriate legal advice should generally be obtained.  The period of time for which the employee is being compensated is generally called the notice period or severance period.  

Bonus:  Dismissed employees should usually be compensated for accrued bonus for the current year (if there has usually been an annual bonus), as well as bonus for the severance period.  Many employers are quite reluctant to include the prospective bonus as part of the severance package.  If the employee has been getting the bonus every year and can show that he or she would have continued to get a bonus if employment had continued over the severance period, the bonus should be payable.  There may be wording in the original employment contract that overrides this entitlement, but it is often worth trying.  If there is wording in an employment contract or agreement that deals with the bonus, this will be something that needs to be properly assessed and considered. Commissions and Variable Pay:  For dismissed employees with fluctuating pay, the test is what the employee would have reasonably earned over the severance period.  Of course all accrued amounts are owed to the employee, subject to the terms of the employer compensation plan.  Going forward, most dismissed employees should be paid severance on the basis of overall estimated earnings, not just base salary for the entire notice period.

Benefits, RRSP and Pension Contributions:  Severance packages should include arrangements that compensate employees for all components of their compensation.  Generally, all benefits, including extended health benefits, STD and LTD insurance, RRSP contributions, pension contributions, and other perquisites should be continue during the notice period – or the employee should be compensated for the value of any items that are not being compensated.  For example, most insurers will not allow employers to continue LTD insurance plans.  Employees should request compensation for the loss of this employment benefit.  Many employers will agree to include that compensation in the severance package.  Pension losses can be a huge component of a severance package, particularly if the employer had a defined benefit pension plan.

Car or Mileage Allowance:  If the employee had the use of a company vehicle, the general rule is that the employee is entitled to be compensated for the personal use component of the vehicle.  In other words, if the employee used the vehicle for personal use 30% of the time (and showed that on his or her taxes), employers can be required to provide compensation for this loss during the notice period.  Some employers will be more flexible in this area and will either provide employees with the use of a vehicle over the notice period or pay a reasonable estimate of the real costs of the vehicle.

Outplacement or Retraining:  Strictly speaking, an employer is not necessarily required to provide outplacement or retraining as part of a severance package.  However, an employer can be required to pay for the employee’s reasonable costs of “mitigation” if the employee incurs costs in trying to find other work.  As a result, many employers will provide direct outplacement arrangements at their expense.  Dismissed employees may be able to negotiate the type of arrangements that are being provided, the organization, location, and value of such services.  As well, dismissed employees can often arrange to have an employer pay for some upgrade or retraining courses if that will help the employee find new employment.  Though some of this may sound expensive for employers, overall, providing these arrangements may help the employer reduce the time period that it will take the employee to find new work and that might save the employer some money.

References:  Employers are not strictly required to provide helpful references though some judges may look at this down the road and award extra damages for an employer’s failure to do, even if the judge does not state that expressly.  Employees should ask for a mutually agreeable reference and an agreement that any reference requests will be answered in a manner that is consistent with the reference letter or summary provided.

Legal and/or Accounting Fees:  Most employers should be prepared to make some kind of reasonable contribution towards the legal fees of a dismissed employee.  Once a lawsuit has been commenced, the employer can be required to make these contributions if the lawsuit had merit.  Employers will often try to avoid a lawsuit by including payment for some of the legal fees in a negotiated severance package.

Waiver of Non-Competition Clauses:  Some employers may be prepared to waive or modify certain non-competition terms or clauses that were contained in a dismissed employee’s employment contract.  This can often be a tricky conversation.  It is usually more likely that employers will agree to modify a non-competition clause (that might have been unenforceable anyways) than to modify a non-solicitation clause, that may actually protect the employer’s business.  Telling an employer that you would like to go and take their clients’ business is not usually the best way to get a great severance package.  But telling an employer that you won’t be able to find any work because of an overly broad non-competition clause may be viewed as reasonable.

Other Perquisites:  Employers will sometimes provide for items like health club memberships, personal cell phone costs, professional memberships, private annual physical examinations, employer discounts and other items.  These items should be reviewed and considered individually.  Employees will also need to weigh the value of pursuing an item that may not be significant in comparison to the other items.

General Damages:  Most wrongful dismissal damages are fully taxable as if they were income.  The withholding rate may be lower (i.e. 30% if the amount is over $15,000) but at the end of the year, the employee will have to pay tax on the full annual marginal tax rate.  An exception is if there is a basis for some of the damages to be paid as “general damages,” which are non-taxable.  This, fortunately, is not applicable for most dismissals. I say fortunately because it would be a harsh world indeed if every employer who dismissed someone had also acted in a way that would warrant general damages.  Nevertheless, conduct that violates human rights legislation or  other “bad faith” conduct can warrant payment of general damages. It is very rare that employers will actually negotiate and pay these damages without an actual lawsuit or human rights complaint but it does sometimes occur.

These are some of the items to look for in a severance package, though entitlements to these items will really depend on the terms of the person’s employment, the length of service, the type of position, the existence of any employment contract or offer letter and a range of other factors.  A key factor is the likelihood of the dismissed employee finding new employment since all of these items are only really payable if they are arranged initially, or if the employee is actively looking for work and unsuccessful.  Dismissed employees who find new employment quickly may only be entitled to the applicable employment standards minimums.

There is no set formula for exact severance pay calculation.  Despite the fact that some lawyers might claim there is a very exact number if you plug a few variables into a “severance pay calculator,” that only produces a rough average, which may not even be statistically significant.  In most cases, there is a range, sometimes a fairly wide range.  Employees need to consider all of the different aspects of the proposed severance including which items are being paid and which are not, whether the severance is being paid as a continuance or a lump sum, and other related factors.

This list of items is provided only as a guideline for things that employees should consider when looking at a severance package that has been proposed.  In most cases, particularly when a number of different items are listed, employees should make the tax-deductible investment of obtaining proper legal advice from a qualified employment lawyer.

Linda Fraser had worked for UBS for more than 20 years.  She became ill after a holiday and was off work for six months on short term disability leave.  She tried to return to work but was unable to do so due to her illness, which had become more severe.  She went off again on short term disability leave for another six months.  After her second leave, Ms Fraser was off for a two year period on long term disability leave.

Most LTD policies change after two years.  For the first two years, Ms Fraser was required to show that she could not perform the duties of her employment, meaning the specific job that she had with UBS.  After two years, she was required to show that she could not perform the duties of any gainful occupation.  The insurer cut Ms Fraser off benefits when the definition changed and Ms Fraser sued the insurer to challenge that decision.  The lawsuit was totally separate from her wrongful dismissal case.

From UBS’ perspective, Ms Fraser’s disability coverage ended even though she was suing the insurer.  She was off work and no longer in receipt of benefits for a period of five months.  She did not keep UBS informed about her status.  After five months, UBS wrote to Ms Fraser and stated that her employment was being terminated.  It paid her out 8 weeks’ notice pay and 22 weeks’ severance pay under the Ontario Employment Standards Act and continued her extended health benefits for three more months.  Ms Fraser did not accept this decision and sued for wrongful dismissal.

At trial Justice Wein of the Ontario Superior Court reviewed the law of “frustration” and concluded that it applied in this case.  Ms Fraser was found to be “permanently disabled.”  The Court held that she is “totally disabled and her disability is permanent such that she will never be able to work again.”  As a result, the employment contract had ended and UBS was not required to provide any further payments.  The wrongful dismissal lawsuit was dismissed.

For employees in Ontario, the case is a reminder that employees have an obligation to keep their employers updated as to their status when they are off on a sick leave.  If disability benefits are cut off, they must provide information to their employers about their proposed actions.  If it becomes clear that the employee will not be able to return to work again, the employer may be able to conclude that the employment relationship has ended.  This will not necessarily lead to a viable wrongful dismissal lawsuit.

For employers, this type of decision is rare.  If the employee can show that he or she simply required more time to recover and kept the employer informed, the employer will not necessarily be able to rely on “frustration.”  The situation may also be different where the employee continues to receive LTD benefits.  Employers looking to rely on “frustration” will need to be reasonably sure that the employee will not be able to return to work for the foreseeable future.

The dismissed employee, Syed Hussain, was an assistant warehouse supervisor.  He had worked for the defendant Suzuki Canada for almost 36 years.  This had been his only full time job after immigrating to Canada from India in 1974.  Hussain was almost 65 at the time he was dismissed in February 2011, due to corporate restructuring.

After losing his job, Mr. Hussain took a period of time to get over the shock and to organize his efforts to find new employment.  He then applied to some 27 positions by July 2011, though his efforts were unsuccessful.

Justice Roberts, writing on behalf of the Court, noted that 24 months is usually the high end of  wrongful dismissal awards.  However, the Court held that Mr. Hussain was entitled to 26 months’ compensation due to the particular factors of his situation including his lengthy service, his age and other related factors.  The Court held that Mr. Hussain was entitled to benefits, RRSP contributions, and a discretionary bonus throughout the entire 26 month period.

Even though this wrongful dismissal case was decided only 10 months after Mr. Hussain was dismissed, the Court still awarded Mr. Hussain 25.5 months’ compensation and reduced the total notice period by only 1% for the contingent possibility that Mr. Hussain could find new employment over the remaining 16 months.

Finally, the Court ordered Suzuki Canada to reimburse Mr. Suzuki for almost $20,000 in legal fees.

This decision follows on the heels of the Ontario Court of Appeal decision in Di Tomaso v. Crown Metal Packaging, a case in which a long service mechanic was awarded 22 months’ notice in June 2011.

It is becoming quite evident in Ontario that long service employees are now entitled to notice periods at the higher end of the range, regardless of the type of position that the person held or the salary level that the employee enjoyed.

This trend is good news for Canadian employees, particularly long service employees who are not employeed in upper management positions.  Although for many years, the longest notice periods were usually awarded by courts only to the most senior employees in wrongful dismissal cases, that is now no longer an accurate summary of the law.  Age will still be a relevant consideration.  Employees who are dismissed after 20 years of service but are still in their 40’s may not be awarded the maximum amounts.  But dismissed employees in their 50’s and 60’s with many years of service will now all have a chance to obtain compensation of close to two years’ pay.

This questions was answered recently by the Ontario Court of Appeal in the case of Bowes v. Goss Power Products Ltd., a decision issues on June 21, 2012.

Peter Bowes had a written employment agreement with his employer.  The contract stated that he would receive six months’ notice or pay in lieu of notice if his employment was terminated without cause “prior to the completion of forty-eight (48) months from commencement.”  The contract said nothing about mitigation or about timing of the payment.

Mr. Bowes was dismissed without cause and he was able to find new employment after only two weeks.  His employer paid him out three weeks’ notice as required under the Ontario Employment Standards Act, but then refused to pay out the rest of the amount specified in the employment agreement.  Mr. Bowes was forced to file a lawsuit.  He was unsuccessful initially and then appealed his case to the Ontario Court of Appeal.

The Court of Appeal reviewed the case law dealing with mitigation of damages in these circumstances.  It emphasized that an employer and employee can fix an enforceable notice period which provides some certainty to both parties.  It may well be a lower amount than the employee would have otherwise been entitled to receive under common law.  However, by doing so, the employer gives up the right to the benefit of mitigation if the employee successfully mitigates damages.

In particular, the Court of Appeal stated the following, quite emphatically:

1.  “A fixed term of notice or payment in lieu is not equivalent to common law damages for reasonable notice.” and

2.  Payment in lieu of a fixed term of notice, being liquidated damages or a contractual amount is not subject to a duty to mitigate;

The Court of Appeal stated that it is unfair of an employer to draft an employment agreement with a set severance term, that is less than the employee might have had under the common law, and then try to get out of it at the point of dismissal by informing the employee “that future earnings will be deducted from the fixed amount.”

The Court decision, written by Chief Justice Winkler, on behalf of a unanimous Court of Appeal, concludes:

“Where an agreement provides for a stipulated sum upon termination without cause and is silent as to the obligation to mitigate, the employee will not be required to mitigate.”

In the present case, Mr. Bowes was awarded the full six months’ pay, as specified in employment contract, despite the fact that he found other work quickly.

This is a very important decision for Ontario employees as it clarifies an area in which there had been mixed case law.  The Ontario Court of Appeal has stated very clearly that employers must pay out fixed contractual severance amounts, even if the dismissed employee finds new employment quickly – unless the employment agreement very clearly states otherwise.

Employers can still use contracts that include mitigation provisions but these provisions must be included in the original employment agreement and must meet all of the other normal conditions of enforceability.

The Ontario Court of Appeal released its decision on August 17, 2012 in the case of Bennett v. Cunningham, as the third (and maybe final) of a series of progressively higher Court judgments in this crazy dispute between two family lawyers.  In doing so, the Court of Appeal upheld a Superior Court decision from 2006 in which Ms Bennett’s wrongful dismissal law suit had been dismissed.  After such a long, protracted dispute over a relatively small amount, it appears that the lawyers for both sides are the big winners.

The plaintiff, Dawn Bennett, was a junior family lawyer with limited experience. She began working with the defendant, Karen Cunningham, as an associate lawyer in a small law firm in Mississauga in the summer of 2002.  The arrangement was a commission based arrangement where Ms Bennett would be paid a percentage of amounts that were billed and collected.  Ms Bennett would work regular hours, in an office provided by Ms Cunningham and would have minimal expenses to look after even though she would be treated as an independent contractor.

Shortly after joining the firm, Ms Bennett had a number of complaints about the way the office was run.  According to the Trial Court Judge, some of these issues were addressed.  However, Ms Bennett was not actually getting paid for fees that she was docketing and billing, which was causing her financial difficulties and she became quite concerned about this.

Ms Bennett decided to write a four page letter which she handed to Ms Cunningham on December 21, 2002, just as Ms Cunningham was leaving for a vacation.  She also sent a copy by registered mail, even though she knew that Ms Cunningham would be away.  The letter included a litany of complaints, including a suggestion that Ms Cunningham was “dishonest and negligent” in her docketing practices.

Ms Cunningham returned from vacation and fired Ms Bennett for “just cause.”  Ms Bennett sued for wrongful dismissal.

The parties could not resolve the dispute and conducted a six day trial.  They fought over whether or not Ms Bennett was an employee or an independent contractor.  The Trial Court had little difficulty concluding that the relationship was an employment relationship, or at least an “intermediate” relationship and that Ms Bennett would be entitled to reasonable notice if she was dismissed without cause.

They also fought over unpaid commissions owing, although Ms Cunningham eventually conceded that she owed Ms Bennett about $18,000 in billings that had not yet been paid to Ms Bennett.

Neither of these findings was disturbed by the higher Courts.

But the major issue in dispute was wrongful dismissal.  The Trial Court judge held that the relationship had been irreparably damaged by Ms Bennett’s “insolence” and that there was just cause for dismissal.  On appeal, the Ontario Divisional Court, in 2011, overturned that ruling and held that Ms Bennett’s conduct did not amount to just cause.  On further appeal, in the decision released in August 2012, the Ontario Court of Appeal restored the original Trial Court ruling.  It held that the decision of the Trial Court judge was mainly a finding of fact and that the judge was best situated to make that decision.   It held that the Trial Court judge had reviewed the evidence fully and was entitled to draw the conclusion that Ms Bennett’s conduct was sufficiently inappropriate to warrant a “just cause” finding.

It is noteworthy that even if Ms Bennett had won, she would have only been awarded about $17,000 in wrongful dismissal damages because she had found new employment within a few months.  This is what makes it even more bizarre that the parties spent so much time, energy and money fighting over this case.

So after 9 years of this heated dispute, Ms Bennett wound up with an award for about $18,000 in billings owing to her (plus interest on that amount) and some of her legal costs paid for the trial.  On the other hand, she lost her wrongful dismissal case and wound up owing legal costs to Ms Cunningham for the Appeal.  She also wound up with a harsh public decision about her conduct as an Associate lawyer.

The case is really an example of how parties can become involved in a legal dispute in which legal fees amount to far more than the value of what either side can achieve.

More importantly, the case is a very serious warning message to employees who are thinking of writing complaint letters to their employers.  Employees should be very careful not to use incendiary, harsh or accusatory language, especially if they cannot support the allegations they are making.  Employees should be particularly careful not to accuse their employers of “dishonesty,” “negligence” or other forms of inappropriate conduct unless they can really back up these accusations.  Even then, this type of letter should only be a last resort after other ways of addressing problems have been exhausted.

Perhaps, most importantly, employees should run this type of complaint letter by a lawyer first before sending out an ill conceived letter that could very well result in a just cause dismissal.

In a recent case of the Ontario Superior Court, Chevalier v. Active Tire & Auto Centre, a wrongful dismissal case brought by a 33 year employee was dismissed for failure to return to work.

The plaintiff, Earl Chevalier, a service centre manager with Active Tire, was placed on a lay-off with minimal notice and no compensation.  Mr. Chevalier wasted no time in suing Active Tire for wrongful dismissal two weeks after being dismissed.  He claimed that he could not be “laid-off” with no pay  and that this was a constructive dismissal.  In response to the lawsuit, Active Tire wrote to Mr. Chevalier, apologized and asked him to come back to work.  Mr. Chevalier elected not to return to work and instead proceeded with his law suit.

At trial, the Court agreed that Mr. Chevalier had been constructively dismissed.  Active Tire could not just lay him off with no notice after 33 years.  However, the main issue was whether Mr. Chevalier should have been required to return to work in these circumstances.  He argued that Active Tire had tried to “make his life miserable” in the period leading up to his dismissal and he therefore would have had to return to work in an atmosphere of “hostility, embarrassment or humiliation.”

After reviewing the evidence, the Court rejected Mr. Chevalier’s claims.  It held that a “reasonable person” would have returned to work in all of the circumstances.  Mr. Chevalier was not able to demonstrate to the Court that his workplace had become intolerable and he was therefore required to return.

If Active Tire had not called Mr. Chevalier back to work, the Court ruled that he would have been entitled to 16 months’ compensation – the time period it took Mr. Chevalier to find new employment.  However, the result in this case was that he was not entitled to anything and was required to pay legal fees to Active Tire, as well as his own.

This case is an example of the risky nature of wrongful dismissal litigation.  It illustrates the importance of obtaining proper legal advice and following it.  Under current Canadian case law, employees who are dismissed or laid off off must seriously consider an employer’s offer to return to work, if it is an offer made in good faith.  Important points to consider may be:

• Is the offer to return an offer for the same position that the employee held?
• Will the pay and working condition remain the same?
• Is there significant evidence of conduct that is embarrassing or humiliating?
• Does the employee have other employment possibilities?

Dismissed employees should carefully review all of these issues, as well as other related matters, with competent employment law counsel.  Making the wrong decision can be costly and harsh.

Two black men, Christopher Johnson and Nathaniel Claybrooks, brought a law suit against ABC.  They claimed that ABC was discriminating against black people by only selecting white contestants as finalists on The Bachelor and The Bachelorette.  The two shows, combined, have run through 24 seasons.  Throughout that time period, none of the finalists have been black – or any other non-white minority.

The plaintiffs alleged discrimination in the casting process and claimed that ABC was specifically excluding non-white candidates.  They argued that this type of racial segregation in the media “perpetuates racial stereotypes and denies persons of color opportunities in the entertainment industry.”  ABC responded by arguing that the “creative process” in producing any television program is fully protected by the First Amendment and that this also applies to the casting process.

The court sided with ABC and dismissed the lawsuit after hearing a motion to strike out the case.  Here is the court’s conclusion:

“The plaintiffs’ goals are laudable: they seek to support the social acceptance of interracial relationships, to eradicate outdated racial taboos, and to encourage television networks not to perpetuate outdated racial stereotypes.  Nevertheless, the First Amendment prevents the plaintiffs from effectuating these goals by forcing the defendants to employ race-neutral criteria in their casting decisions in order to “showcase” a more progressive message.”

On one level, the court rightly held there should be a reluctance, on the part of any court, to interfere in what could be classified as creative casting decisions.  It would be hard to argue successfully that a broadcaster should have been forced to include more white people in The Jefferson’s or The Cosby Show or more black gangsters in The Sopranos.  It seems quite reasonable for courts to steer clear from scrutinizing the casting and producing processes for most types of entertainment that are content oriented.  To do so would indeed be to limit freedom of expression in a very serious way.

On the other hand, there must be a difference between casting decisions that really are part of the “creative process” as opposed to casting decisions that apply to reality shows, news broadcasts, sports programs and other types of shows.  If, for example, ABC had a policy of only hiring white news broadcasters, would that not be considered discriminatory?  Would that really be considered part of the “creative process” and thereby excluded from judicial scrutiny?  Could American Idol implement a policy of refusing to allow black contestants, as part of the “creative process?”  Perhaps in the U.S., the First Amendment argument relating to freedom of expression would still win out in these cases, though, as a Canadian lawyer, I am not about to draw that conclusion.

But in Canada, freedom of expression does not simply trump equality rights.  The Canadian Charter contains balancing provisions which provide the courts with the jurisdiction to consider competing rights and look at ways of providing meaningful content to both sets of rights.  If this case had been brought in Canada, the framing of it may have been quite different.  Instead of being presented as a case about the discriminatory messaging that the show was allegedly promoting, the case could have been characterized in Canada as one about equality of opportunity for potential contestants and racial discrimination.

It still may not be entirely clear, even in Canada that courts can or should interfere in the creative process of developing television shows or movies and force media producers to produce all, or even some of their content in a non-discriminatory way.  However, there is probably a reasonable argument in Canada, that the mere selection of candidates for a reality program should be conducted in a non-discriminatory fashion unless it can be demonstrated that there is a legally supportable basis for doing otherwise.   Whether or not that was the case with a show like The Bachelor or The Bachelorette is probably something that, in Canada, would have been tested at a full trial or a human rights tribunal hearing rather than being dismissed outright on a preliminary basis.

The recent Ontario Court of Appeal decision in Richards v. Media Experts  is an example of the extent to which a proceeding can become costly and prolonged as a result of a decision to include a personal defendant.

The plaintiff sued the corporate defendant for wrongful dismissal.  She also named her former boss, the executive chairman of the company in a suit for intentional and negligent infliction of nervous shock.

The Ontario Court of Appeal upheld a motions Court decision to dismiss the claim against the personal defendant for two reasons:

1.  The employee had signed an employment contract with a limitation clause, which barred these types of claims from being brought against the company and its officers and directors.  Perhaps surprisingly the Court of Appeal agreed with this argument;

2.  More importantly, the Court of Appeal held that the material facts, as included in the Statement of Claim, showed that the personal defendant was acting on behalf of the company when he fired the employee.  In other words, the allegations of misconduct or improper treatment did not demonstrate that the executive chairman was acting outside of the scope of his employment.  There was an allegation that he was off on a “frolic of his own” but this was not sufficient to show that he was personally responsible.

In dismissing the case against the personal defendant, the Court of Appeal ordered the plaintiff to pay $15,000 in legal costs.

This decision is a reminder that plaintiffs should be very careful in deciding whether or not to sue personal defendants.  The claim must show that the individuals were acting outside of the scope of their employment.  Some examples could include fraud, harassment, conspiracy or other outrageous conduct.  But normally, just because a boss makes a decision to let someone go, that will not be the basis for personal liability on the part of the boss.

The decision also reinforces the importance of employment contracts.  Employment contracts can specify termination arrangements that will be made at the conclusion of employment and can broadly exclude other types of claims.  This case suggests that courts will be quite deferential in upholding these clauses if they are crafted properly.