Thursday, October 11, 2012

Constructively Dismissed Manager Ordered to Pay $50,000 to Employer

I posted about this case in August, but the recent costs award calls for a reprise.

Mr. Chevalier worked for Active Tire & Auto Centre Inc., and its predecessor, for 33 years, for 18 years of which he was a service centre manager in Niagara Falls.  His employment came to an end in 2008, at which time his annual salary was $45,912.

In fact, Active Tire only acquired the service centre in March 2007, and there were some changes to Mr. Chevalier's circumstances, including a reassignment to Welland, a request to reassign him to Brampton, two months (following on the heels of a sick leave) during which he was required to commute to Toronto, and coaching regarding Active Tire's processes.  Mr. Chevalier felt that he was being harassed, and that the coaching was an effort to pressure him to quit - a contention ultimately not accepted by the trial judge, who felt that Mr. Chevalier, though honest and well-intentioned, had become bitter, and that the "significance of various incidents...became magnified and distorted in his mind over time".  Active Tire's conduct, in the trial judge's view, was directed to bring Mr. Chevalier's performance up to Active Tire's own standards, which the trial judge characterized as "almost missionary-like zeal".

On October 31, 2008, Active Tire placed Mr. Chevalier on a purported "lay off".  On November 13, 2008, Mr. Chevalier commenced a wrongful dismissal action against Active Tire.  Active Tire then obtained legal advice and discovered that Mr. Chevalier's position was correct - they were not entitled to lay him off; the layoff constituted a constructive dismissal and breached their obligation to provide him with reasonable notice of termination.  So, a few days after the claim was commenced, Active Tire apologized to Mr. Chevalier and offered him his job back.  Mr. Chevalier refused the offer and continued the action.  He was unemployed for 17 months, and sought over $64,000 in lost income (representing 16 months' pay) and $30,000 in moral damages.

At trial, Active Tire conceded that it wasn't entitled to lay off Mr. Chevalier, and that the layoff was a constructive dismissal, but argued that Mr. Chevalier should have mitigated his loss by taking the job back when it was offered to him.

Following a 4.5 day trial, Mr. Justice Lococo concluded that it was unreasonable for Mr. Chevalier to have rejected the offer to return to work, and dismissed Mr. Chevalier's claim.  He then ordered Mr. Chevalier to compensate Active Tire $50,000 for its legal fees.

Questions Raised by this Case

(1)  Can a laid off manager be taken seriously by his staff?  The judge found as fact that the employer was entitled to insist on its higher standards from Mr. Chevalier, and did so in good faith.  Accordingly, the coaching prior to the lay off wasn't a constructive dismissal.  The judge also found that the lay off was for good faith performance reasons.  But with a manager who has been the subject of coaching, who is bounced around for several months and then laid off and recalled only after he sues, how compatible are the optics with a productive and healthy return to the workplace?

(2)  What about ESA minimums?  For an employee whose employment is ended by the employer in most contexts (and in the absence of wilful misconduct by the employee), including by a constructive dismissal, the Employment Standards Act, 2000 requires the payment of termination pay and, in some circumstances, statutory severance pay.  If Active Tire is required to pay statutory severance pay to eligible employees (which is not entirely clear, but likely), then for a 33-year employee this amounts to 34 weeks' pay.  (Even without statutory severance, the minimum termination pay for such an employee would be 8 weeks.)  It appears that they continued his pay for only one month following the dismissal.

(3)  Would the "reasonable person" really accept an offer of re-employment from an employer whom he is suing for breach of contract?  As a contractor, I can confidently say that, if I was required to sue an ex-client for what I was owed under a contract, I would be reluctant to accept a further engagement from that ex-client at all, and certainly not without having the initial litigation dealt with first.  This isn't the first time the Courts have said that it is unreasonable to refuse re-employment by the employer you're suing, but given that litigation is adversarial, stressful, and causes all sorts of negative emotions between the parties, is it really reasonable to generally expect employees to be able to continue to work for an employer while going through civil litigation against that employer?


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

1 comment:

  1. Update: Chevalier appealed, arguing that the trial judge erred in finding that the refusal of re-employment was unreasonable. The Court of Appeal concluded that the finding was entitled to deference, and - recognizing the result as "unfortunate for Mr. Chevalier" - denied the appeal and awarded the employer another $7500 in costs.