Can Your Employer Unfire You?

There is a new and very interesting case out of the Ontario Superior Court of Justice, Chevalier v. Active Tire & Auto Centre Inc..

As you may recall, Evans v. Teamsters involved a case of an employer terminating an employee, then offering him a fixed term contract to work through the notice period he demanded.  The Supreme Court concluded that his refusal to accept the job constituted a failure to mitigate, so his action failed.  This has had a lot of impact on constructive dismissal cases (i.e. 'Yes, you were constructively dismissed, but you should have stayed in the job anyways'), where there would not be an atmosphere of "hostility, embarassment, or humiliation".

Chevalier is along similar lines.  A manager had been in the job for 33 years, and, after Active Tire took over the workplace in 2007, it made several changes with which he was dissatisfied.  He experienced what he felt was harassment, was transferred to a new location (from Niagara Falls to St. Catharines), was required to work for a period of time in Toronto, and was required to do what he felt was demeaning work.

He was 'laid off' in the face of business difficulties (there were two managers on site, and it was decided that the location could only support one), and he immediately commenced legal action (two weeks after being dismissed).  Active Tire obtained legal advice, was advised that they were not entitled to lay him off (presumably there was no contractual right to do so), and they immediately apologized and offered him his job back.  He declined.

The employer denied having harassed him, and ultimately the judge accepted this, finding that Mr. Chevalier's recollection of events was "magnified and distorted" by his bitterness toward the company.  Active Tire's conduct was, according to the judge, directed toward making him "a more effective contributor as an employee".

The judge considered it relevant, but "not determinative" that Mr. Chevalier had already commenced legal action when recalled to work.

All things considered, the judge ruled, a "reasonable" person would have accepted the job and returned to work.  Accordingly, Mr. Chevalier's action was dismissed.

My Thoughts

The case law backs up the judge's analysis here, but I still question whether or not the result is in the right place here.

I'm not sure that the legal community in general fully appreciates how significant a step litigation is to the general public.  Suing somebody is a big deal.  Being sued is a big deal.  Very few people regard litigation as being simply business, from which they can detach any personal feelings.  Most people think of most commercial transactions as being in good faith, and few people will sign a contract if they expect to have to litigate it.

So I would argue that the fact that litigation has begun should be significant indeed.  (However, it is surprising that the litigation began so quickly in this case.  When I'm representing an employee and the employer has overstepped with something like a suspension or temporary layoff, I would normally start with a demand, putting them on notice of my client's position, and give them an opportunity to get their own legal advice on the point.  Sometimes, depending on the needs of the client, I throw a really slow pitch at first to encourage a recall.  Two weeks...well, it's really fast, and suggests to me that there may have been a "Gotcha!" aspect to the claim, trying to get the litigation moving before the employer could realize its mistake.)

There's also another dimension here.  On the findings of the trial judge, the employer's conduct prior to the termination was mostly within its rights, including disciplinary actions.  However, the layoff was not, and the fact that it followed other discipline - even justified discipline - may not be irrelevant to whether or not the layoff poisons the work environment.  If I discipline you, and then lay you off, the causal relationship is implied.  There may well be other legitimate business considerations at play, but at least the choice of who goes is probably being influenced by disciplinary history.  It sends a message.

This is especially so for a manager, being one of two managers.  It would undermine his authority with the staff, when the employer has clearly sent the message - to him and others - that they don't want him there anymore.

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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.

Toyota Service Manager Should Have Mitigated

Justice Belobaba recently released a decision in the case of Ghanny v. 498326 Ontario Limited, and summed up the case quite concisely at paragraph 1.

You’ve been a valued employee for 18 years. One day you’re told that you position is being eliminated at the end of the month but that another job at a related company is available – the same kind of position with the same pay. You’re upset and not thinking clearly and you turn down the replacement job offer. You sue for wrongful dismissal. You eventually find other work but at a much lower position and salary. When the events are replayed at trial and are viewed more objectively, you realize that you should have taken the offered position, that in failing to do so you didn’t mitigate your losses and your action for wrongful dismissal will probably not succeed.

That's essentially the fact pattern.  The owner of Downtown Toyota acquired a Suzuki dealership and reorganized his staffing, telling Mr. Ghanny that his job as Service Manager was ending, but he could take the Parts and Service Manager job at Suzuki, with the same compensation package.  Mr. Ghanny refused, and commenced a wrongful dismissal action.  His concerns included, among other things, that the Suzuki business was smaller, less secure, and a smaller department that he would manage, and also that he would lose the benefit of his 18 years' seniority.  (It is unclear whether his seniority had any impact other than notice of termination.)  There was conflicting evidence on this point, though - management said that they made it clear that his seniority would be carried over.  Management also insisted that they promised job security.  The Suzuki dealership did close 22 months later, but its employees were absorbed by other related companies.


It appears that the different dealerships were operated by separate (albeit related) corporations.


Justice Belobaba concluded, that, whether this is framed as a wrongful dismissal action or a constructive dismissal action, it had to be dismissed because Ghanny should have mitigated his loss by taking the new position.  He applied the framework at play in cases like Evans and Mifsud, which I have discussed before. See this entry for an explanation of the mitigation framework in these cases.


There's also some very interesting obiter:  After the parties got lawyers involved, the employer's counsel made it clear that the Suzuki job was still open, including accrued seniority.  The employee's counsel responded with conditions:  Downtown Toyota had to guarantee Ghanny's salary and benefits; lost wages and costs to that date had to be addressed; and the plaintiff had to be permitted to continue his law suit.

The employer refused these conditions.  The Court concluded that it was unreasonable for Ghanny to insist on the first two conditions, though the third condition was a "legitimate entitlement and the former employer would have been wrong to insist otherwise".  (Frankly, I'm not sure why one would require A, B, *and* C.  If you're continuing the law suit, you're still chasing remedies A and B.  If you get A and B, you don't need to continue the law suit.)  But the Court considered the initial failure to mitigate to be determinative in any event.

My Thoughts


I've noted in the past that I have concerns about the "mitigation with the same employer" cases.  In essence, it often results in the conclusion that the employer unilaterally implemented changes outside of its rights, but the employee should have accepted the changes anyways.  I feel that this is incoherent, and the tests need to be streamlined:  Either an act is a constructive dismissal, and the employee is entitled to quit and seek damages, or it isn't a constructive dismissal, and the employer was entitled to so act.  None of these analytical acrobatics, finding that an act was a constructive dismissal, but the job was still equivalent for the purposes of mitigation and accordingly the employee should have stayed while seeking new employment.

The simple fix, which makes sense from a first principles approach, is that where a unilateral change by the employer has so modified the employment relationship as to create a constructive dismissal, the changed job must inherently be so different as to render it 'not equivalent', such that the mitigation principle will not require the employee to accept the position.  (Reading the other mitigation jurisprudence, one would think that, if anything, mitigation would permit the employee more flexibility than the constructive dismissal doctrine.)  This could involve moving the constructive dismissal threshold up, or lowering the duty to mitigate.

That being said, I think that this case is probably rightly decided, and yet it still raises similar concerns for me.

First and foremost, this case has to be considered in the same context as the constructive dismissal cases, even though it may not strictly be a constructive dismissal case itself.  Because we're talking about related employers, treating them as being actually different would result in arbitrary distinctions.  So I'm glad that the judge felt that it didn't make a difference.

But the judge goes on to note, also in obiter, that even had he believed that Ghanny's seniority would have been lost by the transfer, it wouldn't have made a difference.  It was still unreasonable not to accept it.

If that's right, then the Machtinger line of jurisprudence (i.e. you can't enforce a contract without fresh consideration) dissolves entirely into having all procedural content and no substantive protection for anyone (except for lawyers, I suppose).  It would mean that an employer who is concerned about the notice entitlements of a long-service employee is entitled to simply terminate an employment contract without notice (or on the minimum notice in the ESA) and offer the same job but with different terms, which means that the continued job is 'fresh consideration', and the employer is insulated from a wrongful dismissal suit because of the employee's duty to mitigate.

Finally, some commentary is called for about the employee's imposition of conditions on returning to work.  On these facts, the judge is right - the initial failure to mitigate is determinative, and the subsequent discussions don't matter.  But if one supposed that there hadn't been an initial failure to mitigate, Justice Belobaba is suggesting that the imposition of conditions would still have resulted in a failure to mitigate.

Let's suppose for a moment that you have a wrongfully dismissed employee suing 3 months after the dismissal, and then being offered his job back.

What Justice Belobaba is saying is that the employee is entitled to insist on continuing the law suit - i.e. he can't be required to waive his rights to sue - but he is not entitled to make his due entitlements a condition of accepting the job.  Respectfully, I can't agree that the objectively reasonable expectation is that the employee will take the job back under those circumstances.  Even if there wasn't an acrimonious relationship before...he's suing them now.  It's hard enough to imagine an employee suing his or her current employer while remaining employed (though it has happened).  Saying that an employee is expected to take the job while having to pursue litigation for the unpaid three months...is simply not realistic.

Jack already owes Jill money from breaching a previous contract.  Jill has commenced litigation against Jack to get paid.  Jack now wants Jill to enter into another contract.  Jill responds, "Pay up what you already owe, then we'll talk."  To me, that seems like an eminently reasonable response in any context.  (Indeed, to me, it seems reasonable to insist on additional protections in the new contract to protect Jill's interests in case of another breach.)

Anyone disagree with me on that?

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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.

Constructively Dismissed Bank Manager Didn't Fail to Mitigate

I've posted before about constructive dismissal, and about the application of the mitigation principle to the doctrine.  In addition to having to prove that the employer effectively repudiated the employment contract, a constructively dismissed employee must often meet the additional challenge of establishing that it was reasonable not to continue in the job anyways.

The idea is this:  When a contract has been breached, an innocent party can sue for the damages which flow from the breach, but is obligated to take reasonable steps to limit those damages - you can't recover for avoided losses, or for losses which should have been avoided through reasonable diligence.  Normally, in wrongful dismissal, that simply requires a plaintiff to take reasonable steps to find a new job.

However, in constructive dismissal, the Courts ask whether or not reasonable mitigation would have entailed staying with the old employer despite the constructive dismissal.

This isn't going to be the case where the constructive dismissal is generated by ongoing harassment or a poisoned work environment, and the clearest case where there may be a failure to mitigate is one where an employee is substantially demoted but without a pay cut and where the demotion is not a reflection of performance.  (Imagine that I'm the manager of a facility with a large number of employees, and my employer decides to restructure and close the facility due to changing economic conditions, and finds another place for me with a much lower level of responsibility, but maintains my compensation structure intact.  It's a big step down for me in terms of responsibility, but I'm still making the same money.  So if I quit, foregoing the remunerative employment still being offered by my employer, the Court's conclusion may be "Yes, you were constructively dismissed, but the reasonable thing to do under the circumstances is stay in the job until you find something better.")

I've been fairly critical of this doctrine.   I think there's something dissonant about saying that the employer is not entitled to implement a particular change, but is nonetheless entitled to expect the employee to accept it.  But that's the way the law has fallen, and that doctrine has been applied to the detriment of a number of employees.  But the doctrine is starting to get fleshed out a little bit more, including the limitations on the doctrine.

The Court of Appeal released a decision today in Chandran v. National Bank of Canada, upholding the trial court's decision that Chandran's choice to treat his employment relationship as being at an end was not a failure to mitigate.

Chandran was employed by the bank for 18 years, and was a senior manager at the bank's Commercial Banking Centre in Vaughan.  He had moved up the corporate ladder pretty smoothly, and received excellent performance reviews.  He reported to the Vice-President of Ontario Commercial Banking, Mr. Flowers, who was tasked with improving the substandard performance at the Commercial Banking Centre.  Flowers asked the HR Manager to embark upon an employee satisfaction survey.  The result was that 9 of 11 employees alleged bullying behaviour of Mr. Chandran.  Flowers concluded that it was necessary to remove Chandran's supervisory responsibilities; he issued a disciplinary warning to Chandran which relieved him of his duties as and presented him with two alternative postings of comparable remuneration and prestige, but without supervisory duties.  (The salary and benefits would have remained the same for the relevant period of time, though his target bonus would have been reduced from 17% to 15%.)

The discipline was an important factor in this case.  Even though the changes to his remuneration were relatively minor, the reassignments were still a demotion, and combined with the discipline could actually hinder his ability to find a new job equivalent to his old position; accordingly, it was reasonable for him to decline to take either of the offered positions in mitigation.

The Court of Appeal dismissed the employer's appeal relatively summarily, concluding that this was a finding of fact entitled to substantial deference, and that there was no palpable and overriding error warranting appellate intervention.

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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.

Dismissing Long-Term Employees

I had someone find my blog recently through a search for how to get rid of long-term employees.  It's actually a good question, and calls to be addressed.  I've had a number of small employer clients come to me with such issues.

Long-service employees can have very significant entitlements.  Even at lower levels, this is true now - in the wake of the Court of Appeal's Di Tomaso case last year (discussion here), long-service clerical and unskilled labourers can now be entitled to notice periods up to two years (and possibly higher in exceptional circumstances).

These concerns can be avoided, with advance planning.  If you implemented a written contract with the employee at the point of hire with a good termination clause, then your liabilities might be limited to those in the termination clause.  In some cases, the issue arises for successor employers, where a business was purchased with the employment relationships intact - if this is a concern, make sure that the vendor severs the employment relationships involved first, and you'll need further legal advice if you intend to make new offers of employment to their employees, because such a severance may not work.  Whether it's an asset purchase or share purchase, if the purchaser just assumes the employment relationship without more, they'll be buying into potentially dysfunctional employment relationships with the prospect of significant liability.

But, without advance planning, sometimes you have to take the cards you end up with, and do the best you can.

The first thing to know is that there are ways of bringing in employment contracts even after the point of hire.  But you need legal advice to do so, and by the time you know you want to get rid of the person, it's probably too late to do so.

So let's look at how you can get rid of a long-term employee, while trying to avoid a hefty payment in lieu of notice:

(1)  Dismissal for Just Cause

It's an option, but usually not a good one.  If an employee has engaged in misconduct rising to a certain threshold, you are entitled to terminate summarily without notice.  (Depending on the nature of the misconduct, a trail of progressive discipline is often necessary.)

If the reason you want to be rid of the employee tracks to a singular (and recent) egregious episode, such as theft (which you can prove), then this may be prudent.  If there has been an ongoing series of more minor problems, with documented discipline, but the misconduct has continued, then this could be an option.

However, in most of these cases that I see, the employer's decision that they want to be rid of such an employee is based on a series of minor incidents which the employer accepted, permitted, and tolerated, but there's a recent "straw that broke the camel's back".  The employer now wants to be rid of the employee, and the employee doesn't realize he or she has done anything wrong in the first place.

In such cases, a dismissal for cause becomes a project, not an action, and one that's usually impractical.  The first thing that you need to do is clarify expectations for conduct and make sure that the employee knows that, moving forward, the various shenanigans which may have gone on in the past are not permissible.  (This needs to be done carefully, too.  Employers have a wide range of power in the workplace, but unilateral changes which go to the heart of the employment relationship may generate a constructive dismissal, triggering notice obligations - the very thing you're trying to avoid.  Also, there are times when, while implementing these changes, you need to bear in mind your human rights obligations.)  Then you need to start disciplining if the employee fails to meet these new standards of conduct.  At some point, maybe soon or maybe not, you may have built a case sufficient that a Court might find just cause.

If you've already decided that you want to be rid of the employee, this is not an easy approach.

(2)  Convince the Employee to Quit

This is one that I usually file away with "bad ideas".  Taking actions against an employee simply for the purpose of trying to get them to leave is almost constructive dismissal by definition.  But it's seldom that simple.  For instance, in the situation where the employer has lost control over the employee, the employer might just be able to hope that its legitimate efforts to get the employment relationship back under control might persuade the employee to look elsewhere.  It's unwise to count on this, though.

It's also possible to offer a voluntary separation package of less than an employee's full common law notice entitlements.  (Essentially, paying the employee to resign.)  The employee may or may not accept this, and trying to be too...persuasive...can amount to constructive dismissal.  (Indeed, you need a lawyer's assistance for this approach:  When you're implicitly telling an employee that you don't want him around anymore, you need to be careful with you do it.)

(3)  Dismissal on Actual Notice

This is unusual, and carries with it risks and problems, but in some scenarios can be effective.  Indeed, this is an employer's obligation when it wants to fire somebody without just cause.  (It doesn't usually happen; normally, an employer prefers to breach this obligation and provide pay in lieu of notice instead.)  But for an employer unable to afford to pay the departing employee *and* the departing employee's replacement, it's an option to consult a lawyer about.

One of the major practical difficulties with this is that you're then relying on an individual for a lengthy period of time who knows that they aren't going to be there long.  You run the risk of misconduct, whether intentional or through carelessness.  To that extent, you need to monitor the employee's performance to make sure they're still doing their job, and go down the 'discipline' road if necessary and appropriate.

(In some cases, statutory severance will still be owed at the end of the notice period.  This isn't usually true of smaller employers, however.)

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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.

Company not advised of employee's concerns; OLRB concludes no constructive dismissal

I very frequently get calls from people who think they see the 'writing on the wall', so to speak, worried that they are about to get fired.  There are various reasons that these concerns arise, ranging from disciplinary measures to reorganization of job functions or reassignment of duties.  Regardless of the reason, it is very stressful on employees to go into work every day feeling like, to borrow a comparison from the late Justice Echlin, the sword of Damocles is hanging over their heads, and there is often a real temptation to pre-empt the termination by quitting.

I generally advise against that.  If the core of an employee's concern is that they are worried that they will be fired, then I often say "Let them fire you, then."  Don't give them a reason, of course - you don't want to be dismissed for just cause - but the truth is that it usually isn't all that hard to not give them just cause.

If you're fired for just cause, the employer has to prove that they had just cause, and this is a high threshold.  If you're fired without cause, then the only question is how much money you're entitled to.  If you quit, however, the onus is upon you to establish that you were constructively dismissed, and this often puts an employee into a weaker bargaining position.

The recent OLRB case of Webster v. Securitas Canada Limited is a cautionary tale about quitting in advance of an expected termination, and may be a significant comfort to employers concerned about an employee quitting out of the blue and then claiming constructive dismissal.

Ms. Webster was a non-union office worker with the employer for several years.  She quit her job in July 2010, and brought a proceeding at the OLRB seeking statutory termination pay on the basis that of a claimed constructive dismissal.  The OLRB rejected the claim.

There were four alleged bases for the claim:

(1)  Change in Compensation

This strikes me as something that was likely thrown in to try to bolster the claim on other grounds.  She was removed from the bonus plan at the start of 2010, but was given a raise to make up for it reflecting the average bonus for the previous 3 years, and she signed off on the change.  The OLRB found that this change was not significant enough to constitute a constructive dismissal, and in any event she did not resign in response to this change, particular given her acceptance of it at the time, and even if she had it was not within a reasonable time.

Personally, I question the OLRB's way of reaching this conclusion.  It has broken down the bases of alleged constructive dismissal into discrete areas, which raises concerns for me.  Bear in mind that the statutory test for termination pay on constructive dismissal is threefold:  The employee must have been constructively dismissed; the employee must have resigned in response to the constructive dismissal; the resignation must be within a reasonable time.

The trouble with using discrete analyses for separate changes to an employment relationship is that it can ignore the cumulative effect of the changes.  There is no reason why a series of changes over a modest period of time could not, taken together, constitute a constructive dismissal even where a single change could not.  If I resign because of the constructive dismissal generated by a series of events, one cannot look to the first event in the series and say "He didn't quit because of that", nor can one reasonably say that the clock on the "reasonable time" starts at the time of the first event.

The Board member is aware of this argument, and does address it towards the end of the decision, acknowledging that it must be determined whether or not the changes to the employment relationship cumulatively constitute a constructive dismissal.  My concern is that, for all of the detailed reasons which go into the Board's rejection of each of the four grounds individually, the cumulative analysis is quite cursory.  I would argue not only that the cumulative analysis is more important, but that the individual analysis is actually quite unimportant, bordering on irrelevant.

However, this ground may have had another fatal flaw.  That she signed off on the change should have only one, if any, effect on the test:  If her agreement was legally binding (i.e. amended the contract at law) then the change was not unilateral by the employer, and therefore cannot form a constructive dismissal.

(2)  Change in Reporting Structure

Prior to her resignation, her direct supervisor changed.  She had been reporting to the IT manager and the Human Resources manager; the new supervisor was a Human Resources professional who was not a manager.  She didn't have a problem with the new supervisor, but alleged that it reduced her status.

The OLRB finds that there are a couple of problems with this argument:  Firstly, "this concern was never raised with the employer prior to the resignation", and secondly she appeared not to have been aware that her new supervisor was not a manager until after starting the complaint process.

(3)  Change in Duties

The IT manager, noted above, was terminated when the IT function was moved to the United States in early 2010.  Thus, her IT-related duties disappeared.

However, the work she continued to do was similar in kind to the duties she did beforehand.

(4)  Lack of Work

This seems likely to be where the crux of the issue was.  After her IT-related duties were eliminated, she no longer had enough work to keep her busy.  She felt "unsatisfied, unneeded, and unwanted".  In essence, she thought it was just a matter of time before she was laid off because she was no longer needed there.

The Board rejects this argument, too, finding that the company was in transition, and she was obligated to "give the employer time to work through the transition, or if she was very concerned, raise the concerns with the employer."

My Thoughts

I touched on the issue of the cumulative effect above, and I think the Board's analysis somewhat ignores the totality of the narrative:  First they take away my bonus, then they remove my IT functions and lay off my manager, and relieve my other manager of the burden of me reporting to her, then they don't give me any new work.  They took away everything about my job except my salary, and were essentially just paying me to twiddle my thumbs.

This issue doesn't frequently arise in the jurisprudence, because employers don't generally like to pay employees to do nothing, but there's a pretty decent argument to be made that an employee does have a contractual right to their duties - not just the salary, but also to the actual job, for two reasons.  Firstly, experience is important.  Many jobs are stepping stones on a career path, that you take for the experience of the position and not just for the salary.  Secondly, it has long been accepted in the jurisprudence that a person's job is integral to their sense of self-worth.  That's a reflection of the duties, about the satisfaction of doing one's job, and not just about taking home the pay cheque at the end of the day.

I'm not saying I think the Board's decision is wrong.  Assuming that she did have an obligation to put the employer on notice of her concerns, the Board is almost certainly right.

I'm not sure where that obligation originates, though.  It seems a reasonable expectation of the employer, of course, to be able to correct this sort of thing before liabilities are incurred, and yet at the same time I have concerns about the consequences of such a doctrine.  Constructive dismissal is often about the straw that broke the camel's back.  I have concerns about this, that, and the other thing.  I don't want to make a stink, because I don't want to risk conflict with my manager.  But these push me to the breaking point.  Then the employer crosses the line one last time, so I quit.

Yes, it's a healthier working environment when an employee is comfortable approaching his or her manager with concerns, and where the manager can process and address concerns.  But in reality, many (most?) workplaces don't work that way.  The employees do what they're told, the managers expect nothing less, and both employer and employee often expects that if an employee doesn't like how the employer does business, the employee can leave.  That is what constructive dismissal is.  It isn't about the employer refusing to reasonably address employee concerns, it's about the employer unilaterally changing the relationship in a fundamental way.  To argue that the employee is obligated to go back to the employer and say "Change it back or I'm out" before a constructive dismissal can be said to have occurred in effect gives the employers an unlimited right to make changes to the employment relationship and an obligation only to negotiate about these changes after the fact.  That's not what the law does.

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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.

Legal Remedies of the Still-Employed

I've had a remarkable number of calls lately from people who still have their jobs, but who take issue with actions of their employer, be they disciplinary issues, changes to the nature of the job, or unreasonable employer demands backed up by a threat of termination.

It is possible to take the position that you have been constructively dismissed.  As I've discussed before, it isn't easy, and it's never guaranteed.  It adds an additional couple of layers of uncertainty onto an already uncertain process.  And while it is possible to sue your employer while still working for them, that’s only appropriate in some situations (and will likely cause problems for you with most employers).

The last example I gave really puts this in perspective.  An employee facing unreasonable demands and a threat of termination has two choices:  Give in to the demands, or risk being unemployed.  Assuming that it isn’t a demand they are entitled to make, they won’t be able to make out a case for just cause when you refuse to do so, which means you’ll be entitled to pay in lieu of notice of termination if you get fired.

But how much is that?  And is it enough?  Let’s suppose that you make $50k per year, and are entitled to approximately six months’ notice.  You’ll have a claim worth $25,000.  Which seems like a lot of money, when you say it this way:  If I get fired, I can get $25,000.  But it isn’t that simple.  First off, it’s truer to say “I can maybe get $25,000 or so.”  And then you have to factor in legal fees (which can be substantial), taxes, the fact that any EI entitlements will be deferred until after the six month period...not looking like such a lot of money anymore, is it?  Oh, and don’t forget that you may have to go to the end of a litigation process, years out, before you see a dime of it - unlike straight dismissal cases, employers are often very reluctant to acknowledge any basis for liability in constructive dismissal cases.

And here’s the hitch:  You’ll be unemployed.  How long will you be out of work?  Six months?  A year?  Longer?  Even if it’s shorter, there’s no windfall to be had here – if you find an equivalent new job in two months, you’d only win two months’ pay from your own employer, assuming you win at all.  (That's the 'mitigation principle' at work.  Don't be discouraged from looking for work, though, or accepting a job - failing to take reasonable steps to secure replacement employment can reduce your entitlements, too.)

So you really have to say “I can maybe get $25,000 or so, less legal fees, but I’m not sure when I’ll get it, and in the mean time I’ll be unemployed and I’m not sure when I’ll start getting a steady pay cheque again.”

In other words, when remaining gainfully employed is an option for you, you should think very carefully about your options before throwing that away in exchange for a chance of some litigation entitlements.



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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.

Back to Basics: A Practical Guide to Wrongful Dismissal Resolution

While there's a new wrongful dismissal case coming out of Ontario's Superior Court of Justice every few days or so, the truth is that the vast majority of dismissals get settled very quickly, often even before issuing a statement of claim.

This post isn't designed to help people see the process through themselves; both sides really do need lawyers, and for very compelling reasons.  I practice on both sides the fence, so I would encourage anyone finding themselves in this situation to contact me.  Rather, I want to give readers a sense of what to expect, to be more comfortable with the process.

Before Termination

Employers should consult a lawyer before terminating the employee in the first place.  (Indeed, you should consult a lawyer before even hiring, to get a good written contract in place.)  If you want to terminate for just cause, you need a legal opinion about it first.  Just cause is very difficult to make out, with risks of increased liabilities - sometimes significantly so - if you fail.  And, where there is no just cause, you need to know what your "notice" obligations may be.  (With a good written contract, drafted by a good employment lawyer and properly executed, these may be minimal.  Otherwise, you're looking at owing "reasonable" notice, which even a good employment lawyer will only be able to estimate and give you a range.)

Upon Termination

Employers:  There's a correct process for termination meetings.  Half of it is common sense (yet frequently not done), but a good portion of it might not occur to everyone in every case.  Have at least two people in the termination meeting, one taking notes.  Be professional.  Don't get dragged into an argument about the reasons for termination - have a script, preferably vetted by your lawyer, and refuse to be pulled off of it.  (In most cases, you won't even want to give any substantive reasons.)  Be discrete and sensitive.  There is a lot to be said about how to behave on terminations, and a lot of it depends on the nature of the workplace and the specific employee.  The termination meeting should be accompanied by the delivery of a termination letter, which will advise them about receipt of their last pay and statutory entitlements (which should be conditional on absolutely nothing), and requiring them to return all company property, reminding them of any ongoing confidentiality concerns, etc.  At the same time, there should be a second letter, marked "Without Prejudice", offering them something further in exchange for signing a full and final release.  (In the wake of Brito v. Canac Kitchens, there's a thought that more than the statutory minimums should be provided upon termination.  I don't think that's yet having any real impact on the standard practice, though.)

Employees:  When you are terminated, you will often receive an offer, conditional on you signing and returning it within x days.  At this stage, there are several things to note:

(1)  You are going to feel a range of negative emotions.  It's almost a grief response.  Anger, betrayal, despair, frustration...these are all perfectly normal.  It's one small part of the reason you will need a lawyer - it's going to be difficult for you to deal productively and professionally with your employer in light of these feelings.  (As a note to employers:  This is also the reason that working notice is seldom a good idea.)

(2)  Do not sign anything until you get legal advice.  Employers are seldom generous with their initial offers, and in the vast majority of cases there is some flexibility for movement on both monetary and non-monetary terms.  Sometimes, the entitlements are significantly more than what has been offered.  Even if you have a written contract limiting your entitlements, termination clauses are hard enough to enforce that it is often worth seeking advice on the enforceability of the contract.

(3)  Even if you have signed something without legal advice, it's still prudent to consult a lawyer.  I have seen some employers put a release to a dismissed employee in exchange for payment of the statutory minimum.  (In one case, the strict deadline was the day before stat minimums were due anyways.  I can't help but think that that was calculated.)  A release on such a basis will often be unenforceable.  The rule is that an employee should never assume, without proper legal advice, that the fact they signed something means they are bound to it.  (Of course, it is almost *never* a good idea to sign anything on the assumption that it will not be upheld by a court.)

(4)  If you can't meet with your lawyer until after the strict deadline is up, don't despair.  I've never seen an employer refuse to extend the timeframes of an offer upon request.  In most cases, they know that, if they get sued, they'll owe more than the contents of the offer anyways.  So they don't usually pull offers off the table.

(5)  In my years of experience, I have very seldom seen offers from employers that I could tell an employee was better than they would likely do in Court.  In the vast majority of cases, I respond with a demand letter for the client's full entitlements. (In the rare cases where an employer is being generous, unlike some lawyers, I do tell my client as much and try to respond reasonably.  If there's room for improvement with non-monetary terms, etc., I'll recommend the request, but an employer who is being generous knows that the offer is generous, and isn't going to move much on the monetary aspects of the settlement.)

(6)  If you haven't been asked to sign anything, it's often because you've only been given your statutory entitlements.  You likely still need to make a demand, and you'll need a lawyer to figure out what to demand.

Employer's Response to the Demand


There are myriad employer responses to a demand letter.  Know that most demand letters will frame the employee's entitlements generously.  Many employers will try to negotiate the demand down.  While there's not much certainty as to reasonable notice periods, there's enough clarity as to the appropriate ranges that both lawyers can tell their clients, "This is the range, and there's a good chance that the other lawyer is telling the other side the same thing."  So the employer tries to negotiate something at the low end of the range, the employee tries to negotiate something at the high end, and neither side really has much of a will to litigate when there are offers inside the range.

By contrast, many employers will completely reject demand letters at the outset.  Even large and sophisticated employers do so.  This is often strategic, and done with employees whose entitlements are fairly limited.  (Sadly, it often also factors in the employee's tolerance for stress.)  This approach is usually rationalized by the logic that, if you make the employee sue for his entitlements, some percentage of employees will simply not do so, and the increased costs and liabilities of dealing with the ones who do will be less than what is saved on the employees who walk away.  In these cases, an employee can often expect that the employer will come to the table promptly upon issuance of a statement of claim.  (Many prominent employer-side firms take the approach that, when served with a statement of claim, they immediately make a semi-reasonable offer to settle and ask for an indulgence so as not to be required to file a statement of defence while settlement discussions are ongoing.  If the offer to settle appears to be in good faith, then most employee-side counsel will recommend granting the indulgence, as they know that a settlement is imminent, and there's little to be gained through hardball at that point.)

The ones that go to trial, these days, usually have a fair bit of money at stake and a real fight about one of a handful of things, such as whether or not there is just cause, enforceability of the written contract, how to characterize one of the factors that defines the reasonable notice period, or a dispute about constructive dismissal.  Without some fundamental factual dispute underlying the calculation of the reasonable notice period or the entitlement to reasonable notice, the margins between what the employer might expect to have to pay and what the employee might expect to get are so small that the cost of litigation is prohibitive for both sides.  Even when there is a fairly fundamental dispute, if there isn't a lot of money at stake, both sides still know that the most cost-effective approach is through an early settlement.  What's a few months' notice for a minimum wage employee beside the amount of money it would cost to get to trial?

That being said, many employers will fight certain cases 'on principle':  Where there's a clear-cut case for cause, an employer isn't going to settle, because it sends the message to other employees that they can act badly then cash out.

It's always important to hire a lawyer who knows what they're doing, but that's especially important for low-value cases.  I've taken on clients whose cases I assessed at being mid four digits.  At a lawyer's hourly rate, it doesn't take long before that all gets eaten up in legal fees, so a lawyer on such a case really needs to be careful about how much time is being spent.  So far, in my practice I've been pretty good about being able to settle efficiently enough that my clients still get to keep most of their money.  On the other hand, I have seen lawyers (even boutique employment lawyers) go five digits into legal fees before even issuing a statement of claim, on files that were not high value.

That's why the choice in lawyers is important.  It is important to me to try to ensure that my client will be better off at the end of the day for having hired me, and if I don't think that's going to happen, I tell the client that.  I offer free consultations to dismissed employees in most cases (some exceptions apply), so I would encourage any dismissed employees to contact me immediately.

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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.

Back to Basics: Constructive Dismissal

I frequently refer to constructive dismissal, such as in my recent post about McMillan v. Selectrucks.  I often talk about it in a fairly cursory way, but I feel it's important to occasional address more basic questions.

What is Constructive Dismissal?

Constructive dismissal is a term that most people have heard of, a general idea that, if the employer does something wrong, they can quit and still demand a package.  It's a term that's thrown about pretty casually in some contexts, yet people are rightly reluctant to give up secure employment on the basis of some simplistic sense of an abstract legal principle.  The result is that I, and lawyers like me, get lots of calls from employees saying, "My employer did x, have I been constructively dismissed?"

The essence of constructive dismissal, and part of what makes the doctrine very weak in many cases, is that it is an extension of wrongful dismissal.  Wrongful dismissal damages are not a windfall.  You don't get rich by suing in wrongful dismissal.  Indeed, in many cases the entitlements are quite limited, and so it seems a poor trade to lose one's job in exchange for wrongful dismissal damages.  The appeal of constructive dismissal, of getting paid to walk away, quickly loses its glamour in light of the bleak future of unemployment in an uncertain economy.

So, if you have been constructively dismissed, you are entitled to treat yourself as having been terminated by the employer.  Sort of.  There are all sorts of exceptions and qualifications to address, but let's look to the legal definition first:  A constructive dismissal results when the employer unilaterally makes a fundamental or substantial change to the terms of an employee's contract.

Whether or not the change is unilateral is pretty straightforward:  If you agree to the change, it isn't unilateral.  Whether a change can be characterized as fundamental or substantial...is trickier.

In the jurisprudence, there are really two different types of constructive dismissal.  There's the constructive dismissal where the employer actually changes the employee's duties, functions, title, compensation, or some other aspect of the terms of employment (the "demotion" cases), and then there are the Shah-type cases, where an employee quit to escape harassment or an otherwise poisoned work environment.

It is largely a matter of scale.  The employer is entitled to make certain changes to the terms of an employee's contract, and that includes reductions in pay...to a certain extent.  When the change is large enough to be said to be a 'fundamental' change, then it can be characterized as constructive dismissal.  Where an employee is demoted, with a loss of prestige, that too can be a constructive dismissal, depending on the significance of the change.

The McMillan case shows how even the Shah-type cases are a matter of scale:  Even if you can show that you have been treated unfairly by the employer, and this led you to leave, that will not necessarily make out a case for constructive dismissal.

There are also the 'discipline' cases, which can be a hybrid of the two types.  Sometimes, it's discipline being imposed as part of a campaign of harassment, making it a Shah-type case.  Other times, the discipline itself can exceed employer authority.

This is a mistake I've seen unionized employers make with their non-union staff members, applying the same disciplinary process to them, including unpaid suspensions.  The way the jurisprudence sits on unpaid suspensions was set out by the late Justice Echlin in Carscallen v. FRI Corporation, upheld by the Court of Appeal:  Unless there is an express contractual right to do so (as there usually is in collective agreements, but seldom in individual contracts of employment), an employer has no inherent right to impose unpaid suspensions in disciplinary matters, unless the misconduct rises to the level of "just cause".  In other words, if the employer would be justified in firing the employee without notice, then it can forbear and instead issue an unpaid suspension instead.  Otherwise, it will be a breach of contract, and possibly generate a constructive dismissal.

The Difficulty of Mitigation

When your employment is terminated and you want pay in lieu of notice, you're obligated to try to mitigate your loss by seeking replacement employment.  There is a line of cases dealing with demotions or pay cuts establishing that, where the demotion isn't the result of a soured relationship, an employee can be expected to accept the new position with the same employer in mitigation of the loss generated by the constructive dismissal.

In other words, you might be entitled to treat yourself as having been dismissed by your employer, yet your employer may still be entitled to expect you to stay in the job nonetheless.  (In a previous blog, I wrote of this disconnect and called it "Unconstructive Dismissal".  Just to clarify terminology, there's not actually such a thing called "unconstructive dismissal"...that was just ironic wordplay on my part.)  So there have been cases where the Court has found that a constructive dismissal had occurred, and yet the Court also found that the employee should have stayed in the job as mitigation while seeking a new job, with the result that the employee had few if any entitlements.

(In a case that turns around the same concept, an employee whose pay was cut significantly actually stayed in the job and sued the employer for the salary to be topped up through what would have been the notice period.)

There was one case that went to the Supreme Court, Evans v. Teamsters, which was similar, though not strictly a constructive dismissal case:  The employee had actually been dismissed, and was offered another position on a contract basis through the notice period when he came back with a lawyer's letter.  The Court felt that refusing the job was a failure to mitigate.

I feel that this doctrine needs to be refined, for two reasons.  Firstly, mitigation is usually fairly employee-friendly:  Employees are not generally required to take the first job that comes along, but are entitled to hold out for a job that is close to being as good as the old job.  Outside of these "employment with the same employer" cases, I know of no other case that holds that an employee should accept another position on a temporary basis while seeking replacement employment.

Secondly, this disconnect is the result of having two different standards for what should essentially be the same thing.  In my view, if the changes in the employment relationship are not so significant as to make the resulting job 'not equivalent' for the purposes of mitigation, then it can't be constructive dismissal.  Conversely, if the changes are significant enough to constitute constructive dismissal, then the job can't be close enough to expect the employee to accept it in mitigation.  Still, that's my own view, and does not reflect the current state of the law.

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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.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

Truck Salesman was not Constructively Dismissed

The Court recently released its decision in McMillan v. Selectrucks.  Mr. McMillan worked for Selectrucks as a salesman from 2004 to 2007, at which point he gave two weeks' notice.  Selectrucks sent him home immediately and paid him out the two weeks' notice he had given.  (This is a common practice for many employers.)  Mr. McMillan started another job within two weeks.

McMillan developed a strong customer base and was successful in his role.  Then, a fellow salesman (Mr. Kenny) was promoted to a managerial role over him.  It is not uncommon that such a change in reporting structure can foment such conflict as to make the continued employment relationship untenable, generating a constructive dismissal.  Mr. McMillan contended, unsuccessfully, that this is what happened in this instance.

His arguments included several factors:

(1)  Mr. Kenny breached company policy by permitting alcohol consumption in the workplace, and this made Mr. McMillan uncomfortable because he has had alcoholics in his family.  The Court did not accept that such conduct by Mr. Kenny would really affect the contractual relationship with Mr. McMillan.

(2)  Mr. Kenny gave preferential treatment to another employee by assisting him to develop a client base, thus hurting Mr. McMillan's earning potential.  Perhaps true, yet in context it was evident that Mr. Kenny usually assisted new salespeople (and this other employee was new to the sales role) - and that had included Mr. McMillan when he started - to develop a client base.  Ultimately, given that Mr. McMillan's earnings were still increasing, it was pretty clear that Mr. Kenny wasn't seriously undercutting Mr. McMillan's earnings, even if he was perhaps showing favouritism to this other employee.

(3)  Mr. McMillan accused Mr. Kenny of abusive and improper treatment.  The Court dealt with most of these as being symptomatic of a difference in style - Mr. McMillan was accustomed to a more civil atmosphere in car dealerships, and was unaccustomed to the 'macho' atmosphere in a commercial truck dealership:  The Court ultimately seems pretty accepting of Mr. Kenny's "rough" management style in context.

I also note that the employer made an argument that Mr. McMillan's failure to complain should bar allegations of constructive dismissal, whereas Mr. McMillan explained that he was afraid of reprisals if he had gone over Mr. Kenny's head.  The Court embarks on a thorough analysis of that issue: The fear of reprisals is understandable, and it is a matter of common sense that an employee should not complain lightly about their manager.  That being said, if Mr. Kenny's conduct was already making the employment relationship intolerable, there was little to be lost by doing so.  (I have had occasions to give employee clients exactly the same advice.  While employees are often more afraid to complain than they are to simply quit, if the alternative is quitting then there is absolutely nothing to be lost by pursuing a complaint first.  If they get recourse, then that is great.  If not, then they're in the same position, except with perhaps a somewhat stronger constructive dismissal argument).

However, in the full context of a small work environment in which Mr. McMillan was an outsider, the Court concluded that it was understandable that he hadn't complained, and this wasn't a full bar to a constructive dismissal claim.  I note that these events all took place prior to Bill 168, and I wonder how that Bill would change the analysis.

There was more serious misconduct.  Mr. Kenny brushed off Mr. McMillan's concerns about not getting proper statutory holiday pay, and then was upset when Mr. McMillan did go over Mr. Kenny's head.  However, with no evidence of actual reprisal (perhaps just a souring of the relationship), it was hard to say that it constituted constructive dismissal.

Worse, Mr. Kenny once took Mr. McMillan in "a bearhug or a headlock", after Mr. McMillan understandably said something unflattering about the Habs.  It was horseplay, but unwelcome horseplay, and therefore an assault.  The Court is highly critical of this behaviour:  "it is hard to imagine a professional work environment where that would be appropriate.  These people were not adolescent boys in the schoolyard."

Yet, given the full context, including the fact that it was not close to the time of Mr. McMillan's resignation, and that Mr. McMillan could not be said to fear further violence, this assault did not create a constructive dismissal despite its seriousness.

None of the conduct could be said to go to the heart of the employment contract, so there was no constructive dismissal.  While the relationship may have soured, giving rise to Mr. McMillan's decision to find employment elsewhere, none of Mr. Kenny's conduct repudiated the contract.

My Thoughts

I very much like Justice Corbett's analysis in this case.  The one aspect that cause me concern is that there is, perhaps, too much casual acceptance of otherwise inappropriate conduct as being acceptable machismo in the context of the specific work environment.  Where an employer dismisses an employee for just cause, it is a defence for the employee to respond that the alleged misconduct was "condoned" by the employer, that it was common practice within the workplace.  So if there's a culture that condones profanity, it's hard to fire an employee for swearing.  Yet this decision seems to apply the principle in reverse:  It was acceptable to treat Mr. McMillan in harsh and unprofessional ways because it was common in the culture of the workplace?  The subtext is that an employer can expect its employees to grow thicker skins, depending on the culture of the workplace.  Especially in light of Bill 168, that is clearly not true now, but I don't really think it was true then, either.

Yet, at the end of the day, the conclusion that Mr. McMillan was nonetheless very successful in his position, and that the overall tension between him and his manager did not amount to a constructive dismissal, appears to be well-supported on the facts.

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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.

Is Your Workplace in Compliance with Bill 168?

In June 2010, amendments to Ontario's Occupational Health and Safety Act became effective, requiring most employers to implement policies and programs dealing with harassment in the workplace and violence in the workplace.  It was big news in the HR field and employment law field at the time, and most large employers amended their policy manual to bring themselves into compliance.  Yet many workplaces did not.

Many employers don't make much use of policies.  I strongly recommend the implementation of a good policy manual for just about any workplace - and I can assist in the development of such - but one of the striking aspects of Bill 168 is that it made certain policies legally mandatory.  Not just a good idea.

Especially in light of the mandatory requirement, there are a lot of risks associated with not having them.  First, it's a quasi-criminal offence:  An employer can be charged for breaching the Occupational Health and Safety Act.  When injuries occur due to such breaches, fines typically run upwards of five digits, and it isn't at all uncommon to see fines in excess of $100,000.  Earlier this year, Metro Ontario was fined $350,000 (plus, as always, a 25% victims surcharge) after a young worker was killed at a Mississauga store.

Even beyond those liabilities, however, there's the additional risk that liability could be incurred in respect of employees.  If an employee is the victim of harassment or violence in the workplace, it will be much easier for an employee to make out a case for constructive dismissal, possibly seeking aggravated damages in addition to all else, if the employer has neglected its statutory obligation to provide a recourse mechanism.

On the flip side, while this hasn't worked its way through into the jurisprudence yet, I expect that it will be much harder than before for an employee to make out a constructive dismissal case on the basis of harassment where they haven't taken advantage of recourse made available to them in a properly-implemented policy.

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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.

'Bullied' Manager was Constructively Dismissed

In the recent case of Strizzi v. Curzons Management Associates Inc., a manager took on what is always a difficult hurdle in wrongful dismissal litigation: Overcoming the fact that he resigned. But he did so successfully.

Mr. Strizzi started as a sales representative in a health and fitness centre in Ottawa, but within about a year rose to the position of General Manager, where he remained until he resigned about five years later. In that time, the Club deteriorated, as Head Office failed to (despite Strizzi's recommendations) upkeep and renovate the Club. As well, billing issues began to arise, and - despite recommendations from Strizzi - Head Office failed to take any measures to address these. Membership waned in light of the increasingly competitive Ottawa market, and the profitable club slowly went into the red. Other issues included Head Office frequently tinkering and modifying Strizzi's remuneration package, excessive hours, and excessively harsh behaviour by Strizzo's supervisor. One of the Club's managers could no longer handle the atmosphere, and submitted a resignation letter which praised Strizzi's "compassion, guidance and motivation", but expressed that the climate of the workplace was not conducive to his continued health.

Finally, on September 30th, 2003, a telephone argument between Strizzi and his supervisor led to Strizzi's resignation.

The text of the decision portrays Strizzi as an exceptionally hard-working manager who did his best to run the Club, but was thwarted at every turn by a lack of support from the Head Office. Moreover, Strizzi's supervisor, Cardillo, is described as being a "bully", treating Strizzi excessively harshly.

The most serious work-related problem that Strizzi had, however, was in having to deal with Cardillo who was, to put it bluntly, a bully. Strizzi had experienced Cardillo’s unreasonableness and aggressivity during the telephone call in March 2003 which had left Strizzi and his wife in tears. He had again experienced it during the interchange at the beginning of September in regard to the September launch meeting. Cardillo’s behaviour during the opening few minutes of the September 30, 2003 telephone conversation brought home to Strizzi the impossibility of his continuing to work in an environment where his employer yelled at him, called him all kinds of names, falsely accused him of ruining his business, refused to have a dialogue or engage in reasonable, civil conversation, told him repeatedly how useless he was, made threats, and generally treated Strizzi in a way that no employee should be subjected to.

In wrongful dismissal litigation involving small- or mid-sized businesses, this is remarkably common. Involving larger businesses, it is occasionally seen in managers who are not particularly closely supervised and/or are exceptional producers. Aggressive type-A personalities who can be less-than-forgiving when things don't go their way. It can be great for growing a business, and there are definitely times and places where aggression is very useful and productive, but employee relations can require a different approach. The lesson to be learned from such cases is that an employee is not a punching bag. The employment relationship is not conducive to angry speech or behaviour, in either direction. There is appropriate discipline for employee misconduct, but this will never include profanity or name-calling.

Even in this case, where Cardillo's conduct had persisted over years without a complaint by Strizzo, this was still sufficient for Strizzo to make out a constructive dismissal case.

Food for Thought

This matter took nearly 8 years to come to trial, and Strizzo ultimately achieved a $45,000 damage award. $10,000 of it was for wages owing, which the employer had contested until the opening of trial. That is likely to hurt when it comes to the costs award, but costs awards are still just a portion of the actual legal expenses, and those legal expenses could easily be well into the six-digit range.

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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.

Sue in Court? Or Apply to the Human Rights Tribunal?

This is an issue that I frequently have to deal with in practice, and that I've blogged about before in a previous blog I maintained when I practiced in Norfolk County. (Click the link for a detailed discussion on the question of "Now that you can seek a human rights remedy at Court, should you?") To sum it up, there are a lot of pros and cons for a wrongfully dismissed employee going to either venue, remedies you can obtain in one venue but not another, procedural benefits and cost benefits...but in this post I'll briefly discuss the fundamental issue of the difference in establishing liability.

The Facts

Last week, the Human Rights Tribunal of Ontario released its decision in Callwood v. Franchise Management Inc. et al. Mr. Callwood was assistant store manager of a Pizza Pizza in Oshawa East, and that location (with several others) were purchased by the Respondent corporation in October 2008. In early 2009, Mr. Callwood began to be disciplined due to customer complaints. Mr. Callwood believed that this was connected to his race, and sought legal advice. He apparently received a legal opinion that unjustified discipline could warrant a law suit in constructive dismissal, which he brought up with management. In that time period, he initiated this legal proceeding. Around the same time period (though it appears to be somewhat after he obtained the legal opinion and filed the Human Rights Application), the corporation implemented a management review which resulted in downsizing the management team to one assistant manager (Mr. Callwood was the junior of two) in six stores. Accordingly, Mr. Callwood was demoted to the position of shift manager, his wages were cut from $13.00/hour to $11.50/hour, and he lost his guaranteed 45 hours per week. He believed that this, too, was a consequence of his race.

Further discipline occurred throughout the following year, and ultimately Mr. Callwood was terminated in April 2010. He alleges that all the discipline was the consequence of him initiating the Human Rights Application. But the Tribunal disagreed, believing the employer's explanations as to why Mr. Callwood was selected for demotion, why he was disciplined, and why he was terminated. Therefore the Tribunal dismissed the Application.

Here's the key to this discussion:

[36] I am not here to assess whether there was “just cause” in the common law sense for dismissal. My role is to determine whether a prohibited ground (race or colour or reprisal) played a role in the termination. I have concluded that they did not.

The Issue of Liability

When an employer dismisses (constructively or actually) an employee, in a wrongful dismissal action the onus is upon the employer to demonstrate that they had 'just cause' to do so, or else they are liable to pay reasonable notice (or contractual notice, if applicable) to the employee. Just cause is a very high threshold, and it is really only in the clearest cases that the Courts will find just cause to exist. Thus, at Court, the employee has a pretty strong advantage in establishing liability for notice.

But at the Human Rights Tribunal, the question of just cause is unimportant. The burden of proof is on the employee to establish a breach of the Code, and the employee must lead "clear, convincing, and cogent evidence" that the employer's actions were motivated by discrimination. The failure to do so means a recovery by the employee of zero, even in a case where there is no just cause and therefore an entitlement to pay in lieu of notice.

This loss at the Human Rights Tribunal may not be the end of things. It is likely that the applicant could commence an action in Court seeking pay in lieu of notice, arguing that the employer did not have just cause for termination. But there will be a few difficulties in such an action.

(1) Timing. A claim for constructive dismissal based on the 2009 demotion would now be out of time. It is, quite frankly, fortunate for the employee that this process was already underway by the time he was actually terminated, because it puts this decision still well within the timeframes for initiating an action based on the actual termination of his employment. In most cases, a dismissed employee will not have the ability to commence a Court claim after the dismissal of the Human Rights Application, simply because of the timing factor alone. (This makes the question of venue up front much more critical.)

(2) He will find it very difficult to seek damages beyond straight notice. A claim containing human rights allegations would be struck.

(3) It is unclear to what extent the Court would adopt the factual findings of the Tribunal. While the Tribunal expressly disclaimed any decision on 'just cause', and therefore the employer likely could not succeed in taking the position that a wrongful dismissal action is estopped (barred), the Tribunal did reach several conclusions about the bona fides of the employer's actions in disciplining and terminating him, including a finding that Mr. Callwood's performance significantly declined. If I were acting for the employer in a Court action following this decision, I would be arguing strenuously that the fact of Mr. Callwood's misconduct is a matter of record, that Mr. Callwood cannot relitigate the question of whether or not his disciplinary record was justified, and that the only question for the Court is whether or not the discipline rose to the level of just cause.

My Comments

In cases where there is likely a significant liability for pay in lieu of notice, I usually recommend Court to my employee clients. It's clearer cut in cases where the allegations of discrimination are tenuous, but other files have presented more difficult questions. (One file in particular comes to mind, where the employer was engaged in practices some of which probably and others of which certainly infringed the Code protection against discrimination on the basis of gender and religion...the Tribunal would have been easier and cheaper, and also presented the possibility of a "public interest remedy" - i.e. the Tribunal dictating the employer's policies moving forward - which would give us a stronger position for settlements. Yet the risk of ultimately not establishing that the termination itself was discriminatory in nature pushed me towards recommending a Court action.) In cases where the wrongful dismissal liability would be limited, for whatever reason, and there is clear and cogent evidence of discrimination, I continue to believe that the Tribunal is the preferable option for plaintiffs in most cases.

Additional Remarks

The Tribunal's decision raises a couple of concerns in my mind.

First, I question the Tribunal's acceptance of the Respondent's submissions on one point related to the demotions: Five out of six of the people demoted were visible minorities. The fact that one was not is relevant, true, and rebuts (if perhaps only in a lukewarm way) the suggestion that the demotions were discriminatory. However, the Tribunal also accepted that the fact that five out of six managers demoted were visible minorities painted a picture of a a diverse management team generally. This is simply...well...wrong. To draw that conclusion, we would need to see what the rest of the management team in these stores looked like. If it was universally true that 5 out of 6 managers/assistant managers were visible minorities, then that makes any allegation that the demotion was racist extremely tenuous. On the other hand, if it turned out that these five were the only visible minorities in the management team, then the fact that they were all demoted and all the non-minorities left in place...well, that would tend to go the other way, and support an inference of discrimination. That's a minor point, though, and I don't think that it materially affects the integrity of the Tribunal's finding that there was no discrimination.

Secondly, and more importantly from a broader policy perspective, I have concerns about the Tribunal's commentary (though not its disposition) dealing with the employer's response to Mr. Callwood hiring a lawyer. Comments were apparently made expressing concern about Mr. Callwood's choice to get a lawyer involved, saying that "once you mention legal that gets their dander up". The Tribunal's response is basically: "Well, yeah, that's a natural reaction."

The problem, as I see it, is that anti-reprisal provisions in statutes like the Human Rights Code are exactly designed to prevent deterioration of the working relationship based on the employee standing on their rights. (A lofty goal, certainly, but that is the objective. It is illegal for the employer to treat an employee unfavourably just because the the employee has threatened human rights-based legal proceedings.) The suggestion that it is not only acceptable but should be expected that the employer's attitude to the employee will be chilled by the employee seeking legal advice undermines that purpose.

Again, I don't think that the Tribunal was necessarily wrong to find that this wasn't a reprisal, but the obiter could interfere with employees' abilities to stand on their rights in the future.

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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.

Firing for Cause, but Hedging Bets

In light of the Oosterbosch case hitting the media again (which I discussed to some extent in this post), this time on the Star's Moneyville blog, another comment on it seems appropriate.

First, though, some background.

It has long been the law in Ontario that an employer who provides any amount of pay in lieu of notice of termination is blocked from later arguing that the termination was for just cause.

In 1964, in a decision upheld by the Court of Appeal (in Tracey v. Swansea Construction Co. Ltd., [1965] 1 O.R. 203), Justice Thompson held as follows:

The simple position appears to me to be this. The defendant desired to dismiss the plaintiff. If there was misconduct or default sufficient to justify discharge it had one of two courses open to it. It could have summarily dismissed for cause or it could have decided to overlook, waive or condone the misconduct and terminate upon notice, or payment in lieu of notice, in accordance with the provision of the contract for termination implied by law. It could not do both, for one would operate as a repudiation of the contract for a breach thereof, and the other, conversely, would operate as an affirmation of the contract and the adoption of its provisions for termination. The fact that the defendant was in error as to the length of, or sufficiency of, the notice given could in no way alter the effect of its intention as expressed by its conduct.

The legal jargon aside, the practical effect is that an employer who says "Yeah, there's misconduct, but it'll be easier to make this go away if we put money on the table" will not generally be able to retract that position if the employee isn't happy with 'a bit' of money.

Considering that (a) many employers don't realize that employees might have entitlements in excess of the statutory minimums; (b) the threshold for just cause is often very high; (c) employers can get hit with moral damages for alleging cause improperly and/or failing to promptly pay the statutory minimums; and (d) the doctrine of 'near cause' - reduced notice periods due to misconduct - has been thoroughly rejected in Canada (though there is still some judicial murmuring from respected sources otherwise), this Swansea doctrine put employers in a very difficult position at the point of termination. There were a lot of reasons to pay the statutory notice except in the clearest cases of just cause, and doing so meant they'd be on the hook for the whole reasonable notice cost.

But now we have the Oosterbosch case which, if it holds up, seems to undermine Swansea. Recall in Oosterbosch that we have an employee who was found to be overly careless justifying summary dismissal, but that the misconduct wasn't wilful so as to disentitle him to the $25,000 in statutory minimums. It seems pretty employee-friendly, but when you turn it around you realize that employers can now use the Oosterbosch decision as a precedent for the proposition that there is nothing inconsistent with terminating for just cause and still having paid statutory minimums. Directly contradicts Swansea, and could end the doctrine that has given employees a great deal of bargaining power for nearly fifty years.

This turnabout isn't uncommon in employment law. Take, for example, the constructive dismissal doctrine that says that, under some circumstances, a constructively dismissed employee might reasonably be expected to stay in the job to mitigate his or her losses (see, for example, Mifsud). Seems pretty employer-friendly, aye? Enter Russo v. Kerr, in which an employee took a significant pay cut, and successfully sued to be topped up through the reasonable notice period while still working for the employer.

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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.