Here's a fun one: K. v. B.
(I'm using initials for the sake of some anonymity here; even though the decision is actually published online with full names, I nonetheless feel inclined to exercise a bit of sensitivity here.)
Background
K. has a long history of litigation: She has commenced a number of actions against the police, the attorney general of Canada, and various doctors and psychiatrists based on a variety of applications. In dismissing one of her actions, the Court remarked that "The Statement of Claim is incomprehensible. It appears to stem from alleged experimentation with the plaintiff as a subject, involving the implanting of some unidentifiable device."
In another action against a psychiatrist, she alleged negligence in that, when she explained that her issue was that she had been affected by brain waves and probably had a microchip embedded in her body, he diagnosed her with a psychotic illness, and failed to recognize that the cause of her symptoms was that she was the victim of "psychotronic attacks". (Some kind of "directed energy" weapons...sigh. No, I don't make these things up.) She led evidence from, among others, a hypnotherapist from California, a psychotherapist from New York, and a psychologist from Pennsylvania. Justice Perell dismissed the action on the purely legal analysis that there was no evidence that the defendant psychiatrist had failed to meet the requisite standard of care in Ontario, and noted that the case was not about "whether...the whole discipline of psychiatry is wrong in disregarding psychotronic weapons as a possible cause of mental disturbances."
Dr. B.
Though she has always been self-represented, it seems that she understood that she needed a supporting opinion from someone qualified to speak to standards of Ontario psychiatrists (as opposed to professionals of other disciplines in other jurisdictions), so she went to see Dr. B. to try to get an opinion from him that the previous psychosis diagnosis was incorrect. (Incidentally, Dr. B. was one of 1500 Ontario psychiatrists she tried to contact.) Dr. B. administered some standard psychiatric diagnostic tests, and concluded, consistent with the findings of the previous psychiatrists, that she suffered from a delusional disorder. Needless to say, she wasn't happy with that result.
Likewise unsurprisingly, the Court dismissed her resulting action against Dr. B.
Commentary
This is a real challenge for the system. As a lawyer, I get a couple of calls per month from people who have stories which raise questions as to mental health - most frequently involving some large conspiracy of people who are out to destroy them.
I can't assume that a person is delusional. That is neither my expertise nor my job. But I'm not about to humour them, either. The question, "What do you hope that I can do for you?" is an important tool: One of the common features of these conspiracies involves an inability to identify the conspirators and/or specific actions which would ground legal action. Which would pretty much tie my hands, even if I were willing to be retained, and assuming that the person had the money to retain me.
But, particularly in more 'accessible' venues, it is very common to see self-represented litigants launching claim after claim against myriad people for perceived wrongs. It causes the responding parties to hire lawyers and incur costs, and such costs will usually not be recoverable, whether because of the venue, or simply because the plaintiff lacks the resources to satisfy a costs award.
But, while it's a small part of my job, I can't imagine how challenging it would be to make a full career out of dealing with mental illness.
*****
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.
Tuesday, August 27, 2013
Summary Judgment Motion Fails for Mitigation Question
The Superior Court recently released a decision on a motion in Anderson v. Cardinal Health Canada Inc., where a dismissed employee sought summary judgment.
Lillian Anderson worked for Cardinal for 22 years until she was dismissed on October 1, 2012. At the time of her dismissal, she was 55 years old, and her role was that of Accounting Manager. Her remuneration package was worth nearly $80,000 per year.
There were two reasons the motion failed: Mitigation, and availability of replacement employment.
Mitigation
This is actually really tricky to understand in the context of a motion for summary judgment.
Ordinarily, there's a reverse-onus on mitigation. The onus is on the plaintiff to prove dismissal without notice (which in most cases isn't that difficult), and if the defendant employer wants to argue that the plaintiff failed to mitigate, the onus is upon them to prove it on a balance of probabilities.
And it's a really high test: The employer needs to prove that the employee's efforts to find alternative employment were 'unreasonable in all respects'. Unless there's something very specific to be pointed to, such as "The employee started his own business" or "The employee spent two months in Europe" or "The employee declined this equivalent job offer", the Courts are very reluctant to second-guess an employee's job search. When a dismissed employee comes to Court with some meaningful evidence of a job search, that's often going to be sufficient; it's a rare case indeed where the Courts will say "Yes, you looked for a job, but you didn't try hard enough."
So, because the onus is upon the employer to establish this high threshold, it often isn't a big problem for employees.
However, on a motion for summary judgment, there's a different consideration of onus: There's an onus on the moving party (i.e. Anderson) to prove "that mitigation is not a genuine issue in this case requiring a trial". Which means that, where the employer is raising mitigation as an issue, the employee is going to need to be able to respond to the employer's evidence in a way that makes it pretty clear that the employer is not going to succeed.
The Court found that she failed to do so. To be clear: This is not a finding that she failed to mitigate. Rather, it's a finding that the interests of justice require a trial of the issue.
Her evidence was that she took courses in writing resumes and cover letters, and in other job search skills, and searched through multiple job resources and applied to 13 jobs in the eight months following termination.
The Defendant pointed out that other cases have involved employees who applied to over sixty jobs in similar time periods. In my humble opinion, that's a difficult argument to make much out of: The employee referred to found to have satisfied his obligation to mitigate (meaning that it can't indicate a threshold); the employee referred to was in a completely different type of position (meaning that it can't indicate any meaningful facts about the market), and there's no basis whatsoever for treating this employee as a 'standard'. Lots of people go above and beyond the minimum requirements for mitigation. I've had clients who applied for and accepted positions of much less prestige at much lower pay grades, despite that they clearly had no obligation to do so; it would be inappropriate to look to those individuals as an example of a standard to which others should be held.
However, the Defendant also searched through the same sources Anderson had used, and claimed to have found an additional 27 suitable jobs to which she didn't apply. That could be more compelling, but the judgment reflects an admission that some (it isn't clear how many) involved lower pay grades than what she was receiving at termination. (The judge doubted the credibility of the employee's explanation that she didn't apply for these jobs because they aren't comparable, because it appeared that she had applied for other jobs that were not comparable. I think there are problems with that analysis, but I won't go into it right now.)
The judge expressly stated that the "record does not show details about the 13 positions, such as hourly wage, benefits package, work hours, number of direct reports, managerial duties, or required qualifications". This suggests that there may be a weakness in the evidence. That being said, for a managerial-level full-time employee, you wouldn't always expect to see details regarding hourly wage and benefits package. and you would almost never see details of work hours or number of direct reports. At that level, a job ad should have some description of the duties and qualifications required, though.
It's not clear how much detail the employer provided regarding the other 27 positions, either, but from the framing of the judge's description, and the fact that the judge did not herself analyse the nature of the positions, I would infer that they were merely described and/or summarized by an affidavit, without producing the actual job ads.
I have my doubts as to how this issue was addressed: The judge referred to 'conflicting evidence', but I don't see any on the description of the facts. The employee applied to 13 jobs. The details of those 13 jobs aren't clear, one way or another. The employer found another 27 jobs it thinks she should have applied for. The details of those 27 jobs aren't clear, either. But the failure to mitigate, in this context, doesn't altogether turn on the characterization of the 13 jobs for which she did apply; it turns on the 27 jobs for which she didn't apply. If they're all comparable, then the employee probably needs to provide a reasonable explanation for why she didn't apply to have a chance of succeeding on the motion. But it's not at all clear to me, and the judge did not find, that the 27 jobs were comparable. If that's because of deficiencies in the employer's evidence, then that should not hold up a summary judgment.
Still, I have a feeling that the decision is partly informed by the fact that the reasonable notice period isn't over yet. The employee is seeking a 24-month notice period; the employer is arguing that the appropriate award is somewhere from 12-16 months. (In the vast majority of cases, you can expect the right answer to fall somewhere between the two positions.) Right now, we're less than 11 months into the notice period, so judgment would have the effect of relieving her of ongoing duties to mitigate...and given that her efforts thus far appear to have been lukewarm at best, the Court isn't prepared to do that. Remember my commentary on the Bernier case, where I remarked that the Court might be less willing to give summary judgment partway through the notice period in a borderline mitigation case?
Availability of Replacement Employment
There's some crossover between this issue and mitigation: How many jobs are out there that are reasonable replacement jobs for the plaintiff? How qualified is she for the jobs coming up? How long should her job-hunt reasonably take?
In some ways, I feel that this was a more solid area for the motion to fail: The plaintiff was under an obligation to lead evidence relating to the Bardal factors, so the failure to lead sufficient particulars on this point is understandably fatal.
On the other hand, I'm not sure I think this should hold up a judgment. In many cases (including Bernier), availability of replacement employment isn't even remarked upon, because the evidence is almost always weaker and more abstract than the other Bardal factors. Age is an easily-verified factor, length of service and character of employment are matters between the employer and employee - there's sometimes an issue about them, but they're matters about which the parties have all the relevant facts. Availability of replacement employment, however, requires the parties to lead evidence about the market, writ large, and without appropriately-qualified experts (which very seldom happens), it amounts to fairly broad and general statements by the parties, often not meeting any real standard of Court-admissible evidence, about their understandings or experience of the applicable job market. (The number of job postings is only one factor; the number of applicants to such postings is also quite relevant, and there's really no way for the employee to know that in a Court-admissible way.)
"Character of employment" has been described as being of relatively declining importance - the conclusion seems to be rising that it's only important because of the presumptions it raises regarding the availability of replacement employment: We usually presume that a senior executive will have a harder time finding a new job than a cashier. This is certainly not true as a universality, and may not even be true as a generality, but it seems to me that the law is moving towards a more practical approach that blends character of employment and availability of replacement employment together. If the parties can illustrate the availability of replacement employment in a meaningful way, the presumptions arising from character of employment will be less important. Where availability of replacement employment is in question, it seems to me that character of employment becomes more relevant.
And, quite frankly, when even with employer evidence, there are only 40 relevant job postings that arise in an 8-month period, it suggests against significant availability of employment. (Though, again, there's a question of how competitive the job market is.)
*****
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.
Lillian Anderson worked for Cardinal for 22 years until she was dismissed on October 1, 2012. At the time of her dismissal, she was 55 years old, and her role was that of Accounting Manager. Her remuneration package was worth nearly $80,000 per year.
There were two reasons the motion failed: Mitigation, and availability of replacement employment.
Mitigation
This is actually really tricky to understand in the context of a motion for summary judgment.
Ordinarily, there's a reverse-onus on mitigation. The onus is on the plaintiff to prove dismissal without notice (which in most cases isn't that difficult), and if the defendant employer wants to argue that the plaintiff failed to mitigate, the onus is upon them to prove it on a balance of probabilities.
And it's a really high test: The employer needs to prove that the employee's efforts to find alternative employment were 'unreasonable in all respects'. Unless there's something very specific to be pointed to, such as "The employee started his own business" or "The employee spent two months in Europe" or "The employee declined this equivalent job offer", the Courts are very reluctant to second-guess an employee's job search. When a dismissed employee comes to Court with some meaningful evidence of a job search, that's often going to be sufficient; it's a rare case indeed where the Courts will say "Yes, you looked for a job, but you didn't try hard enough."
So, because the onus is upon the employer to establish this high threshold, it often isn't a big problem for employees.
However, on a motion for summary judgment, there's a different consideration of onus: There's an onus on the moving party (i.e. Anderson) to prove "that mitigation is not a genuine issue in this case requiring a trial". Which means that, where the employer is raising mitigation as an issue, the employee is going to need to be able to respond to the employer's evidence in a way that makes it pretty clear that the employer is not going to succeed.
The Court found that she failed to do so. To be clear: This is not a finding that she failed to mitigate. Rather, it's a finding that the interests of justice require a trial of the issue.
Her evidence was that she took courses in writing resumes and cover letters, and in other job search skills, and searched through multiple job resources and applied to 13 jobs in the eight months following termination.
The Defendant pointed out that other cases have involved employees who applied to over sixty jobs in similar time periods. In my humble opinion, that's a difficult argument to make much out of: The employee referred to found to have satisfied his obligation to mitigate (meaning that it can't indicate a threshold); the employee referred to was in a completely different type of position (meaning that it can't indicate any meaningful facts about the market), and there's no basis whatsoever for treating this employee as a 'standard'. Lots of people go above and beyond the minimum requirements for mitigation. I've had clients who applied for and accepted positions of much less prestige at much lower pay grades, despite that they clearly had no obligation to do so; it would be inappropriate to look to those individuals as an example of a standard to which others should be held.
However, the Defendant also searched through the same sources Anderson had used, and claimed to have found an additional 27 suitable jobs to which she didn't apply. That could be more compelling, but the judgment reflects an admission that some (it isn't clear how many) involved lower pay grades than what she was receiving at termination. (The judge doubted the credibility of the employee's explanation that she didn't apply for these jobs because they aren't comparable, because it appeared that she had applied for other jobs that were not comparable. I think there are problems with that analysis, but I won't go into it right now.)
The judge expressly stated that the "record does not show details about the 13 positions, such as hourly wage, benefits package, work hours, number of direct reports, managerial duties, or required qualifications". This suggests that there may be a weakness in the evidence. That being said, for a managerial-level full-time employee, you wouldn't always expect to see details regarding hourly wage and benefits package. and you would almost never see details of work hours or number of direct reports. At that level, a job ad should have some description of the duties and qualifications required, though.
It's not clear how much detail the employer provided regarding the other 27 positions, either, but from the framing of the judge's description, and the fact that the judge did not herself analyse the nature of the positions, I would infer that they were merely described and/or summarized by an affidavit, without producing the actual job ads.
I have my doubts as to how this issue was addressed: The judge referred to 'conflicting evidence', but I don't see any on the description of the facts. The employee applied to 13 jobs. The details of those 13 jobs aren't clear, one way or another. The employer found another 27 jobs it thinks she should have applied for. The details of those 27 jobs aren't clear, either. But the failure to mitigate, in this context, doesn't altogether turn on the characterization of the 13 jobs for which she did apply; it turns on the 27 jobs for which she didn't apply. If they're all comparable, then the employee probably needs to provide a reasonable explanation for why she didn't apply to have a chance of succeeding on the motion. But it's not at all clear to me, and the judge did not find, that the 27 jobs were comparable. If that's because of deficiencies in the employer's evidence, then that should not hold up a summary judgment.
Still, I have a feeling that the decision is partly informed by the fact that the reasonable notice period isn't over yet. The employee is seeking a 24-month notice period; the employer is arguing that the appropriate award is somewhere from 12-16 months. (In the vast majority of cases, you can expect the right answer to fall somewhere between the two positions.) Right now, we're less than 11 months into the notice period, so judgment would have the effect of relieving her of ongoing duties to mitigate...and given that her efforts thus far appear to have been lukewarm at best, the Court isn't prepared to do that. Remember my commentary on the Bernier case, where I remarked that the Court might be less willing to give summary judgment partway through the notice period in a borderline mitigation case?
Availability of Replacement Employment
There's some crossover between this issue and mitigation: How many jobs are out there that are reasonable replacement jobs for the plaintiff? How qualified is she for the jobs coming up? How long should her job-hunt reasonably take?
In some ways, I feel that this was a more solid area for the motion to fail: The plaintiff was under an obligation to lead evidence relating to the Bardal factors, so the failure to lead sufficient particulars on this point is understandably fatal.
On the other hand, I'm not sure I think this should hold up a judgment. In many cases (including Bernier), availability of replacement employment isn't even remarked upon, because the evidence is almost always weaker and more abstract than the other Bardal factors. Age is an easily-verified factor, length of service and character of employment are matters between the employer and employee - there's sometimes an issue about them, but they're matters about which the parties have all the relevant facts. Availability of replacement employment, however, requires the parties to lead evidence about the market, writ large, and without appropriately-qualified experts (which very seldom happens), it amounts to fairly broad and general statements by the parties, often not meeting any real standard of Court-admissible evidence, about their understandings or experience of the applicable job market. (The number of job postings is only one factor; the number of applicants to such postings is also quite relevant, and there's really no way for the employee to know that in a Court-admissible way.)
"Character of employment" has been described as being of relatively declining importance - the conclusion seems to be rising that it's only important because of the presumptions it raises regarding the availability of replacement employment: We usually presume that a senior executive will have a harder time finding a new job than a cashier. This is certainly not true as a universality, and may not even be true as a generality, but it seems to me that the law is moving towards a more practical approach that blends character of employment and availability of replacement employment together. If the parties can illustrate the availability of replacement employment in a meaningful way, the presumptions arising from character of employment will be less important. Where availability of replacement employment is in question, it seems to me that character of employment becomes more relevant.
And, quite frankly, when even with employer evidence, there are only 40 relevant job postings that arise in an 8-month period, it suggests against significant availability of employment. (Though, again, there's a question of how competitive the job market is.)
*****
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.
Wednesday, August 7, 2013
Another Wrongful Dismissal Claim at Small Claims Court
I recently posted about the difficulties of litigating employment law claims at the Small Claims Court.
There is an interesting recent decision, Pascua v. Khul-Schachter, decided by Deputy Judge Prattas of the Small Claims Court. It's a pretty good decision, all in all, where the employer was represented by a lawyer and the employee by a paralegal.
The Facts
Pascua was a full-time nanny and live-in caregiver for the employer's two children. She started August 20, 2009, initially on a three-year term contract, but on November 30, 2010 the parties signed an indefinite term contract (which appears to have been necessary to obtain a renewal of the employee's work visa to stay in Canada). She was dismissed without notice on September 30, 2011, allegedly for cause, without a reference letter.
The employer took the position that there was just cause, based on two incidents: On one occasion, the "elevator incident", one of the children got into the building's elevator alone and took it to the ground floor. Pascua admitted that this happened, and took the position that it happened in late May or June 2011. The building's security guard testified that it happened after 5:30pm on July 29, 2011. However, in a previous statement, he had given the time as 4:15pm. Likely nothing turns on a difference of 75 minutes, but it hurts a witness' credibility to confidently give conflicting evidence. Added to the fact that Pascua's passport indicated that she was out of the country on July 29, 2011, the Deputy Judge accepted her evidence on the point.
The second incident, the "hallway incident", involved an allegation, which Pascua denied, that on September 30 2011 the employer's husband had come home to find the children unsupervised and crying in the hallway outside the apartment.
Pascua argued that she was terminated because she had become pregnant.
The questions for the Court were these:
(1) Did the employer have just cause to terminate Pascua's employment?
(2) If not, what are the appropriate damages?
The Decision - Just Cause
The Deputy Judge doesn't appear to have reached a finding as to whether or not the Hallway Incident occurred, instead content to conclude that the test for just cause wouldn't be made out even if it did.
His reasoning is very much in line with the established case law on the point.
A central concern is the adequacy of the warning after the Elevator Incident. There was no written warning, and while there was some evidence about a 'discussion' of the incident, the evidence fell short of establishing the clear and unequivocal warning that recurrence would jeopardize continued employment:
The Deputy Judge took the analysis a step further, finding that "real and escalating warnings" were particularly necessary in light of the "special relationship" that forms between a nanny and family living under the same roof.
The Hallway Incident, if it happened, was serious, but as a standalone incident in a long-standing employment relationship, did not constitute cause. Even together, the two incidents were "not enough to constitute a shattering of the confidence to the parents so as to constitute just cause."
Side Note: The Practicalities of Warning Live-In Nannies
A family hiring a live-in nanny really needs to have a great deal of trust in the employee, and keeping a disgruntled employee around while building a case for cause is simply not a realistic option in general. They usually have unrestricted access to the household and many of the valuables in the household, and while I would not suggest that all employees will start plundering when they see the end coming, the truth is that some employees will act badly when the relationship sours, and that isn't a chance that employers should want to take.
However, this is fundamentally about an abundance of caution - firing somebody because they could, or might, act dishonestly, and not because there's any cogent reason to believe that this particular individual would. With misconduct that isn't inherently dishonest, that general concern will not justify a termination for cause. If the relationship is souring due to doubts as to the competence or capability of the nanny, but where the nanny hasn't demonstrated any reason to expect dishonesty, then a prudent employer will terminate the employee with pay in lieu of notice.
Damages - Common Law Notice?
As those familiar with my blog or employment law in general will know, there is a presumption of "reasonable notice of termination" at common law, which can be rebutted by clear contractual language, provided that the contractual language complies with applicable employment standards legislation.
The contract included the following language:
When the contract was executed, more than a year into the employment relationship, two weeks was the statutory minimum. However, being an indefinite term contract, language which purported to limit notice entitlements to two weeks would not be enforceable, because it would be an attempt to contract out of the ESA...though that isn't what this language does. This language says "at least two weeks" which basically tracks the language of the ESA itself, and doesn't displace the common law. The second sentence, likewise, is simply an affirmation of employment standards. The ESA does not displace the presumption of reasonable notice, and so language which simply affirms the ESA will not do so either. Contract language needs something more: If, as here, it's framed in terms of the employer's obligations, there needs to be an exclusion of further obligations beyond the ESA.
It's kind of like the 'warning' issue. As an employer, you can argue until you're blue that it was 'understood' to have the effect you were going for, but unless you've put it down there expressly, it won't fly.
So I agree with the Deputy Judge's decision to award damages based on common law reasonable notice...however, I should highlight a problem with an alternative finding of his:
However, that's an alternative point made by the Deputy Judge, and in my humble opinion he was nonetheless correct to award common law damages.
He awarded four months pay in lieu of notice, which seems about right to me, but there's a really interesting aspect to the analysis: The employee had a hard time finding replacement employment, particularly so without a reference letter.
Where the Case Starts to Go Wrong
There are a couple of potential problems, however.
Human Rights?
Firstly, while the Deputy Judge notes that the employee claimed to have been dismissed due to pregnancy, he did not dispose of that argument in any way. The allegation may or may not have been substantiated; the problem is that the Deputy Judge did not accept or reject it. And that's important, because dismissing an employee due to pregnancy can lead to other damages under the Employment Standards Act or Human Rights Code.
"Wrongful dismissal", in the usual sense, is about breach of contract. It means that an employer, when lawfully terminating the employment relationship, failed to provide notice required by contract. And most terminations are lawful: In a non-union environment, an employer is entitled to terminate an employee for almost any reason, or no reason at all. As an employer, I can wake up on the wrong side of the bed one morning, decide "I feel like firing someone", and have my employees draw straws to figure out who is going. It would be bad business, but there's nothing illegal about it, and the employee would be entitled only to notice of termination.
However, there's a reason that I say "almost any reason, or no reason at all". There are a few reasons for which an employer cannot lawfully terminate an employment relationship, under the Labour Relations Act, the Occupational Health and Safety Act, the Employment Standards Act, and the Human Rights Code. (Not a comprehensive list, but in the Provincial sphere, that pretty much captures the main ones.) Firing somebody because they're pregnant would violate both the ESA and the Code.
Either way, the illegality of the termination can give rise to additional damages - it is no longer simply the case that the employer should have given notice; rather, it is the case that the employer should not have terminated the contract at all, and so rather than an estimation of "reasonable notice", it is more appropriate to look at de facto losses. (My reasonable notice period may have only been 4 months, but if I was actually unemployed for a full year, then I might be able to argue for the full year when the termination itself was unlawful.)
As well, under the Human Rights Code, additional damages are available for injury to feelings, dignity, and self-respect. The Courts are now empowered by the Code to award these damages. (Until a few years ago, this was not the case.)
In other words, if there was anything to her allegations that the termination was a result of her pregnancy, the plaintiff may have been seriously shortchanged in terms of damages.
Value of a Month
Secondly, I'm concerned about the calculation of damages. Pay in lieu of notice is not limited to salary, and it appears that the Deputy Judge took a salary-only approach to damages:
Notice that $410 is $10.25 (the minimum wage) times 40 (the usual hours for a full time contract). So it may well be that the $410 includes the deemed wages...but even then, there are special rules relating to the wages of residential workers, which aren't discussed at all in the decision, so I can't help but wonder if they were given due consideration and argument.
And finally, I have no idea where the "4.2 weeks" per month comes from. On average, a month is 4.33 weeks. The four months following September 30 are closer to 4.4 weeks, on average. Small difference, though - it only makes a difference of a couple hundred dollars.
Another Interesting Observation: Conventions of Domestic Servants
In 1931, in a decision in the case of Peidl v. Bonas, the Courts in Saskatchewan upheld a 'common law rule', referencing the 1864 English case of Nicholl v. Greaves, that a dismissed domestic servant is entitled to one month pay in lieu of notice.
Though the 'rule' has occasionally been referred to in other contexts, there is relatively little recent case law actually considering its merits or applicability in 21st-century Canada.
In 2001, the Nova Scotia Court of Appeal summarized the doctrine in Burton v. Howlett, and while they didn't expressly reject it altogether, they expressed serious scepticism about the merits of this 'common law rule'.
Personally, I am unaware of any case law of contemporary relevance which either accepts or expressly rejects the doctrine from Nicholl v. Greaves. It was not mentioned in the Pascua decision, even though - if it is good law - this probably would have been a case for its application.
That being said, I doubt whether or not it could be held to be enforceable today, and one might reasonably argue that it is, in fact, incompatible with our current employment standards framework.
*****
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.
There is an interesting recent decision, Pascua v. Khul-Schachter, decided by Deputy Judge Prattas of the Small Claims Court. It's a pretty good decision, all in all, where the employer was represented by a lawyer and the employee by a paralegal.
The Facts
Pascua was a full-time nanny and live-in caregiver for the employer's two children. She started August 20, 2009, initially on a three-year term contract, but on November 30, 2010 the parties signed an indefinite term contract (which appears to have been necessary to obtain a renewal of the employee's work visa to stay in Canada). She was dismissed without notice on September 30, 2011, allegedly for cause, without a reference letter.
The employer took the position that there was just cause, based on two incidents: On one occasion, the "elevator incident", one of the children got into the building's elevator alone and took it to the ground floor. Pascua admitted that this happened, and took the position that it happened in late May or June 2011. The building's security guard testified that it happened after 5:30pm on July 29, 2011. However, in a previous statement, he had given the time as 4:15pm. Likely nothing turns on a difference of 75 minutes, but it hurts a witness' credibility to confidently give conflicting evidence. Added to the fact that Pascua's passport indicated that she was out of the country on July 29, 2011, the Deputy Judge accepted her evidence on the point.
The second incident, the "hallway incident", involved an allegation, which Pascua denied, that on September 30 2011 the employer's husband had come home to find the children unsupervised and crying in the hallway outside the apartment.
Pascua argued that she was terminated because she had become pregnant.
The questions for the Court were these:
(1) Did the employer have just cause to terminate Pascua's employment?
(2) If not, what are the appropriate damages?
The Decision - Just Cause
The Deputy Judge doesn't appear to have reached a finding as to whether or not the Hallway Incident occurred, instead content to conclude that the test for just cause wouldn't be made out even if it did.
His reasoning is very much in line with the established case law on the point.
A central concern is the adequacy of the warning after the Elevator Incident. There was no written warning, and while there was some evidence about a 'discussion' of the incident, the evidence fell short of establishing the clear and unequivocal warning that recurrence would jeopardize continued employment:
31. I would accept that the elevator incident was serious, but the defendant had to be unambiguous about her intentions. It was not clear from the evidence whether she informed the plaintiff that the incident was unacceptable; or whether she simply expressed her concern to the plaintiff; or whether she delivered any stern warning that if a similar incident were to happen again that the plaintiff would be fired.Paragraph 33 is a completely accurate statement of the relevant law. Many employers, especially in smaller or informal environments, hesitate to expressly threaten termination - it seems heavy-handed and likely to exacerbate existing conflicts - but the reality is that in all but the most egregious misconduct the threat needs to be there before you can fire for cause.
32. In fact, from their conduct the defendant and her husband may have “forgiven” the plaintiff. The defendant testified that she “discussed” this incident with the plaintiff and emphasized to her that the children’s safety was the number one priority. Something which the plaintiff accepted. In his cross–examination the husband testified that he did not investigate the elevator incident and did not inquire as to how it happened or how his child got into the elevator.
33. In my view, the defendant should have given the plaintiff a clear-cut warning – with no ambiguity – that if a similar incident of concern were to happen again that she would be fired on the spot. The warning has to be actually conveyed to the employee, and the employer cannot simply rely on an impression that the employee may have received it.
The Deputy Judge took the analysis a step further, finding that "real and escalating warnings" were particularly necessary in light of the "special relationship" that forms between a nanny and family living under the same roof.
The Hallway Incident, if it happened, was serious, but as a standalone incident in a long-standing employment relationship, did not constitute cause. Even together, the two incidents were "not enough to constitute a shattering of the confidence to the parents so as to constitute just cause."
Side Note: The Practicalities of Warning Live-In Nannies
A family hiring a live-in nanny really needs to have a great deal of trust in the employee, and keeping a disgruntled employee around while building a case for cause is simply not a realistic option in general. They usually have unrestricted access to the household and many of the valuables in the household, and while I would not suggest that all employees will start plundering when they see the end coming, the truth is that some employees will act badly when the relationship sours, and that isn't a chance that employers should want to take.
However, this is fundamentally about an abundance of caution - firing somebody because they could, or might, act dishonestly, and not because there's any cogent reason to believe that this particular individual would. With misconduct that isn't inherently dishonest, that general concern will not justify a termination for cause. If the relationship is souring due to doubts as to the competence or capability of the nanny, but where the nanny hasn't demonstrated any reason to expect dishonesty, then a prudent employer will terminate the employee with pay in lieu of notice.
Damages - Common Law Notice?
As those familiar with my blog or employment law in general will know, there is a presumption of "reasonable notice of termination" at common law, which can be rebutted by clear contractual language, provided that the contractual language complies with applicable employment standards legislation.
The contract included the following language:
The EMPLOYER must give written notice before terminating the contract of the EMPLOYEE. This notice shall be given at least two weeks in advance. The parties agree to abide by provincial/labour/employment standards regarding written notice of termination of employment.While the Courts aren't entirely consistent with interpreting this kind of language, I largely agree with the Deputy Judge's treatment of it: The language is ambiguous and shouldn't be enforced. I might go a step further, though.
When the contract was executed, more than a year into the employment relationship, two weeks was the statutory minimum. However, being an indefinite term contract, language which purported to limit notice entitlements to two weeks would not be enforceable, because it would be an attempt to contract out of the ESA...though that isn't what this language does. This language says "at least two weeks" which basically tracks the language of the ESA itself, and doesn't displace the common law. The second sentence, likewise, is simply an affirmation of employment standards. The ESA does not displace the presumption of reasonable notice, and so language which simply affirms the ESA will not do so either. Contract language needs something more: If, as here, it's framed in terms of the employer's obligations, there needs to be an exclusion of further obligations beyond the ESA.
It's kind of like the 'warning' issue. As an employer, you can argue until you're blue that it was 'understood' to have the effect you were going for, but unless you've put it down there expressly, it won't fly.
So I agree with the Deputy Judge's decision to award damages based on common law reasonable notice...however, I should highlight a problem with an alternative finding of his:
53. More importantly, since the defendant in this case served no notice and relied on just cause which I have rejected, this provision is ineffective and cannot be interpreted so as to cap the damages to the detriment of the plaintiff.Simply put, that is not an accurate statement of the law. It may be persuasive, given the imbalance of power, that an employer seeking to rely upon a contract should have to show compliance with the contract, but in this context it ignores the first principles of contract law. The key question is this: What position would the employee have been put into had the employer complied with its obligations under the contract? The fact that an employer does not comply with the terms of an otherwise-enforceable written contract does not somehow operate to nullify the written contract and substitute other terms. In a case of an otherwise enforceable written contract, the contract would be breached, not voided. And therefore the employee's damages would be calculated on the basis of where they would be had the contract not been breached - i.e. had contractual notice been provided.
However, that's an alternative point made by the Deputy Judge, and in my humble opinion he was nonetheless correct to award common law damages.
He awarded four months pay in lieu of notice, which seems about right to me, but there's a really interesting aspect to the analysis: The employee had a hard time finding replacement employment, particularly so without a reference letter.
60. In my view the attempts by the plaintiff to find another job were seriously impeded because of the way her termination of employment was handled by the defendant.The appellate Courts have sometimes frowned on breaking down the value of certain factors. Calculation of reasonable notice is really a global assessment, and so it would be incorrect to take from this a valuation of the failure to give a reference letter as 4-6 weeks. But I think it's an important observation here, because while there's no formal obligation to give a reference letter, it highlights that it is an important step for an employer to take in helping the employee obtain new employment.
61. Even though her employment period was just over two years, in my view it would be inadequate to simply give the plaintiff 2.5 months based on the length of service as suggested in the submissions of defendant’s counsel. This approach would unduly emphasize the length of service and under emphasize the availability of similar employment.
62. Had the defendant given the plaintiff a reference letter and had she terminated the contract without cause, for example, the suggested 2.5 months – or even 3 months – may have been appropriate.
Where the Case Starts to Go Wrong
There are a couple of potential problems, however.
Human Rights?
Firstly, while the Deputy Judge notes that the employee claimed to have been dismissed due to pregnancy, he did not dispose of that argument in any way. The allegation may or may not have been substantiated; the problem is that the Deputy Judge did not accept or reject it. And that's important, because dismissing an employee due to pregnancy can lead to other damages under the Employment Standards Act or Human Rights Code.
"Wrongful dismissal", in the usual sense, is about breach of contract. It means that an employer, when lawfully terminating the employment relationship, failed to provide notice required by contract. And most terminations are lawful: In a non-union environment, an employer is entitled to terminate an employee for almost any reason, or no reason at all. As an employer, I can wake up on the wrong side of the bed one morning, decide "I feel like firing someone", and have my employees draw straws to figure out who is going. It would be bad business, but there's nothing illegal about it, and the employee would be entitled only to notice of termination.
However, there's a reason that I say "almost any reason, or no reason at all". There are a few reasons for which an employer cannot lawfully terminate an employment relationship, under the Labour Relations Act, the Occupational Health and Safety Act, the Employment Standards Act, and the Human Rights Code. (Not a comprehensive list, but in the Provincial sphere, that pretty much captures the main ones.) Firing somebody because they're pregnant would violate both the ESA and the Code.
Either way, the illegality of the termination can give rise to additional damages - it is no longer simply the case that the employer should have given notice; rather, it is the case that the employer should not have terminated the contract at all, and so rather than an estimation of "reasonable notice", it is more appropriate to look at de facto losses. (My reasonable notice period may have only been 4 months, but if I was actually unemployed for a full year, then I might be able to argue for the full year when the termination itself was unlawful.)
As well, under the Human Rights Code, additional damages are available for injury to feelings, dignity, and self-respect. The Courts are now empowered by the Code to award these damages. (Until a few years ago, this was not the case.)
In other words, if there was anything to her allegations that the termination was a result of her pregnancy, the plaintiff may have been seriously shortchanged in terms of damages.
Value of a Month
Secondly, I'm concerned about the calculation of damages. Pay in lieu of notice is not limited to salary, and it appears that the Deputy Judge took a salary-only approach to damages:
64. According to the Second Contract the weekly salary of the plaintiff was $410. The amount for the 4 months reasonable notice period would therefore be $6,888 calculated: 410 x 4.2 weeks = 1722 per month x 4 months = 6888.A domestic worker like Pascua probably isn't getting group health insurance benefits, a company car, pension plan, significant performance bonuses, etc., which is what I'm usually looking for beyond base salary...but likely is getting room and board, and it isn't entirely clear if that value is included in the salary figure. The Employment Standards Act deems room and board for domestic workers to be worth $85.25 per week, for the purpose of minimum wage calculations. I might make an argument based on actual damages - if I have to go out and rent a new place at market-value rent for my four month notice period, I'd be arguing for that plus food in terms of common law damages, and on the right facts it would be a pretty sound argument - but at least those deemed wages would be included in wages owing over the notional notice period.
Notice that $410 is $10.25 (the minimum wage) times 40 (the usual hours for a full time contract). So it may well be that the $410 includes the deemed wages...but even then, there are special rules relating to the wages of residential workers, which aren't discussed at all in the decision, so I can't help but wonder if they were given due consideration and argument.
And finally, I have no idea where the "4.2 weeks" per month comes from. On average, a month is 4.33 weeks. The four months following September 30 are closer to 4.4 weeks, on average. Small difference, though - it only makes a difference of a couple hundred dollars.
Another Interesting Observation: Conventions of Domestic Servants
In 1931, in a decision in the case of Peidl v. Bonas, the Courts in Saskatchewan upheld a 'common law rule', referencing the 1864 English case of Nicholl v. Greaves, that a dismissed domestic servant is entitled to one month pay in lieu of notice.
Though the 'rule' has occasionally been referred to in other contexts, there is relatively little recent case law actually considering its merits or applicability in 21st-century Canada.
In 2001, the Nova Scotia Court of Appeal summarized the doctrine in Burton v. Howlett, and while they didn't expressly reject it altogether, they expressed serious scepticism about the merits of this 'common law rule'.
Personally, I am unaware of any case law of contemporary relevance which either accepts or expressly rejects the doctrine from Nicholl v. Greaves. It was not mentioned in the Pascua decision, even though - if it is good law - this probably would have been a case for its application.
That being said, I doubt whether or not it could be held to be enforceable today, and one might reasonably argue that it is, in fact, incompatible with our current employment standards framework.
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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.
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