Thursday, March 13, 2014

Small Claims Court - Just Cause Defence Fails

There's a new case out of the St. Catharines Small Claims Court, Schalk v. Sitel, dealing with an employee in an outsourced customer service company (think: inbound call centre), who was dismissed due to personal use of company equipment.

The employee was there for just shy of 10 years, and had generally positive reviews.  In early 2011, she and two colleagues were disciplined (not dismissed at that point) for regularly using company email for personal purposes.  Her evidence, which the Deputy Judge accepted, was that her previous manager had permitted the practice.  The Deputy Judge highlights:  "Nevertheless Ms. Schalk and her colleagues were disciplined."

(It's not entirely clear to me what significance the Deputy Judge places on the discipline.  Having accepted that it was previously condoned, it's not properly disciplinable and not at all culpable, so the appropriate treatment of the purported discipline would be that it stood as a direction that - regardless of previous practices - that was no longer permitted.  But the evidence is that Ms. Schalk stopped using her email for personal purposes afterwards.)

Some twenty months later, she was dismissed without notice, and the employer took the position that the dismissal was for just cause, because Ms. Schalk was taking personal phone calls on the company phone line.  To Sitel's client, Cox Communications, this is a capital offence.

The evidence was that Ms. Schalk never made personal calls on company lines, but received several calls, particularly from the sister of a co-worker. [Edited:  In the original post, I mistakenly posted that it was Schalk's own sister.]  This violated company policy.

There was a logistical problem in the company policies:  When Ms. Schalk's line rang, she was required to answer it.  That was her job.  She didn't know who was calling until she answered it.  The phone number was publicly available (and her uncontradicted evidence is that she never gave it out).  The transcript of one call, from her co-worker's sister, was led in evidence, and the trial judge considered her to have dealt with it quickly.  The defence argued that she should have hung up as soon as she realized that it was not a client-related call.

The Deputy Judge concluded that it may have been appropriate of Sitel to "discipline Ms. Schalk in a more minor way", but that, particularly in light of her long service and positive performance, just cause was not made out without progressive discipline.

This makes a great deal of sense to me.  Receiving a personal phone call, in that kind of role, might even be fairly serious misconduct.  But without prior discipline on the point, clarifying the "hang up immediately" expectation, and the consequences that will flow from subsequent violations, it's unlikely that just cause will be made out in such a case.

That said, I think the Deputy Judge may have put a bit too much emphasis on her positive performance review after the 2011 discipline, suggesting that the employer was sending mixed messages.  While positive reviews might weigh against just cause in a general sense, it makes sense that an employee who engages in disciplinable misconduct yet otherwise does her job well might have a disciplinary record alongside positive performance reviews.  (However, because I don't really think the prior discipline matters, I don't think this should change the analysis.)

Reasonable Notice

So how much notice should Ms. Schalk have received?  The employer led case law, mostly quite dated, arguing for a notice period of 4-6 months.  Schalk argued for a notice period in the range of 7-10 months.  (She earned under $30,000 per year; more than ten months would put her over the Small Claims Court cap.)

The employer's position was ambitious, without a doubt.  The Deputy Judge recognized it as such, and awarded 10 months in lieu of notice, granting judgment for just under $24,000.


Ms. Schalk's mitigation evidence was pretty sparse.  She applied for a grand total of five jobs between the termination and the trial, though her evidence was that she spent a lot of time looking for jobs, and her lack of education meant that she wasn't qualified for many, so she started taking online courses to further her education.

Her evidence on the unavailability of other jobs within her expertise was unchallenged; the onus is upon the employer to prove failure to mitigate, and the employer did not meet this onus.


I have occasionally commented about the limits on Small Claims Court as a venue for wrongful dismissal.  This is not a case that really highlights my concerns.  This is a good decision, right on the law in all material ways (though I'm a little surprised by how the Deputy Judge got there in some ways).  Both sides were represented by counsel.

The plaintiff's lawyer is pretty junior - a third year associate with a full-service firm in the Niagara and St. Catharines area.  But her bio indicates that she only practices labour and employment law, and she clearly served her client's interests well in this case, and probably relatively affordably.

I know the defendant's lawyer personally; he was a year behind me in law school.  I can say firsthand that he's a good advocate (and not a bad softball player, either).  If there's such a thing as a 'good loss', this is it:  It was an uphill battle, and he appears to have fought it well.  I've dealt with his firm often enough, and they're usually pretty good about 'client management' in the sense of convincing their clients to negotiate reasonably.  (That said, some employers can be pretty stubborn about not wanting to give a package to an employee they think was a bad apple.)

With a two-day trial, this file would have been pretty pricey on both sides.  Definitely more expensive for the employer - their lawyer was not such a junior lawyer, and was from a major Toronto-based firm.

15% of the judgment - arguably the prima facie cap on costs at the Small Claims Court - would be under $3600.  This was a full win for the plaintiff, so one would hope that the plaintiff did better than an offer to settle, which could double that to $7200.  This isn't so far out of line - I can't know what kind of costs the plaintiff incurred, but it seems to me that, if she can collect $31,000 from the employer, she's probably coming out ahead by a pretty good margin.

And, from the employer perspective, consider the message:  One expects that they probably could have settled for less than $24,000 somewhere along the line, but now they're faced with paying the full $24,000 to the employee, plus, likely, a contribution to costs, not to mention having to pay their own legal fees...which, as I said before, I'm sure isn't cheap.

It definitely doesn't raise the concerns I've noted before about pyrrhic victories and encouraging employers to play hardball.

At the same time, this was kind of a 'best case scenario'.  A claim that approaches the maximum jurisdiction of the Small Claims Court; a junior lawyer for the plaintiff who nonetheless appears to be a competent employment lawyer; and a reasonably skilled and experienced lawyer acting for the defendant; and it dealt only with three 'bread-and-butter' employment law legal issues:  Just cause, reasonable notice period, mitigation.


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

1 comment:

  1. FYI
    As per the court document in the provided link it states it was the sister of the plaintiffs co worker not the sister of the plaintiff.