Wednesday, July 30, 2014

Employer fails to established just cause for disobedience; should have given "cooling off" period

Another just cause case was recently decided by Deputy Judge Prattas - he's deciding a lot of these, it seems - in Borges v. Midland Food Products Inc.  The employer alleged just cause, in the form of disobedience in a meeting the day prior to dismissal, and secondly alleged 'cumulative cause' on the basis of a series of incidents.


Borges worked for Midland for about 10 years as a salesperson, until he was dismissed in March 2011.

In a nutshell, his sales numbers had been struggling a little bit.  It doesn't sound like the problem was particularly significant - he had exceeded his 2009 and 2010 targets, but the year-over-year numbers had declined in the previous six months.  It also bears noting that he hadn't historically met his targets before those two years (though much of his employment had been in a different division at the time).  It also bears noting that there was no evidence as to how realistic the quotas were.

Most of Borges' work was out of the office, which is not at all uncommon in a sales role.  However, when you're starting to question the performance of someone outside of the office, many employers will start to ask the question "What's he doing when he isn't here?"

In March 2011, Borges' boss called a meeting with him to discuss the decreasing sales.  By all accounts, it became a heated discussion (Borges alleged that there were 'slurs' against himself and his family), and the major problem was a note presented to Borges requiring him to be in the office until 5pm three days per week (and until 1pm on the other days), and to advise his boss in advance of any meetings.

Borges' exact response to this was also in dispute.  The employer took the position that he refused the direction.  It appears that Borges' position is that he said that it didn't make sense - most successful salespeople don't sell from behind a desk, and the employer was basically looking to chain Borges to his desk and micromanage his work.

The Deputy Judge appears not to have been satisfied that there was any actual refusal, but in any event felt that any refusal would have been "in the heat of the moment".  The requirement was a "significant change", and he "should have had time to absorb the shock and even if he failed to comply he should have been given a proper warning about it."
Common sense would dictate that there should have been a cooling off period following the heated discussion - for both parties - and the plaintiff allowed some reasonable time to comply.
The Deputy Judge highlighted that the appropriate next step would have been to continue to require Borges to comply with the direction, and expressly warn him that his continued employment was in jeopardy if he failed to do so.
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 March Note did not contain any such warning or any consequences for failure to comply and no such warning was evident from Provost.
In addition, the employer took a 'kitchen sink' approach, alleging all sorts of other problems - an issue about whether or not the quota policy had been given to the plaintiff; an issue where the employer over-ordered tillapia allegedly because of assurances from Borges that he could sell that much (Borges had a different factual take on this); an issue regarding completion of call sheets and punching in and out; not using current prices; declining sales; and singing in the office.

Yes, you read that right:  Singing in the office was alleged to contribute to a just cause argument.  I'm pretty sure that is the metaphorical kitchen sink in employment law.  As Prattas DJ put it, "One would have to stretch things a long way to show that this constituted a ground for dismissing him without notice."

Ultimately, the court felt that these were not misconduct, were condoned, or otherwise didn't rise to the level of just cause.  (For instance, while the Deputy Judge didn't expressly decide which side he believed regarding the tillapia incident, aside from a general statement that he preferred Borges' evidence, it's clear that he felt that the employer was the author of its own misfortune on the point.)

The court found that Borges was entitled to a reasonable notice period of 10 months, but reduced it by 25% because of a failure to mitigate - that is, Borges failed to produce records of his mitigation efforts (because he changed email providers) in the six months following dismissal, and because, though minimal efforts in the 2-3 months immediately following termination are understandable, Borges "may not have been as diligent as he ought to have been prior to September 2011".


It's an interesting thought, and not entirely unprecedented, that an employee shouldn't be held to things said in the heat of the moment, but should be entitled to a 'cooling off' period.  It is also very practical for employers to take such a cooling off period in any event...and then seek legal advice.

Deputy Judge Prattas' analysis on just cause is sound.  He wasn't satisfied that Borges actually refused, and that factual finding is pretty fatal to the just cause claim, but in any event he's also quite right that the correct approach would have required an express warning that failure to comply would lead to dismissal - followed by an opportunity to comply.

I'm not sure that would have been enough, though, because it's not entirely clear that the employer was entitled to unilaterally change the terms and conditions of employment so significantly:  Recall my discussion about an employee's options in the face of constructive dismissal?  Had Borges refused, that might be characterized as a 'third option' case, with Borges rejecting the change and putting it the employer:  Either leave my employment as is or fire me.

It's not entirely clear if the change would rise to the level of constructive dismissal, but there would be a pitch:  Being tied to his desk, being micromanaged, these are pretty significant changes...but add to that a reasonable expectation that it will impair his sales performance, when his compensation package is at least partly based on commission...well, as I said, there would likely be an argument.

However, I'm less certain about the Deputy Judge's treatment of the mitigation issue.

Mitigation is a high threshold:  The onus is upon the employer to lead evidence of a failure to mitigate, and to establish that proper mitigation efforts would have led to re-employment.  The Deputy Judge ultimately accepted Borges' evidence of, among other things, his mitigation efforts, but held it against him that he failed to produce records (which failure was explained).  Drawing an adverse inference on the facts from an unexplained failure to produce documents might be one thing, but that's not what's going on here.  Particularly in light of the onus, it's a rather strange thing to say "I believe you, but because you couldn't produce a paper trail, I'm going to reduce your damages."

Even more troubling is the language of "may not have been".  That may have been an intentional understatement, but the bottom line is that it is a misstatement of the test:  To reduce damages for failure to mitigate requires a finding, on a balance of probabilities, that he was not as diligent as he ought to have been.  (Nor is that the end of the analysis.)  The burden of proof being what it is, a wrongfully dismissed employee is presumed to have taken reasonable steps to mitigate, unless proven otherwise.

Even beyond that, while a lack of diligence in a job search frequently results in a reduction of the notice period (though 25% seems quite significant, under the circumstances), I would argue that the approach is wrong, for much the same reason the Supreme Court did away with Wallace damages:  The well-established test for mitigation requires an employer to show that, through reasonable efforts, the employee would have obtained replacement employment within the reasonable notice period.  There's no room for a presumption to that effect; there's an evidentiary burden on the employer, and to simply say "failure to take reasonable steps results in a reduction of x" is arbitrary and baseless.


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.

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