Bennett v. Cunningham - Court of Appeal Cautions Employees About Standing Up For Themselves

In January, I posted about the Divisional Court's decision in Bennett v. Cunningham.  This was the case of a junior lawyer who sent a scathing email to her boss criticizing her office practices and lack of response to concerns she had previously raised, and in particular billing errors which ultimately reduced Bennett's commissions.  She was fired, and at trial the judge held that there was just cause for termination, but under appeal the Divisional Court allowed the appeal and found that the letter, read in context, should properly be interpreted as a constructive attempt to resolve these concerns.

The Court of Appeal heard the matter, and released its decision on Friday, allowing Cunningham's appeal and restoring the trial judge's decision.

The Court of Appeal's decision essentially hinged on deference.  A trial judge is entitled to deference, particularly as regards factual findings, and concluded that the Divisional Court mistakenly substituted its view of the facts for the trial judge's findings.

Analysis

First of all, it should be noted that most of the material facts were agreed upon - the letter which was at the core of the 'just cause' analysis was simply a matter of record.  As for whether or not the majority of the concerns Bennett raised were justified, the Divisional Court did not attack the trial judge's findings that they were not.

The core aspects in which the Divisional Court disagreed with the trial judge were the following:

(1)  The trial judge concluded that the letter was "critical", "disrespectful", "accusatory", and suggested that Cunningham was "disorganized, incompetent, dishonest and negligent".  This was insolent.  The Divisional Court found that the only part of the letter which could be considered 'insolent' was the sole allegation that the docketing errors (affecting Bennett's commissions) were 'dishonest and negligent'.

(2)  The Divisional Court disagreed with the trial judge's failure to give weight to the closing of the letter, which was an invitation to discuss and resolve the issues, and also the failure to consider the overall context and purpose of the letter, as private correspondence between employer and employee, not disclosed to third parties.

(3)  The Divisional Court viewed the trial judge as having failed to consider the full context in light of the high threshold for an employer to meet in establishing just cause:  "As in other employment relationships, there remains a power imbalance and there is a strong policy interest in encouraging open and frank discussion between employer and employee of workplace issues."

My personal view is that this quotation of the Divisional Court is a highly important aspect of this case.  As an employment lawyer, I'm fairly confident that I can draft a letter in most contexts to address an employee's concerns and strengthen their position in possible subsequent wrongful dismissal litigation without crossing the line into 'insolence'...however, it's often a fine line, and many (I'd dare say most) employees are not entirely capable of toeing that line.  Therefore, a certain latitude needs to be afforded.

The Court of Appeal found that the trial judge had applied the necessary contextual analysis, and that the Divisional Court simply came to its own different conclusions.

Impact

This decision could be significant, for a couple of reasons.  Despite the title of this entry, the Court of Appeal didn't really address the merits of the case directly.  The Court didn't say "Employees should be more cowed".  But by restoring the trial judge's decision, that's the precedent being set.

I'm concerned, moreover, about the characterization of the finding of just cause as being "essentially factual in nature".  There are well-established and not-so-straightforward legal tests for proving just cause.  To call it a question of fact...well, it's highly inconsistent with the existing case law, including case law which the Divisional Court accurately summarized by noting that a trial court is required "to consider not just whether an employee may be found guilty of misconduct giving rise to just cause dismissal, but also whether the nature and the degree of the misconduct warranted the employee’s summary dismissal."

I can't really fault the Court of Appeal for its findings regarding difference #1 above.  Strictly speaking, a finding that the language and tone of a letter is altogether insolent is probably squarely within the realm of factual findings.  The Divisional Court may have stepped over the line of deference slightly when it zeroed in on the language of the letter and determined that only one narrow part was really insolent.  But when you start getting into the question of "Is it bad enough to justify summary dismissal?", that's more than just a simple question of fact.

The Divisional Court looked to the letter directly to come to its own assessment of the severity of the misconduct.  As I said, this may have been slightly over the line, but not unforgivably so, because the letter was simply a matter of record.  Perhaps more importantly, there was a reason they looked at the letter directly:  The analysis of severity in the trial judge's reasons were relatively scarce.

The trial judge's reasons, regarding just cause, boil down as follows:

Paragraphs 30-34:  The concerns raised in the letter were largely unjustified.

Paragraphs 35-37:  Bennett wrote the letter out of frustration, but her action was unreasonable.  She had an opportunity to apologize and failed to do so.

Paragraphs 38-40:  The overall tone of the letter was not courteous, and he doubted Bennett's sincerity in inviting a constructive discussion, because she hand-delivered it and also sent it by registered mail.

Paragraph 41:  Cunningham decided that she could no longer maintain the employment relationship.

Paragraph 42:  Cunningham's conclusion was justified.  "The comments and accusations in the letter undermined the confidence she had in Bennett and destroyed the employment relationship."

Paragraph 43:  The letter constituted just cause.

When the Divisional Court said that there was an absence of contextual analysis, this is what they were talking about.  There were no detailed reasons about how Cunningham's confidence was undermined.  She was shocked and angry, certainly.  But no examination of the severity of the insolence in light of the context of the employment relationship.  Just a blanket statement that Cunningham's conclusion was justified and that her confidence was undermined.  The problem is exacerbated by the subjective language the trial judge continued to use - the Divisional Court rightly called him on that, noting that the question isn't whether or not Cunningham was able to continue the relationship, but whether or not - in light of all the circumstances - the misconduct was objectively serious enough to regard the employment relationship as being at an end.

In other words, what we're looking at is a 'sufficiency of reasons' problem.  When it comes to simple factual findings, such as "John said x", then there's a low threshold for the judge to meet.  If there's contradictory evidence on the point, the judge probably needs to nod to the opposed evidence and explain why he disregarded it, but not in too much detail.  "I preferred John's evidence" is usually enough.  From there, it's simply a question of whether or not there's evidence on the record capable of supporting that conclusion, and that the trial judge didn't simply misapprehend what John was saying.

However, for questions of law, or of mixed fact and law, there are greater obligations.  It is not enough for a trial judge to show that he is aware of the issues; he must explain how he came to his decision, in such a way that his reasons can be subjected to appellate review.  Whether or not an act of misconduct rises to the level of just cause is certainly in that area.  The Court of Appeal's treatment of the issue of just cause as being simply factual...is worrying.

If the Court of Appeal really wanted to hold the Divisional Court's feet to the fire in terms of inappropriate appellate intervention, it should have sent the matter back down to the trial level for a new trial of the issue.  Respectfully, I think even that might have been overkill, given that there were really no contested facts at issue on the appeal.

At the end of the day, the Divisional Court's decision was based on a look at the record and a look at the trial judge's reasons, and a conclusion that 'It wasn't really all that bad'.  However, all of the underlying findings of pure fact were left completely intact.  Bennett sent the letter.  The language of the letter was harsh.  The allegations in the letter were wrong.  There was misconduct.  It was inappropriate to call Cunningham 'dishonest and negligent'.

But, said the Divisional Court, this didn't rise to the level of just cause.

Other Thoughts

Beyond the issues strictly on appeal, the trial judge's decision contains an asymmetry which should be troubling in light of the power imbalance of an employment relationship.  The expectation seems to be that, to the extent that there are difficulties in the relationship between Bennett and Cunningham, it falls to Bennett to be proactive and resolve them.

Consider, on the one hand, the trial judge's treatment of the "docketing system" issue.  Bennett submitted her docketed hours to Cunningham's assistant, who entered them into a system for billing.  She was entitled to a percentage of her collected billings.  However, she discovered that some of her hours were being entered as Cunningham's hours, presumably as an error by the assistant.  Cunningham's response was to tell Bennett that the errors would be corrected if Bennett provided the accounts in which the errors had occurred.  The trial judge felt that this was enough.

In other words, this was a system established by Cunningham, administered by an employee of Cunningham, which resulted in errors which favoured Cunningham, and Cunningham's answer was to put Bennett to the strict proof of each error.  Assuming Bennett still had copies of her handwritten dockets and access to all the accounts in question, it would still be a time-consuming and menial process to perform a line-by-line comparison of all of her time entries with the accounts on each file.  

On the other hand, consider the trial judge's discussion of the possibility of an apology for the letter.  Bennett delivered the letter on December 21, immediately before Cunningham left for a two week vacation, and failed to apologize in the two week window before she was summarily fired.  "Although that would have been difficult, if not impossible, to do in person, Ms. Bennett could have prepared and placed a written apology on Ms. Cunningham’s desk for her attention when she returned from vacation."  This implies that an apology would have been sufficiently mitigating that it might have changed the trial judge's analysis of just cause (and perhaps even suggests that the 'failure to apologize' was aggravating), and yet recognizes that there was no meaningful interaction between the parties between the delivery of the letter and the termination.  It also suggests that Bennett should have anticipated that a personal apology after Cunningham's return would be impossible, and that the absence of a proactive apology cemented cause for dismissal.

The relevance of this asymmetry is simply this:  The trial judge was always looking to Bennett's acts or omissions - what could Bennett have done differently to save the employment relationship?  At no point does the trial judge ask whether or not Cunningham could or should have done something differently which might have salvaged the employment relationship, and there is usually such an obligation upon the employer:  That's what progressive discipline is all about.

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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.

Between a Rock and a Hard Place

There's an interesting recent case from the Superior Court, Barton v. Rona Ontario Inc., involving a dismissed manager who was fired for just cause after compromising safety in favour of human rights.

The Facts

Barton was an assistant store manager at Rona's Barrie location, responsible for managing 140 employees.

In April 2009, a training program was scheduled in the store's training centre, and one of the employees, Kai Malmstrom, wanted to take the course.  Management wanted him to take the course, too.  The one problem was...well, physics.  Malmstrom was confined to a wheelchair, and the training centre was on the upper level of the store, and not wheelchair accessible.  The official plan was that, after the training session on April 17th, one of the attendees to the training session would provide training to Malmstrom on the ground floor.

Malmstrom wasn't happy with this.  He wanted to join his colleagues on the second floor, and take the training directly.

So Malmstrom and his colleague Mr. Stirk, came up with a plan to get Malmstrom upstairs using an order picker.  The essentials of the plan involved strapping Malmstrom's wheelchair to a skid and lifting him up to the second floor, and bringing him back down the same way.  On the evening before the training session, Malmstrom suggested this plan to Barton.  Barton, at the time, was in the middle of coordinating a major event in the store, and while he did not expressly permit the plan, he failed to expressly prohibit them from carrying out their plan before he was called away.  The evidence on the conversation was conflicting - the trial judge accepted that Barton reminded Malmstrom of the plan to have him trained later, but also accepted Malmstrom's evidence that Barton seemed agreeable to the plan, despite Barton's evidence that he tried to express his discomfort with the idea.

The next morning, as they began to carry out their plan, the Operations Manager, Clint Marsh, asked them what they were doing, and his evidence was that he prohibited them from doing so.  Then he was called away, and they continued nonetheless.

The plan proceeded essentially without incident, except that Stirk wasn't wearing the appropriate safety equipment when bringing Malmstrom back down.  Nobody was injured.  Nonetheless, it was an egregious safety violation.

Gierak, a Human Resources Advisor, conducted an internal investigation into the incident, and there were significant excerpts from her notes reproduced in the decision.  Both Marsh and Barton acknowledged they would have done things differently if given another chance - i.e. they would have stopped it (which is strange to me, given Marsh's evidence that he instructed them not to proceed).  They also noted that, had they not been confident that it would proceed safely, they would have stopped it.

It appears that, given Malmstrom's impression that Barton was okay with the plan, he left Stirk with the impression that Barton had given permission, who conveyed that same impression to Marsh.

Gierak's report did not recommend termination.  Up until her discovery that Stirk had foregone the appropriate safety equipment herself, she wasn't sure that there even was a safety violation, and felt that everyone's actions to get Malmstrom to the training session were, while perhaps ill-advised, understandable.

Nonetheless, following a second investigation by a second HR professional, management terminated Stirk and Barton for cause, and disciplined Marsh.  There is no indication in the decision as to whether or not Malmstrom was disciplined, nor any of the others involved.  (Apparently, several people assisted in the process of getting Malmstrom upstairs.)

The Decision

The question in this case was whether or not Barton's failure to stop the lift constituted just cause for termination.

Rona has very clear policies regarding safety protocols, including that immediate dismissal may be called for in specific cases of safety breaches, including deliberate acts that could endanger safety, riding on moving equipment, and deliberate violation of safety rules.

Furthermore, the Court accepted the proposition that managers are held to a higher standard than non-managerial employees.

The judge is not at all critical of Rona's decision to terminate Barton.  There were many 'good and valid' business reasons to terminate an employee in that context.  "In this case, for example, Rona might have formed the view that Mr. Barton lacked the character required of a senior management person and did not want him back.  Rona could have decided that, given the large number of store staff who witnessed the event and assisted in the lift and the descent, it was necessary to make an example of him...."

However, these reasons do not necessarily "pass muster as just cause".  The Court rightly notes that its assessment is simply whether or not the misconduct in and of itself justifies termination.  In this case, there is no reason to suggest that discipline would have been inadequate to preserve the relationship as between Rona and Barton.  No reason to think that a stern warning would have been insufficient to prevent Barton from engaging in such misconduct again.  His specific acts were not so egregious as to warrant termination, and progressive discipline would have been appropriate.

My Thoughts

This is a close case in some ways, but I believe the Court got it exactly right.  All Barton did was fail to prohibit a plan brought to his attention in a brief conversation during which he was otherwise occupied, and which was carried out the next morning before he arrived at work.

He probably should have said "Don't do it", and it's probably culpable misconduct that, as a manager, he failed to do so.  But just cause is a high threshold.  And it's interesting that Rona rolled the dice on this one, because it just so happens that the lawyer who represented Rona was one of the instructors for my law school employment law class, back in the day, where I was taught how high a threshold just cause is.  (I recall one of the instructors relating an anecdote from Court where a judge queried whether or not just cause still exists at all.)

One of the things which really surprises me about this decision, though, is how little discourse there was on the human rights aspects of the case.  The parties were clearly aware that the incident was simply an effort to get Malmstrom access to the training facility, and Barton himself was of the view that some blame lay with the lack of accessibility in the store.

It's hard to fault Malmstrom for wanting to attend the seminar in person.  Getting instruction from somebody who happened to attend the seminar is hardly a substitute for having gotten professional instruction in a structured classroom.  It seems like a discriminatory result.

Suppose, for a moment, that the lift could have been and was completed in a way that reasonably controlled for all risks involved.  (Even though not all safety protocols were observed during the descent, that's hardly Barton's fault:  He wasn't even there at the time, and even had he given express permission one would reasonably infer that it was subject to ordinary safety protocols being observed.)  A Rona safety policy saying "Don't do it" might not be sufficient to justify rejecting the plan; you would have to carefully and contextually examine the risks, figure out why the particular policy is in place and whether or not the risks it seeks to avoid can otherwise be accounted for.  We don't know what Rona's human rights policy says, but there's a good chance that it is also disciplinable for managers to engage in discrimination.

And also suppose that Barton hasn't memorized all such policies.  This is a fair supposition, I think.  Given an opportunity to review the safety policies and the human rights policies, and the specifics of the request being made, there may have been a right answer and a wrong answer within the context of Rona policy, but in the absence of such an opportunity to review, we're looking at two answers which could be wrong.  This is not a scenario where you can necessarily err on the side of caution, because there is no cautious approach.

Barton doesn't want to refuse the request, because he sees it as his responsibility (and Rona's responsibility) to accommodate Malmstrom.  He may be wrong.  It may be that the plan was inherently unsafe in such a way as to justify refusal, and it may also be that creating an access route or a ground floor training facility would amount to 'undue hardship', which would mean that Malmstrom would have no legal right to be so accommodated.  But this is a complex and nuanced human rights question, which lawyers could certainly and reasonably disagree about.

At minimum, this mitigates the severity of his failure to instruct Malmstrom not to carry out the plan.  We know that he was busy with other matters, he wasn't able to complete the conversation, and he didn't have an opportunity to return to the matter to finish dealing with it.  That he could reasonably and in good faith believe that his decision was to protect Malmstrom's human rights makes it difficult to argue that the decision, even if wrong, could be such misconduct as to warrant summary dismissal for cause.

But it's more than that:  Refusing to discriminate against somebody is a protected act under the Human Rights Code.  The law on this point is not particularly well-settled either - it is reasonably clear that a good faith complaint of discrimination will give rise to reprisal protection, even if the original complaint was not founded.  Imagine, for example, that I was denied a promotion, and I felt in good faith and reasonably that the denial was due to my religion, and I made a complaint accordingly, and was fired for it.  Even if I cannot prove the actual discrimination (and indeed, even if the denial of the promotion could be shown to not be discriminatory at all), the termination would still likely be an unlawful reprisal.  It is not so clear that the same principle applies to people refusing to breach another's Code rights, but it's arguable.  So if refusing to allow Malmstrom to attend the seminar would be unlawful discrimination (which could be argued), then not prohibiting him from doing so would likely be Code-protected.  Alternatively, even if it wasn't unlawful discrimination, the failure to prohibit him from doing so based on the good faith belief that Malmstrom was entitled to accommodation might still be Code-protected.

Highlights

I'm pretty sympathetic to Barton, but that sympathy arises from several places, and I wouldn't want to be taken as suggesting any sort of general proposition that safety ought to be compromised in favour of human rights.

Firstly, he wasn't there.  He discussed the matter the night before in what sounds like a fairly cursory manner, and didn't prohibit it.  That amounts to, at best, lukewarm complicity.

Secondly, not being there, he can hardly be faulted for the fact that not all safety precautions were taken.  He was dealing with people well-qualified and trained in the use of the equipment, and ought reasonably to have presumed that these folks would take all safety precautions.

Thirdly, nobody was injured.  Had there been injuries, that could be a whole different matter.

Fourthly, it was Malmstrom's idea in the first place.  Inherently unsafe, perhaps, but most of the risk was to Malmstrom, and he would have been aware of such risks.  (If it was the employer's idea, pressuring Malmstrom to engage in something unsafe as an alternative to reasonable accommodation, it could be a very serious problem under both the Human Rights Code and the Occupational Health & Safety Act.)

Fifthly, it was necessitated by an unfortunate absence of accessibility, which means that the employer probably has to shoulder at least some of the blame, and can't just point fingers at Barton.

In general, I'm inclined to believe that Barton was probably wrong, but not even at the longest stretch could I imagine this constituting just cause.

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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.

When is an Employee Accountable for Representations in the Job Interview?

You occasionally hear about employees who are caught having lied on their resumes or in their job interviews, usually about their own qualifications.  In general, that's going to be fairly serious when your employer finds out about and, depending on the context and the importance of the misrepresentation, could constitute just cause in some cases.

Earlier this month news broke about Yahoo CEO Scott Thompson having represented himself as having a degree in accounting and computer science from Stonehill College, when in fact he had never received a computer science degree.  He resigned as a consequence of the scandal.

But here's an interesting new twist:  A case came out recently in which an employer alleged just cause because the employee had made representations regarding the sales he could bring to the company, and these promises didn't pan out.

The case is McGregor v. Atlantic Packaging Products Ltd. The employee, Mr. McGregor, was hired in April 2005 to manage the employer's Niagara Peninsula branch, and fired in October 2007.

Incidentally, just cause was not alleged at the time of the dismissal.  He was offered a package.  The package wasn't good enough, so he sued in February 2008.  The employer defended, again not alleging just cause, then in 2010 amended its pleadings to allege just cause.  By trial, the only allegation of just cause still being pursued was the above, that he made promises in the interview that he couldn't keep.

McGregor had spent 25 years with another company in the same industry, and was the VP Sales when he left. There was a restrictive covenant preventing him from competing for 18 months; towards the end of the 18 months, he entered into discussions with Atlantic for them to hire him to set up a distribution centre in Niagara.  They asked him to put together a business plan, which he did, including a sales forecast.  He was hired after his non-comp clause expired.

The employer's allegations, which the trial judge ultimately didn't accept, was that the sales numbers had been promised based on clients which McGregor guaranteed he would be able to bring to Atlantic.  The trial judge concluded that, based on the business plan, there was no evidence of any such 'guarantee'.  Moreover, Atlantic knew that McGregor had not been in contact with his old clients for 18 months, and it seemed obviously unreasonable to believe that he could actually guarantee that clients would come over to Atlantic.  (Also, in a more general sense, the trial judge did not find the employer's witnesses to be credible.)

Suffice it to say that the Niagara centre didn't work out.  In August 2006, the employer decided to cut its losses and close the facility, and transitioned McGregor to its Burlington office, until he was fired in October 2007.

He had not received any discipline whatsoever nor any performance evaluations, nor was he advised of any performance concerns at the time of his termination.  Only three and a half years later did the employer first allege gross misconduct as justification for summary dismissal.

Suffice it to say that the employer was unsuccessful in its defence.  The judge didn't believe that the employee had made fraudulent misrepresentations in the first place, but in any event the fact that the employer had kept McGregor on for over a year after determining that the Niagara plan was "hopeless" amounted to 'condonation'.  They knew of all the relevant facts at that point, and nonetheless continued to employ McGregor.

When an employer has just cause, he has to act on it.  Use it or lose it.  He can't just sit on it until he decides he wants to be rid of the employee for whatever reason, and play it then like a trump card.

To be fair to the employer's position, the employer gave evidence that McGregor had essentially admitted in a conversation in September 2007 that he knowingly lied about the numbers to trick Atlantic into giving him the job.  If true, that may have defeated the condonation argument - okay, we knew that the numbers hadn't panned out, but it wasn't until just before we fired him that we knew that he had knowingly and intentionally deceived us.  One problem, though:  The trial judge didn't believe the employer.  The overall lack of credibility of the employer's witnesses on the point, particularly combined with the lack of written records that one would expect following such an important conversation - memoranda, correspondence, written notes, etc. - caused the judge to reject this evidence.

The trial judge's alternative reasoning is that condoning it until the termination would be fatal to the employer's defence (even if the defence had merits in the first place).  But there's a further point that the trial judge didn't address:  There is case law suggesting that dismissing a person on a non-for-cause basis is further condonation of misconduct of which the employer is aware.

In 1965, the Ontario Court of Appeal affirmed a decision by Justice Thompson in Tracey v. Swansea Construction Co. Ltd., with the following passage:

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.

It's not a hard-and-fast rule that you can't assert just cause after the fact.  Particularly in cases of "after-acquired cause", where the employer didn't know about the misconduct until after the dismissal, it can't be argued that the employer ever 'condoned' the misconduct.  But it undermines the employer's case for cause when, knowing of the misconduct later alleged, the employer nonetheless dismissed the employee on a not-for-cause basis.

Aside from the technical 'condonation' argument, the further difficulty is this:  Just cause is an extremely high threshold in the first place.  If the employer equivocates and hedges by failing to allege just cause at the outset, the employer will tend not to be as credible when arguing, at the eventual trial, that the misconduct should be perceived as rising to the level of just cause.

In this case, the employer was faced with an impossible task:  If these alleged misrepresentations were so important, then why didn't you fire him in 2006?  Why didn't you raise the issue when you finally did fire him in late 2007?  Why didn't you even raise them in your statement of defence in 2008?

I would have been shocked had the defence succeeded.  Indeed, on the facts as presented by the judge's reasons, I'm surprised that the employer actually amended its pleadings to allege just cause in 2010.  The argument itself seems fairly tenuous, and the condonation response is pretty academic.  And you can certainly expect that this will not have a favourable result on costs for the employer - when the main issue at trial (reasonable notice and mitigation were also argued, but these alone seldom require a trial) wasn't even raised until more than 2 years into the litigation process, and was unsuccessful, it doesn't look good 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.

Wrongful dismissal action by an employee who moved across the country

Interesting case just out of the British Columbia Supreme Court:  Staley v. Squirrel Systems of Canada Ltd.

Put briefly, Mr. Staley worked for Squirrel since 1995 in Burnaby, starting as a call centre agent but working his way up through the ranks.  In 2009, he married a Mountie, who was trying to secure a posting in her home Province of Quebec.  She eventually got the posting, and so Mr. Staley and his wife sold their condo in Chilliwack and moved to Montreal in September 2010.  When Mr. Staley thereafter refused to report in to the office, he was dismissed.  So he sued for wrongful dismissal.

Never quite that simple, of course.  There had been ongoing discussions with the employer about potentially arranging the employment to function as a long-distance relationship, so to speak.  Staley first told his supervisor in April 2010 about the possibility of an eventual move, wanting to continue his work from Montreal.  The supervisor was open to the idea of hiring him on as a contractor working remotely from Montreal.  What exactly was said in the April conversation is in question, and is important because it appears that Staley walked away thinking that he would be able to keep working from Montreal, and the supervisor walked away thinking that, if and when it happens, we'll talk about it.

When Staley left in September, he continued his duties remotely, and was permitted to do so.  In late October, the employer wrote to the plaintiff noting (in language that I'm guessing came from a lawyer) that he had asked to alter the terms of employment to permit him to work from Montreal, and that the employer "temporarily permitted" remote duties "while we consider your request", with the final decision being under consideration by senior management.  Staley took issue with this, and sent a reply summarizing various conversations in which he alleged that the employer had agreed to let him work from Montreal.  They had further discussions trying to reach an agreement to new contractual terms, but nothing was ever signed, and eventually (March 2011) the employer gave the employee notice that he would be required to resume reporting to the office in Burnaby as of July 2011.  This was not an option from Staley's perspective, so they were at an impasse, and the employer dismissed him.

Staley sued, but was unsuccessful.  He argued that he had relied upon representations by his supervisor that he would be able to continue to work from Montreal.  (It appears that he probably would have moved either way, but his unemployment would have affected their decision to purchase the house they did.)  The Court concluded that there had been a misunderstanding, and essentially felt that Staley was making a very tall order, and "it was not reasonable for him to make his commitment to Montreal on the basis that his continued employment was assured."

Accordingly, Staley's refusal to report to work constituted abandonment of his position, or insubordination, and either way permitted the employer to dismiss him.

My Thoughts

Considering the facts, the employer came awfully close to very substantial liabilities.  The Court's assessment of the plaintiff's conduct is probably fair - if you're going to move across the country and want some assurances that you'll still have your job, get it in writing.  Work out the details before you move.  Don't have a few casual conversations about it and assume that the whole thing will be fine.

Still, the employer could easily have been hanged by the fact that it doesn't appear to have specifically advised the plaintiff of its position that its acceptance of the arrangement was 'temporary' and subject to senior management approval until it had already existed for a month.

The Court concludes that, in the discussions leading up to the move, neither the word 'temporary' nor 'permanent' was used by the employer.  However, in the absence of that kind of express language, it would be very easy for a Court to conclude that the employer, by permitting Staley to work from Montreal, had agreed to change the employment relationship on an indefinite basis.

There was an internal email circulated when Staley moved, stating that he was now an independent contractor.  Not too much was made of it in the judge's reasons.  It would have been difficult for the employer to use that email to take a position that the employment relationship had ended and Staley was now an independent contractor, but more importantly that would not have been a helpful position for the employer - there is little doubt that, had it been agreed that Staley would work as an independent contractor working from Montreal, this would have put him, at best, into the intermediary category of employment relationships, which would still have entitled him to reasonable notice in the absence of enforceable written language to the contrary.

I find it difficult to reconcile that email with the judge's conclusion that the employer's tolerance of Staley working from Montreal was temporary and subject to final approval.  There doesn't appear to have been any actual evidence of the employer reserving a right to require Staley to return until late October, and that October letter has a certain lawyerly air to it, as if they had gotten their lawyers involved at that point because they had decided not to permit him to continue and therefore wanted to end the employment relationship, and the lawyers opined that they had not been clear enough in asserting an entitlement to do so.  That sort of letter, clarifying your position, can be very helpful later on if the recipient doesn't challenge the assertions in it.  Silence gives consent, as they say.  In this case, however, the employee answered immediately with a 'Hang on, where's this coming from?' type of response, which ultimately set the stage for a legal dispute in which the employer was fortunate to have been successful.

If the employer had been clearer from the outset, however, there would have been no reason for a legal dispute to have been necessary in the first place.

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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.

TTC Driver Eating a Chocolate Bar

I was on the road this morning, reminding myself why I dislike driving in winter, and on 102.1 (the "Edge"), I heard the radio host Josie Dye discussing a story she had read about in the news, involving a TTC driver being investigated for eating a chocolate bar while driving.  You can read about the story in the Toronto Star.

Josie questioned the severity of such an allegation.  The prospect of this employee being suspended or even fired for such an incident seemed absurd to her.  It's a chocolate bar.  She acknowledged the TTC's statement that drivers are prohibited from eating or drinking while operating a bus, but argued that eating a chocolate bar is not necessarily the same as eating a full three-course meal behind the wheel.  (Well, I'm paraphrasing - the point was about the same.)  When one of her callers suggested, albeit not in so many words, that we need a bright line rule about eating, rather than fuzzy contextual analyses, Josie argued the contrary, that context counts for a lot:  We need to use common sense.

Now, I want to step back for a second and say that, on the TTC statements that I'm reading, I see absolutely no evidence for the proposition that this employee has been suspended pending investigation, or that the employee is likely to face suspension or discharge for this misconduct.  The only real facts that appear in the news story are that the employee was accused of eating a chocolate bar; eating breaches TTC policy; and the TTC is investigating.  This all seems quite reasonable to me.  A "no eating or drinking" policy seems to make sense in my mind, and investigating when there's an allegation of a breached policy also makes sense.  I wouldn't advocate a serious penalty for a first offence under the circumstances described, but this all seems legit.

That being said, Josie is absolutely right about the contextual approach.  If a driver was fired for eating a chocolate bar and thereby breaching policy, and it were a first offence (again, we don't know this), then there's little doubt that an arbitrator would reinstate the employee.  It is a relatively minor offence, and even though it is safety-related the actual implications of the conduct are fairly insignificant.  (Heck, there was one case where a police dispatcher was reinstated after being fired for stealing chocolate bars from the workplace concession machine.)  On the other hand, if the conduct complained of posed a serious and imminent risk to the public, or was otherwise unlawful (i.e. talking on a cell phone), then it would be more serious and potentially attract more serious penalties.

Josie went on to note that there may be perfectly reasonable excuses for eating a chocolate bar.  What if the driver was diabetic and needed to keep his blood sugar up?  Or maybe not diabetic, but tired and needing a pick-me-up for safety-related concerns?

I have to disagree with Josie about these, to some extent.  A case involving a diabetic driver would be extremely complicated, partly because she's right - failure by a bus driver to properly manage the condition would be extremely dangerous to the general public.  There's a presumptive obligation to accommodate, that an employer may have to permit a diabetic employee to snack as necessary...however, with the lack of supervision and peer interaction on the job, the significantly safety-sensitive aspects of driving a bus, and potential hazards caused by the necessity of snacking while driving, the TTC would likely have an argument against needing to accommodate.

As for a tired driver needing a pick-me-up...that's not an excuse, in my mind.  An employer such as the TTC has a right to expect its drivers to show up for work bright-eyed and alert, not blurry-eyed and groggy with an extra large coffee in hand.  It comes down to how you take care of yourself, for which we are all personally responsible.  Even as a lawyer, I consider a good night's sleep to be important, to be sharp and doing my best work for my clients the next morning.  Tiredness causes mistakes.  On the road, mistakes can be life-or-death.  So having a chocolate bar because "I stayed up too late last night, so I needed to address my tiredness" is actually more serious in my mind than having one just because "I felt like indulging my sweet tooth."  Now, if I were a TTC driver kept up all night by a colicky newborn or some other factor outside of my control, and got up in the morning feeling unable to safely operate a bus, then I would expect that the appropriate resolution would be to alert my supervisor to the situation before getting behind the wheel, rather than by waiting until I got caught with a coffee or chocolate bar and then trying to justify my conduct retroactively.

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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.

Employment Disputes of Lawyers

I came across an interesting case some time ago involving two lawyers in a small firm, Dawn Bennett and Karen Cunningham.

Cunningham was called to the bar in 1996, and opened up her own practice in 1997 in several areas of law.  Bennett was called to the bar in 2001, and accepted a position as a junior litigation lawyer with Cunningham in July 2002.

The relationship broke down quickly, with Cunningham terminating it on January 10, 2003.  Despite the brief relationship, there are a number of interesting employment issues in it, including the distinction between employees and independent contractors and just cause.

Bennett's compensation was not salaried.  Rather, Bennett was to be paid a commission of 50% of all fees billed and collected.  She received advances on commission at a rate of $38,000 per year.  All office equipment and infrastructure was provided, and all files ultimately belonged to Cunningham, but Bennett was responsible for the payment of her own Law Society dues and professional insurance premiums, as well as employee deductions.

Bennett developed some concerns with the relationship fairly quickly.  In particular, though she was busy and working long hours, she was concerned that the office lacked the tools (technological in particular) for her to do her job.  She proposed a business plan to Cunningham to correct this, about a month in.  At the same time, she expressed concern about the fact that she had been required to sign a written employment agreement on the first day of work, though no written employment agreement had been discussed before then.  In response to these concerns, Cunningham invested in voicemail and a well-known piece of practice management software called Amicus Attorney, and also implemented some of Bennett's other file management suggestions.

A common practice among older lawyers (though growing less so with younger lawyers, including Bennett and Cunningham's generation) is to handwrite all time dockets for data entry by the receptionist.  This was the practice in Cunningham's office, at least until the introduction of the Amicus Attorney software.  The process was interrupted somewhat by the sudden departure of the receptionist in August 2002.

By November, Bennett was becoming concerned about the entry of her time dockets and collection of her accounts.  A subsequent comparison between her handwritten notes and computer records indicated that 42.8 hours of time had not been entered.  In addition, though her share of fees billed at that time was approximately $26,500, only 10% of that had been collected.  As December rolled along, Bennett became increasingly concerned; the gap between fees billed and collected was increasing, to the point that her advances exceeded her actual commission after only five months by about ten thousand dollars.

In December, Bennett reviewed some of the accounts rendered, and discovered something quite alarming:  There were a number of instances in which time she had docketed had been credited to Cunningham.  She met with Cunningham about it, and was advised that the errors would be corrected upon receipt of copies of accounts where such errors had occurred.

Just before Christmas, 2002, Bennett gave Cunningham a letter documenting 9 areas of concern.  In it, she was highly critical of Cunningham's systems for, among other things, file management and docketing.  On docketing, especially, she said the following:

Many of the dockets that were entered by hand were credited to your dockets instead of my dockets.  There has been no attempt on your part to reconcile these problems despite my repeated and numerous requests.  As my income depends solely on my billable hours docketed and collected, the monetary gain to you is both dishonest and negligent.  I have no control over the docketing system.  It is your system.  As a result of your flawed docketing system you have gained income that should be attributed to me.  I need an accurate reconciliation of the docketing system to reflect my dockets.

This letter became a major factor in the litigation, when Bennett sued for unpaid commissions and wrongful dismissal, because Cunningham took the position that it created just cause for termination.  Bennett's defence to that hinged on the closing language of the letter:  "I would like to work together to resolve these issues.  Kindly contact me so that we may work together to make this arrangement a successful one for both of us."  When the case went to trial in 2006 (decision found here), the trial judge described it thusly:

The overall tone of the letter was anything but courteous.  It was critical. It was accusatory. It was disrespectful. The letter suggested that Ms. Cunningham was disorganized, incompetent, dishonest and negligent.

The Issues


(1)  Contractor versus Employee


Cunningham took the position that Bennett was an independent contractor, and therefore not entitled to reasonable notice of termination.

Cunningham noted, in support of this argument, that Bennett was paid on a commission basis; that she submitted periodic invoices for professional services rendered; that Bennett was responsible for her own income taxes/payroll deductions and professional dues and insurance; and that the intention of the parties was that Bennett would be an independent contractor.

The trial judge, however, noted that it was for the Court, and not the parties, to determine whether or not Bennett was an independent contractor.  The intention of the parties is not determinative.  The trial judge found that she was either an employee or a member of the "intermediary category", which meant that in the absence of just cause she would be entitled to reasonable notice of termination.

The factors reviewed in the trial judge's reasons included that Bennett was expected to be in Cunningham's office 9-6 Monday to Friday; that the clients and their files belonged to Cunningham; that Bennett did not provide any of her own office equipment; that Bennett did not hire any employees at her expense nor did she pay rent for her office; that Bennett took some financial risk in the commission structure (this was the sole factor leaning towards a finding that she was not an employee); but Bennett did not have any opportunity for profit beyond the 50% commission structure.

(2)  Just Cause

The letter was the crux of the "just cause" argument.  The trial judge notes that a single incident of insolence (defined as "derisive, contemptuous or abusive language or conduct directed by an employee at his/her employer") can be sufficient to justify summary dismissal if the employee and employer are no longer capable of maintaining a working relationship.

Finding that "[t]he relationship between lawyers practising in the same law office is fundamentally based on confidence, respect and trust", the trial judge concluded that the insolence undermined the relationship and that Cunningham's conclusion that the relationship could no longer be sustained was reasonable.  Therefore, there was just cause for termination, and no pay in lieu of notice was required.

The Divisional Court, however, reversed the finding of just cause on appeal in 2011.  (Decision found here.)  The Divisional Court concluded that the only passage which could reasonably be seen as insolent was the phrase "dishonest and negligent", and that all of this should have been read in light of the invitation at the end of the letter to resolve the existing issues; thus, the letter could not be seen as making the continuation of the employment relationship impossible.  (Further, Bennett's employment was not immediately terminated, which did not amount to condonation but did provide a contextual factor supporting the conclusion that the employment relationship was possible to continue despite the letter.)

Lessons to Learn


Firstly, just because you have a contract saying that somebody is an independent contractor does not prevent a Court from going underneath that characterization and finding otherwise, depending on the actual circumstances of the relationship.

Secondly, this case gives some guidance to employees who find themselves having increasing issues with their employer.  There's a lot of wisdom in the "If you can't say anything nice..." saying.  While I'm a big advocate of 'setting the record straight', Courts do tend to understand that employees don't necessarily feel empowered to contradict the employer or seek to change conditions which are intolerable.

However, the Divisional Court's decision in this case sends a clear message to employees that they are allowed to object to employer actions that they find intolerable, and do not have to do so in a manner which is overly cowed or deferential.  Provided that the overall message of the objection is "These are the issues; let's work on fixing them", and there is nothing that clearly crosses the line into the inappropriate in the letter, it will not be regarded as just cause for dismissal.  (However, when one starts getting into swearing, name-calling, gratuitous strong language, sarcasm, etc., it gets more risky.)

Likewise, this case is a caution to employers not to overreact to such letters from employees.  When an employee is expressing concerns, an employer should consider the employee's concerns.  Ideally, if a concern has merit, an employer ought to address that concern with the employee, and seek a solution.  On the other hand, employees often over-estimate their own power in the employment relationship, and so will sometimes make demands that are unreasonable, in which case an employer can go to varying levels of effort to explain to the employee why his demands are unreasonable.  Ignoring a critical letter from an employee is never a good idea.

Where the line is crossed into insolence, however, appropriate discipline should be imposed, regardless of whether or not the employee's concerns in the letter are justified.  So one can imagine a circumstance in which an employee writes a letter which has insolent tones and contents, but which seeks, for example reasonable accommodation of a medical condition.  The employer then needs to address the request for accommodation through its ordinary accommodation policies, but should *also* consider disciplinary action for the impropriety in the letter itself, making it clear that the substance of the request for accommodation has absolutely nothing to do with the imposition of discipline.

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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.

Manager fired for just cause after sleeping with administrative assistant

Romantic and/or sexual workplace relationships are nothing new, and they're difficult for employers to deal with, in part because they're so prolific.  Employees spend an extremely large proportion of their waking hours in the workplace, and it's to be expected that many will develop strong emotions towards each other, whether in the nature of friendship, hatred, love, or lust.

A relationship can be quite benign when between two single people in different departments, and will have little impact on the employer, provided they remain discrete and professional in the workplace.  However, when people who are emotionally involved must work closely together, or are in a reporting relationship, it is more concerning to the employer:  It is more difficult for the employees involved to be discrete, and almost inevitable that others on the team will become aware of it.  This can cause uncomfortable situations, perceptions of favouritism, and increases office politics and drama, and that's unpleasant enough...but what happens if they have a bad break-up?  Suddenly, the employer is dealing with major conflict in the workplace.

There are also Human Rights Code concerns about intra-office flirtation.  Unwelcome advances by a person in a position to confer a benefit on the other in the workplace are Code violations, and while that's ordinarily viewed as a supervisor/subordinate matter, it may also apply to peers not in a reporting relationship, in the "I can move your vacation request to the top of the manager's pile" sort of sense.  (I'm not familiar with any cases concerning a strictly work-related benefit, where the person making the advance is in a position to make the other person's job easier, but that would be a trickier case.)

For an employer to hire the spouse of an existing employee often doesn't create the same issues, when done carefully, because the employer defines the working relationship of the couple (instead of the couple defining themselves regardless of working relationship) and moreover there is less chance of a break-up (though you never know).

But the real issues occur where you have a clear power imbalance.  When a manager engages in a relationship with a non-managerial employee, an employer should worry.  This remains true, if less so, even where the employee is not a direct report of the manager.  Concerns about favouritism are more severe at that level.  If the manager crosses the line in terms of the above-noted Code concerns, the employer is likely directly liable for that.

Thus, even employers who don't feel that they need a nepotism policy (i.e. family members working together) should always have a good fraternization policy.

And there's good news for employers dealing with managers who violate fraternization policies, in the form of the recent case in Reichard v. Kuntz Electroplating Inc.

The Case

Mr. Reichard was a manager of Kuntz, having worked there since 1984, and at age 41 began an extramarital affair with Ms. Thompson, an administrative assistant who at the time was, to use the words of the trial judge, "not directly under Reichard".  In 2005, Kuntz introduced a non-fraternization policy, as a mechanism to carry out its obligations to ensure that its workplace is free from sexual harassment.  The policy is not reproduced in the decision, but it appears that it may not have an absolute prohibition on romantic relationships, but requires disclosure to the employer of any romantic relationships.

8.  The policy was not introduced for moral reasons.  It was introduced to protect both employees of Kuntz and Kuntz.  Kuntz has a vested interest in not having any of its employees harassed sexually or otherwise.  It also wants to guard against any favouritism or perceived favouritism between employees.  In particular, the reporting provision would allow Kuntz to make arrangements to eliminate or mitigate a conflict of interest if there was a romantic relationship between two employees.

Under the policy, Reichard was required to disclose his ongoing romantic relationship with Ms. Thompson.  There were many rumours about the relationship, and Reichard's superiors asked him about it on multiple occasions, and he denied it.  (One has to wonder if these suspicions prompted the implementation of the policy in the first place.)

In 2006, on Reichard's suggestion, Thompson was transferred into his department over two other candidates, and he gave her "glowing" reviews.  There was evidence of favouritism, making other subordinates uncomfortable, and Reichard routinely took extended lunches with Thompson.

Finally, in 2008, Reichard confided about his troubled personal life, including that he had fathered Thompson's infant son, in another employee, who reported it to the employer.  Reichard then finally admitted the affair to the employer, and was suspended and told that he was on suspension and could not return until called by someone from the company.  The employer's evidence was that they were leaning towards discipline short of dismissal, but then discovered that in the days following the suspension he returned twice to the office despite the suspension.

The employer then concluded that it was unable to trust Reichard as his position required, and so terminated him for just cause.  The judge agreed with the decision, and dismissed Reichard's action.  It all turns not so much on the relationship itself, but on his continued deception about the relationship, breaching the non-fraternization policy.

My Thoughts


The Court's reasoning is a little thin on a couple of points.  Firstly, Reichard argued that the non-fraternization policy didn't apply to the relationship, because it pre-dated the implementation of the policy.  I'm not sure this should hold much sway, but I'm not comfortable with the way the judge disposed of it, either, being because Reichard had simply denied the affair rather than asserting that the policy didn't apply to him.

If one assumes that there wasn't a free-standing obligation on Reichard to disclose the relationship upon request (which may not be the case) and that the policy either did not or could not apply to pre-existing relationships (albeit doubtful), then Reichard would have been entitled to conclude that the relationship was none of the employer's business, and that he had no obligation to disclose.  To refute the applicability of the policy would have entailed telling the employer (at least impliedly) that the relationship predated the policy, which would in effect disclose the relationship and comply with the policy.  Therefore, the judge's conclusion that the policy applied because he didn't refute it has the effect of saying that disclosure was  necessary to preserve his entitlement to not disclose.  Incoherent.

Next, I'm concerned with the absence of any indication as to why Reichard returned to the office while on suspension.  If it was to talk to Thompson, then that's clearly aggravating.  If it was for some other reason - say, picking up the heart medication he forgot - then maybe not so much.

Third, the details of the suspension are thin, as well.  There's a line of case law suggesting that you can't discipline twice for the same offence (meaning that a suspension pending a final determination must be very carefully implemented, and it isn't clear that this happened in this case), and that, in the absence of contractual language to the contrary, an employer cannot suspend an employee unless just cause already exists.

The judge looked at everything in its totality and found that Reichard's misconduct was sufficient to justify termination, and that the return to the workplace was the straw that broke the camel's back, so to speak.  But if you suppose that just cause wouldn't have existed without the returns to the workplace, it isn't clear that the employer was entitled to tell Reichard to stay away (without entirely repudiating the employment contract), which would obviously impact the extent to which his returns can be seen as misconduct.

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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.

Business Trips, Alcohol, and Criminal Charges

This weekend, when discussing current events, I had a question posed to me:  If two senior executives on a business trip get drunk on an airplane forcing the plane to make an unscheduled landing, resulting in criminal convictions and causing national embarrassment to the company, will they have any recourse if they are fired?

Of course, the question was a reference to this story.  Two employees of Research in Motion did exactly that, forcing an unscheduled landing in Vancouver en route to China.  They were charged with mischief, convicted (on guilty pleas), and sentenced to probation with restitution orders to the cumulative effect of over $70,000.  As far as I know, the employees haven't yet been fired, but they have been suspended pending further investigation.

So what's the answer?  My answer was that it will depend on the objective seriousness of the misconduct on the aircraft.  It sounds extremely serious, when the news reports are saying that it was necessary that they be physically restrained, and to land the aircraft at the nearest airport.  Certainly these are serious consequences, and such serious consequences will have a major impact on whether or not there is "just cause" for termination.  But if you read the news coverage carefully, you'll find scarce details as to what the employees actually did.  I often say that, when I read the news, I never assume I have all the relevant facts.  On what I have seen, even if it is all true, it still leaves open the possibility that the flight crew's reaction could have been an overreaction.

And really, there are two thoughts that might support such an inference:  Firstly, for the last decade in particular, airlines have been quite paranoid about security.  This is not a criticism; just an observation.  They will react harshly to any perceived security risk.  Secondly, the question arises as to how these two achieved such a state of intoxication aboard the aircraft?  Were they permitted to board already drunk?  Were they served the alcohol on the plane?  On the ground, we hold venues that serve alcohol to very strict standards - we expect a bartender, in a raucous and loud bar setting, to identify people who have had one too many and refuse to serve them more.  Is a flight crew not held to a similar standard?

One would also need to consider the objective seriousness of the conduct of each employee:  If one of them was acting in a way that caused a real threat to the safety and comfort of the other passengers, justifying the flight crew's response, but the other one was involved in less serious misconduct - say, egging him on - then it may well be that just cause may exist for one of them but not the other.

That being said, pleading guilty to the resulting offences might interfere with the employees' ability to successfully take such a position in subsequent civil proceedings.  To my mind, it is also an important factor that they were on a business trip.  Had it been two individuals on personal travel who happened to be employees of the same company, the analysis would be altogether different.  (Not to say that it couldn't constitute just cause, but the test would change.)


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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.

Negotiating a Severance Package

When discussing severance packages on termination of employment, the first thing employees need to remember is this:  Never sign anything without legal advice.

Similarly, one of the first things employers should remember is never to ask an employee to sign anything without giving them an opportunity to obtain legal advice.

On some wrongful dismissal disputes, you get 'make-or-break' issues, where the employer might not have any liability at all if successful.  These are cases involving issues such as constructive dismissal, deemed quit, or just cause.  Or sometimes a dispute can be between minimal liability and significant liability, where there is a question as to the enforceability of a written contractual term.  If there's a real dispute on any of these points on a high value case, it could well require a trial, or a significant compromise on the parts of both sides to reach a settlement.

However, in the vast majority of terminations, the only real dispute is about 'how much' - namely, the length of the notice period.  Sometimes, this is coupled with an argument about some of the Bardal factors - most notably, the character of employment.  But in most cases this dispute is not going to hold up a settlement for long.

If each side has a good lawyer in most of these cases, then both sides will probably have a similar estimated ranges - and an estimate is all you ever get in cases without a written termination clause - of the reasonable notice period that a Court would award.  So, in a given case, I might opine that an employee is entitled to 8-10 months notice, give or take.  There's always uncertainty.  A judge sympathetic to the employee might go higher; an unsympathetic judge might go lower.  So the employee hoping for a 12-month notice-period probably doesn't have his head in the clouds, nor does the employer hoping for a result in the ballpark of 6 months.  But neither side is likely to be able to reasonably expect such results.

As a lawyer, my job is to assess the risks of different strategies and advise my clients of the same, but it's up to the client to determine his/her own risk tolerance.  The key thing to remember is that nobody wants litigation, but some people are more willing to go that route than others.  Offers send messages - a skilled negotiator can often read the sweet spot on the deal after the first couple of offers - and the message that an unreasonable offer can send is “I’m not prepared to settle except on terms unfairly favourable to me.”

The other party might be prepared to concede, and settle on less-than-favourable terms to avoid litigation, but otherwise they're more likely to go further in the other direction, to send a clear response that they are not going to play ball, and to bring you into the range they regard as reasonable.  So, in the scenario I described above, suddenly you have an employee asking for 16 months and an employer offering only 4.  That is a big difference, and it is going to require both parties to completely change the philosophy of their positions to reach any middle ground.  Initiating litigation will often be necessary, and the more legal steps and the more negotiation that is necessary, the higher the legal costs of both sides go.

Alternatively, if both parties from the outset send messages that say “Let’s make a deal”, then there`s a higher probability that a quick agreement will be reached with minimal legal expenses, though both sides may be left wondering if they could have perhaps gotten a slightly better deal had they pressed the point further.

In other words, the harder you press your bargaining position, in an attempt to get a better deal, the more you will likely have to pay your lawyer.

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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.

*****

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.