Dismissed Employee Jailed for Contempt

Another very unusual fact pattern has arisen involving Ceridian, a major human resource service provider, in the case of Ceridian Canada Ltd. v. Azeezodeen.

Ceridian entered into a business relationship with Pendylum Inc., which involved Pendylum and its subcontractors assisting in providing services to Ceridian customers.  Because of the sensitive nature of much of Ceridian's information (consider that Ceridian processes payroll directly into the bank accounts of its customers' employees), Ceridian required Pendylum employees and subcontractors to undergo background checks and enter into strict confidentiality agreements.

In July 2013, Pendylum hired Ms. Azeezodeen - the court describes her occasionally as an employee, though other language would suggest that the relationship may have been characterized as an independent contractor relationship - to assist with Ceridian contracts.  She entered into the requisite confidentiality agreements, but it appears that she among others were not required by Pendylum to submit for a background check...at least, not until Ceridian found out about it in October.  When Pendylum sought to correct the oversight, she refused, and her contract was terminated.

That circumstance could raise a number of interesting questions from an employment law perspective, and the right thing for her to do would have been to consult with an employment lawyer to assess whether or not she might have any recourse for her dismissal.

Unfortunately, what she actually did was basically the opposite of the 'right thing':

In November 2013, the defendant sent a letter to Ceridian in which she made numerous defamatory statements about the plaintiffs’ business practices and operations, which she threatened to make public. The defendant advised Ceridian that unless she was paid the sum of $23.2 million, she would make public confidential information relating to Ceridian, Pendylum and their customers. On January 6, 2014, the defendant again wrote to Ceridian threatening to “go public” with numerous allegations about Ceridian and Pendylum.  The defendant now offered not to publicize the allegations in exchange for a “settlement” of $500,000.

On April 24, 2014, she wrote again and threatened that, on May 12, 2014, she would circulate a press release - which would include, according to the court, "confidential information regarding Ceridian and Pendylum's business methods".  On May 8, 2014, she reiterated that threat.

So, on May 9, 2014, Ceridian and Pendylum brought an ex parte motion (i.e. without notice to the defendant) seeking an injunction.  Justice Belobaba granted the injunction, prohibiting her from carrying out her threat for a five-day period, so that the matter could be brought on for a full hearing on the merits.  A process server tried to serve her personally with the order, but she didn't answer the door; a copy was left at the door.  On May 10, 2014, the plaintiffs' counsel, David Lederman, sent her a copy of the order by email.  She responded very quickly that it was "too late" and that the press release was "already submitted and paid for".

Lederman's response, sent about 20 minutes later, was pretty much exactly what he should have said under the circumstances:

Pursuant to the terms of the attached Order, you and anyone acting on your behalf have been prohibited from publishing or disclosing any of the statements in the press release.  You will be held in contempt of Court if you do not abide by the terms of this Order.  I suggest you speak with a lawyer who can explain the ramifications to you should you choose to ignore the attached Order of the Court.

There was a lengthy exchange after that.  She claimed "free speech", and said that from her perspective the judge's order had "no effect", but she would try to stop the press release if Ceridian 'settled'.  Once again, that's exactly the wrong answer.  If she said, "I would if I could, but I can't", then that may well have provided her with a defence to a finding of contempt.  However, claiming that the judge's order had "no effect", and refusing to even try to comply, is pretty much the definition of contempt of court.

The press release was circulated online, and the plaintiffs brought a motion to find her in contempt.  On June 24, 2014, Justice Belobaba found that she was in contempt of court; on July 8, 2014, she was sentenced to 20 days in jail.

Commentary

While the original publication of the press release has been taken down, the reality is that, once something is on the internet, it's probably there forever.  I was able to view a copy of it without much difficulty, despite a relative lack of technical expertise for such things.

I'm not going to reproduce the text, for reasons which should be fairly obvious, but I will make a few observations about it:  It's not that bad.  She didn't publish sensitive customer information, bank accounts, etc.  She did publish business practice information which would likely be caught by a standard confidentiality agreement, but no sensitive business strategies, and nothing likely to be prejudicial - at least, not from a confidentiality standpoint.

In fact, a large majority of the press release's contents, in terms of facts, are either expressly contained in the judicial decisions I've linked above, or else can be gleaned from them.

The two central thrusts of the press release appear to be allegations that (a) Ceridian is failing to protect sensitive customer information - including by having subcontractors upon whom background checks have not been carried out (pretty thick, isn't it?) - and that (b) Ceridian and Pendylum mistreat their subcontractors by illegally trying to work around employment standards legislation.

For clarity, I should highlight that I am not saying that these allegations are necessarily true - only that these appear to have been the allegations that Ms. Azeezodeen will go to jail for having made.  At the end of the day, it's likely that Ceridian would be more concerned about the unflattering allegations than about the disclosure of confidential information.

So it's important to emphasize that Ms. Azeezodeen was not sent to jail for breaching confidentiality.  Nor for defamation.  Indeed, there is a distinct possibility that, had she retained counsel and fought the injunction properly, she might have succeeded.  The reason she was sent to jail was because she published the press release despite a judge having ordered her not to.

There's no question that Ms. Azeezodeen did everything wrong.  Nor do I question the appropriateness of the sentence.  Still, I find myself a little concerned about one passage in the sentencing decision:

[T]he defendant’s breach is known to many Ceridian employees, who are actively following this dispute. These employees, who have their own strict obligations of confidentiality, are aware of the defendant’s breach, her confidentiality agreement and of her violations of this Court’s Order.  Given the nature of Ceridian’s business, it is important that confidentiality obligations be complied with and enforced in order to deter future violations.

In other words, Ceridian's goal here was to send a message to its other employees:  Don't go public about our business practices.  Which, respectfully, is not what contempt is about.  Contempt is the court's way of sending a message to the parties and to the general public to comply with its orders, and to punish parties for failing to do so.  And, as far as I know, no other Ceridian employee is subject to an injunction prohibiting such disclosure.  Merely contractual obligations - which are presumably civilly actionable if breached, but not the kind of thing you go to jail for.

If the fact of disclosure is what they're concerned about, the mechanism to remedy that is through a civil action, seeking compensatory and punitive damages from Ms. Azeezodeen for the disclosure.

*****

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.

Employee "Theft" Found Not to be Just Cause

The decision released yesterday in Dennis v. Ontario Lottery and Gaming Corporation is a delightful and convoluted example of why context can be so incredibly important in employment law, and why lawyers can never make blanket statements like "theft is just cause".

Ms. Dennis worked for OLG for over 13 years, until they decided to fire her without cause.  They offered her a package being roughly equivalent to 53 weeks' salary, and she accepted it.

Then they found out that Ms. Dennis had done something bad.

For several years, in addition to her regular duties, she had volunteered to handle ticket sales and cash receipts relating to an arrangement between OLG and Canada's Wonderland involving admission ticket sales to the park.  However, in the summer leading up to her dismissal, she fell for a classic Nigerian fraud scheme on the internet, and was taken for somewhere between $12,000 and $15,000.  She drew a little over a thousand dollars of that money from the proceeds of sales of Wonderland tickets.

Fully intending to repay it, of course.  But still, sometimes you have to wonder what people are thinking.

So when OLG discovered the shortfall in the Wonderland cash, they called the OPP, who investigated and charged Ms. Dennis with theft under, a charge which was subsequently withdrawn at the request of the Crown.

OLG, for its part, refused to pay out on the settlement it had agreed to, taking the position that it had just cause for termination and that Ms. Dennis' failure to disclose the cash shortfall permitted it to resile from the agreement.  In deciding to do this, they embarked on what Justice O'Marra called an "inadequate and inaccurate internal investigation", which concluded that Ms. Dennis had admitted to theft and admitted guilt in court.  (She admitted to taking the money.  It may be a nuance only lawyers understand, but that's not the same as admitting theft - no mens rea.  But the more obvious defect is that they assumed that she had pled guilty, whereas in fact the charge had been dropped.)

The Court upheld the settlement agreement, finding that, in light of her intent to repay the money, the fact that her role managing that money was outside the scope of her ordinary employment duties, and the inadequate and inaccurate investigation, it was "totally disproportionate for OLG to view her conduct as support for termination with cause."

Commentary

First, I would like to point out an interesting missing link in the decision.  The fact that the misconduct did not amount to "just cause" is very important, but it's rather different from the question of whether or not OLG should be able to resile from the settlement agreement.  There are circumstances in law where a material non-disclosure can be treated as a misrepresentation sufficient to ground rescission for a contract.  It may well be that the test for rescission of the settlement is met, even though the test for just cause is not.

This would yield the interesting circumstance of Ms. Dennis being able to pursue damages not limited by the settlement agreement or release.  (That said, I don't have any reason to believe that the settlement was too low in the first place.)

Conversely, it's also not generally going to be true that an employer will be able to assert after-acquired just cause after a settlement agreement is made.  Even if the conduct would amount to just cause, it does not necessarily follow that the employer would be entitled to rescission of the contract.

Secondly, the employer's 'duty to investigate' has long been a point of discussion - there's a real question in law as to whether an employer is obligated to hold a procedurally fair investigation before termination for cause, or if it's just a really good idea but not mandatory.  It seems strange to me that her conduct might no longer stand as just cause because the employer overstated the case in its investigation conclusions.

Thirdly, I don't take issue with Justice O'Marra finding that it was mitigating that overseeing that money wasn't a part of her regular employment responsibilities - if it was, say, a bookkeeper tasked with maintaining petty cash, it would have been worse - but it's important to highlight that it's not entirely a defence on its own.  Misconduct of that nature that's connected to the employment relationship - and this certainly was - would absolutely be disciplinable.

But ultimately, the most important thing that this case does is highlight the fact that even relatively egregious conduct - taking over a thousand dollars that wasn't hers - might not stand as just cause, in the right fact pattern.

*****

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.

10 Tips for Managing the "Problem Employee"

I have seen a great many employment relationships as they have come to very sour endings, and in a great many cases there is fault on both sides for that - where there was some failing by the employee, in many cases it is also true that the employer failed to manage the employee, resulting in a scenario that the employee is not cognizant that his/her conduct is failing to meet the employer's expectations.

The result of this failure to manage is not simply that the employer may not be able to assert just cause for dismissal; in many of these cases, it is probable that dismissal would not have been necessary at all - thus saving the employer turnover-related costs.

Sometimes, an employer doesn't want to have to deal with an employee's failings.  That's generally fine, provided that the reason doesn't fall within the narrow scope of reasons you can't fire (think: ESA-protected leaves of absence; human rights grounds; union membership; reprisal for standing on certain statutory rights), but - in the absence of just cause (which can, in severe cases, be made out by a singular instance of misconduct, but the test is high), the employer has to be prepared to provide pay in lieu of notice.  And sometimes it's worth it; keeping a "problem employee" in the workplace, paying them despite their problems, and having them potentially impact workplace morale, can be very costly in some cases.

So if you just want to get rid of the employee, contact a lawyer, and that lawyer can advise you if you have an arguable case for just cause, or in the alternative what the scale of your liabilities are likely to be.

But if you don't have just cause, and don't want to pay out the employee, here are a few steps to bear in mind for managing the employment relationship once problems have arisen:

(1)  Set Clear and Consistent Expectations

Employees can't read your mind, and sometimes they're coming at an issue or problem from a very different perspective than you.  Maybe they don't realize that what they're doing is wrong, and their behaviour can be corrected by clarifying expectations.  Maybe they realize there's a rule against what they're doing, but they don't realize the importance of the rule, and their behaviour can be corrected by explaining to them the rationale behind the rule, or at minimum highlighting that it is important to you (and, by extension, to their continued employment prospects) that they comply with the rule.

Even if it seems like common sense to you, if you've never explained your expectations, assume that the employee doesn't know.

Likewise, sometimes they see other workers disregarding a rule without consequence, and therefore regard it as acceptable conduct.  You may want to accept your most productive employee taking a few extra minutes for lunch, or swearing in the workplace, but if tardiness and decorum are at all important to you, that's a problem:  Other employees will see this, and some will mimic the behaviour.  (And as for that top employee:  Rewarding excellence should be done in an express and direct fashion; never through condonation of what otherwise constitutes misconduct.)

(2)  Accept Feedback

If you're making the best use of your workforce, your employees should generally know their jobs as well as anyone (and certainly better than HR or senior management).  Sometimes there's a reason that an employee wants to perform a task a certain way.  Management should want to know that reason, and should listen with an open mind, for two reasons:  Sometimes, the employee's way might be better, and so everyone wins by taking the employee's advice.  Otherwise, having listened to the employee's concerns puts management in a position to much more effectively respond to those concerns.  If you're still convinced that your way is better, or that the employee's way will generate unforeseen consequences, or perhaps that both ways are equally valid but you'd rather the workforce do things uniformly, then you can explain your concerns to the employee.

In cases where the employee remains unconvinced, or protests that they think that your way will cause serious problems, then tell the employee, "I've heard your concerns, and I understand them, but this decision is my responsibility.  If there are consequences, that's my problem, and we'll address them when the time comes."

This is a particularly common issue involving long-term employees when a new junior manager comes in:  I've been doing my job this way for 30 years, and now you're telling me to change it?  Sometimes, it's just a matter of getting used to changes, and you're entitled to expect the employee to try it your way.  But there's some folly in failing to even try to understand the perspective of such an experienced employee.

(3) Be Constructive

"You made a mistake", on its own, isn't helpful.  It won't assist the employee in avoiding the mistake next time, nor will it help you down the road if you're trying to assert just cause because of a series of successive mistakes.

Telling the employee what mistake he/she made is a start.  You want to point out the specific error, help the employee understand how it arose, and coach the employee as to how to avoid it happening again.  And, again, that's a two-way conversation which includes accepting feedback - sometimes there's a legitimate reason that the employee made the mistake:  Lack of training in a specific area, lack of support from another department, or poor channels of communication with the rest of the team.  Work with the employee to develop a strategy to prevent the problem from happening again.

Performance improvement plans, properly implemented, should look very positive - they aren't about past failure; they're about future success, about establishing fixed short-to-mid-term goals, with a practical strategy for achieving them.

(4) Investigate - Don't Jump to Conclusions

I have seen a number of cases where a customer or co-worker complains about an individual, and the employer immediately assumes the allegations to be wholly true.  Sometimes, the allegation is partly or entirely false.  Sometimes, it's missing exculpatory context.  The precise nature of an investigation depends on the nature of the misconduct alleged, but the one thing that you need to do in almost every case is to get the other side of the story.

Failing to appropriately investigate complaints of misconduct can, and has, put employers into very bad situations with very significant liabilities, often because of marginal-to-non-existent misconduct.  (These are some very tragic cases indeed - consider the case of Correia v. Canac Kitchens, where 62-year-old Joao Correia, a long term employee, was dismissed from employment and charged with theft, following a third party investigator concluding that the thief was 20-something-year-old Joao Correio.  A unique case, certainly, but consider the result for the employer:  Firstly, they were on the hook for wrongful dismissal damages, as well as potentially significant additional moral damages.  Secondly, it resulted in lengthy and complicated litigation as to exactly what those additional moral damages were.  Thirdly, and here's the real kick in the teeth, they lost a good long-term employee.  Never forget the importance of attention to detail.)

(5)  Explain the Consequences of Continued Misconduct

"Don't do this again" is helpful, but you really do need to add an "or else" there before you can start thinking about a dismissal for just cause.

This is a hard one for many managers.  Threatening to fire somebody...well, it's pretty harsh.  Not nearly as harsh as actually firing somebody (especially without advance warning), but at least the manager doesn't have to deal with the employee at the office the next day after a dismissal.  A dismissal threat can strain the relationship between the employee and employer.

But it needs to be done, and when combined with the other tips in this entry, it's not quite so terrible:  If you've taken the necessary steps to identify the misconduct and provide the employee with the tools and understanding to avoid recurrence, then the termination threat is little more than an incentive:  If you want to keep this job, start doing it the way we've discussed.

This is also completely essential for most 'just cause' dismissals to stand up in court, incidentally.

(6)  Document Discipline, but don't "Build a Case"

I almost never recommend an employer "build a case" for cause.  If the employer already has a settled intention to get rid of an employee, hopefully you either already have cause, or can afford to provide pay in lieu of notice.  If you're starting the process with the intention of bringing the employment relationship to an end (whether because of misconduct you've already identified, or for other reasons entirely), that will bleed through to your disciplinary efforts, and bad faith will likely be apparent.  You'll be left in a situation where (a) you kept the employee on payroll longer than you wanted; (b) you incurred significant litigation costs following dismissal; (c) you may well be on the hook for bad faith damages; and (d) you still have to provide pay in lieu of notice.

The purpose of discipline is corrective.  If you're not interested in fixing the employment relationship, bite the bullet and just fire the employee.  (But, of course, call a lawyer first.)

When you're satisfied that an employee has committed disciplinable misconduct, it's important to actually discipline the employee.  The disciplinary notice should bear in mind all these tips - clarify expectations, be constructive, seek employee feedback, explain the consequences of continued misconduct, etc.:  Again, I have seen cases where employers have issued vague disciplinary notices, without meaningful investigation, and without specifying what the employee did wrong, but with the conclusion that they'll be fired if any of the misconduct is repeated.

Not only is such a disciplinary notice not likely to be effective to support a subsequent dismissal for cause, but it could be argued to constitute, or at least support, a constructive dismissal.  (Ever since I first read Justice Echlin's decision in Carscallen v. FRI Corp, that situation always evokes Voltaire's description of the banquet of Damocles.)

So disciplinary notices should be documented (even if it's just a verbal warning), should specifically indicate the misconduct and the corrective action taken and to be taken, and written warnings should be acknowledged by the employee - i.e. have the employee sign an acknowledgement field at the bottom.  (I have seen cases that turned in large part on a dispute as to whether or not the disciplinary notices in question had ever been given to the employee.)

(7)  Don't Overstep

Speaking of Carscallen, it's important to remember the limits of your entitlements as an employer:  By default, an employer does not necessarily have a right to issue, say, a disciplinary suspension.  There's not a whole lot of case law on this, but Justice Echlin's reasoning in Carscallen is pretty widely accepted:  If there's no contractual right to suspend, then a disciplinary suspension will constitute constructive dismissal, unless the misconduct constituted just cause for dismissal in the first place.

(This is a common mistake in unionized workplaces:  Most collective agreements do include provision for disciplinary suspensions, and so become a part of an employer's ordinary disciplinary practice...which they then apply to non-bargaining unit employees, and end up getting sued for constructive dismissal.)

Even aside from bright lines like that, an employer should be cautious not to appear to be too heavy-handed - as judges say in the criminal arena, sentencing is an art, which takes into account many factors.  If you issue a "final warning" the first time a long-service employee walks in 30 seconds late, that may raise questions about your true motivations for doing so.

(8)  Be Proactive

Managing difficult employees isn't something you should disregard until you have a difficult employee.  Set expectations from the outset of the employment relationship with a detailed and thorough policy manual.  (It's wise to either have a lawyer draft the manual, or at least review the manual if a non-lawyer drafted it.)  That makes it much easier to establish fixed expectations applicable to all employees, rather than having the line (or possibly various lines) drawn on an unpredictable case-by-case basis.

Don't wait until employee use of work equipment and/or personal use of work time (i.e. surfing Facebook from your work computer or taking personal phone calls on the work phone) becomes a problem before implementing a policy to set out the expectations in your workplace.  Don't wait until two of your employees become romantically involved before you think about a fraternization policy.  Don't wait until you start smelling marijuana in the lunchroom before you implement a drugs-and-alcohol policy.  Don't wait until you receive accommodation requests before implementing a human rights policy.  Absolutely don't wait until you start getting harassment complaints before implementing harassment and violence policies (these are legally mandatory under Ontario's Occupational Health and Safety Act).

As well, for cases where you can't (or don't want to) salvage the employment relationship, it's really important to have a good lawyer-drafted employment contract executed in advance of the start of the employment relationship, to control your liabilities on dismissal.  (It's easiest to implement such contracts at the start of the relationship, but if you haven't done that yet, it's not impossible to do so for continuing employment relationships.  Contact a lawyer to see how to implement written contracts for your existing employees.)

(9)  Never EVER try to get the employee to quit

This is another scenario I've seen far too often - an employer doesn't want to (or can't afford to) provide pay in lieu of notice, but really wants the employee out of the workplace.  So instead of firing the person, the employer just changes the terms and conditions of employment in such a way that will be unacceptable to the employee, or otherwise tries to make life difficult.

This is, almost by definition, constructive dismissal.

Don't get me wrong, there are situations where adverse changes to the employment relationship are necessary and justifiable.  If you've failed to take the "be proactive" advice, then sometimes you have to make changes after employees have started to act in problematic ways, and sometimes you might even secretly cross your fingers and hope that the problem employees will say "What do you mean I can't surf Facebook all day at work?  I'm out of here."  But if the court believes that part of the motivation for the changes was to drive the employee out, then that's probably going to be constructive dismissal, so especially if you're actually hoping for that result, you'd best make absolutely sure that the changes you're implementing are objectively justifiable.

(10)  Get appropriate help

Small and mid-size employers often fall into the trap of thinking that they can save a few bucks by taking care of their HR and legal needs in-house.  After all, business owners and entrepreneurs are, by and large, intelligent and sophisticated people - how hard can it be to put together an employment contract or policy manual?  How hard can it be to properly discipline an employee or implement a performance improvement plan?  How hard can it be to properly dismiss somebody?

And the answer is that it's not a question of intelligence, sophistication, or difficulty:  It's a matter of expertise.  It's a matter of knowing, through industry experience, what actions are needed and what pitfalls are to be avoided.

As an employer, you really do have a choice:  You can pay at the front end of your employment relationships, or at the tail end.  If you pay at the front end, you're talking about budgeting a relatively modest amount for legal fees and HR consultants to help with recruitment, policy development, employee relations, and dismissals.  If you opt not to pay at the front end, you're very likely going to pay at the tail end for legal fees and substantial liabilities, the amount of which would make the front end costs look like pocket change.

Not to say that getting good assistance at the front end guarantees that no employee will sue you, or even that no employee will sue you successfully - there are no guarantees in life (or litigation, for that matter).  But it's a very good gamble that the work and expertise you pay for at the front end will pay off, not only in terms of reduced liabilities later on, but also in terms of having a productive workforce, and maintaining freedom as an employer to appropriately manage your workplace.

In other words, employers may well claim that they "can't afford" legal assistance, but that's a lot like saying that you "can't afford" business insurance - the reality is that you can't afford not to get appropriate legal assistance (i.e. from a lawyer such as myself).

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These tips are not legal advice, but are for general information purposes and are primarily aimed at non-unionized workplaces.  In unionized workplaces, different considerations may apply, as the specifics of labour relations tend to be governed in great detail by collective agreements.  I would encourage unionized employers to contact me for a consultation (service and fee information to be provided) regarding how to correct difficult behaviour within the scope of the collective agreement.

*****

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.

Miller v. A.B.M. Canada Inc: Court strikes down contractual language

This week, Justice Glithero released his reasons in Miller v. A.B.M. Canada Inc., a wrongful dismissal action hinging on the enforceability of the termination language in an employment contract.

Mr. Miller starting working for ABM on September 1, 2009, in a 'middle management' position (if perhaps at the upper end of middle management).  As of November, 2010, he was told that he was doing a good job, yet in January 2011 he discovered an invoice from a hiring consultant which indicated that they were advertising job, trying to replace him.  He approached the president of the company to discuss it, and was dismissed without notice effective January 26, 2011.

His contract contained language limiting his termination entitlements:

Regular employees may be terminated at any time without cause upon being given the minimum period of notice prescribed by applicable legislation, or by being paid salary in lieu of such notice or as may otherwise be required by applicable legislation.

Contractual language giving only the statutory minimums is relatively easy to draft, because you can refer directly to the statutory minimums.  So it's surprising to see this clause include the phrase "salary in lieu", because 'salary' is not a term properly invoked in context of the ESA minimums.  The plaintiff argued that this language excluded non-salary components of his remuneration package, including pension contributions and car allowance (even though the contract reserved a right to the employer to discontinue these benefits at any time anyways).

Justice Glithero agreed, and awarded damages based on a reasonable notice period of 3 months.  It's clearly a low-end notice period, particularly given the senior-level position, and Justice Glithero bore in mind the fact that Miller admitted not having read the termination clause.

Had he done so, he could have voiced objection to whatever provisions he found unsatisfactory, either as to the length of the notice period, or the fact that it did not call for payment of benefits during that period.  The contract terms made it clear what the employer intended.  Mr. Miller in his curriculum vitae indicated that he had experience in and had been responsible for human relations at Dieter's.  Part of his job description with the defendant made him responsible for monitoring all legislation relevant to the organization, and specifically listed employment standards.  By signing the contract, Mr. Miller signified to the employer that had read, and understood, and accepted the terms of the contract.  Had he in fact read what he acknowledged having read, the parties could have either negotiated their differences, or parted ways and avoided a period of employment that has been unhappy and no doubt costly for both.  In the circumstances of this case, the employee cannot escape bearing some responsibility for the fact that both parties entered into a contract which fell below ESA standards.

Commentary

It's slightly troubling that Justice Glithero did not address the effect of the "or as may otherwise be required by applicable legislation" phrase.  It seems to me that some judges would have read a lot into that phrase, such as a common intention between the parties that statutory minimum payments would be made.  (Justice Glithero did note that the employer's own payments and proposals included no provision for pension contributions, which might undermine such an interpretation.)  That being said, I could argue conversely that the meaning of the phrase, in the overall context of the sentence, is pretty ambiguous.

ESA saving language is quite common, and usually enforced, but there are often troubling elements, such as instances where the express language actually directly contradicts the ESA requirements:  If a contract expressly contradicts the ESA, such as by expressly disclaiming the continuation of some benefit through the notice period, can a clause otherwise promising not to contravene the ESA really save it?

It would be helpful to see Justice Glithero's actual line of reasoning on that point.

What's more difficult, however, is the segment of text I quoted above.  If you haven't read a contractual term, then that's usually your own problem.  But where the contractual term is illegal in any event, it's hard to see how not having read it can be at all relevant to the resulting implied terms.

The notion that the reasonable notice period should be reduced in recognition of the fact that the intended effect of the contractual clause is clear...is wrong.  That is almost exactly the proposition that the Supreme Court rejected in Machtinger.

Justice Glithero appears to consider it relevant that Mr. Miller has an expertise in human resources and employment standards compliance.  I'm not sure I see the relevance of that in general, but in the circumstances of this case it seems a misplaced criticism:  By and large, it would take an employment lawyer to spot the problem in the language in that contract.  Mr. Miller was not a lawyer at all, much less an employment lawyer.  (Despite being responsible for employment standards compliance, this is a very fine point of statutory interpretation.  This is why companies need to hire lawyers, and not rely on in-house non-lawyer expertise.)  So blaming him for the unenforceable contractual term seems highly inappropriate.

Or is it that Justice Glithero figures that Mr. Miller wouldn't have accepted the term had he read it, either negotiating something that is ESA-compliant or alternatively not accepting the job, and that either one of these solutions would have been better all around?  That seems fairly speculative to begin with - on the contrary, I would think that if he didn't read the termination clause, it's because the termination clause was not something he considered a negotiating priority - but where do you go from there?  The parties did enter into an employment relationship, and as unhappy as it might have been, the employer did not have just cause to terminate the relationship, and the employee did not resign.  And there would be no basis for trying to figure out what the parties would have agreed to had they negotiated the point:  This is precisely what the common law notion of 'reasonable notice' is designed to accomplish.

The real question is this:  At the point of termination, how much notice would have been 'reasonable' to give to Mr. Miller?  It is hard to see how the answer to this question is affected by the question of whether or not, prior to entering into the employment relationship, Mr. Miller read a contractual clause which is unenforceable in any event.

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

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

Beatty v. Best Theratronics: Partial Summary Judgment in Wrongful Dismissal

The 'standard' wrongful dismissal action involves factual issues that are usually relatively straightforward:

1. How long is the notice period?  For that, we turn to either a written contract or else to the Bardal factors, like age, length of service, character of employment, and availability of replacement employment - usually (though not always) factually straightforward.
2. What would the employee have received over the notice period?  This question looks to issues like salary, bonuses, overtime, stock options, etc.  Valuing a month isn't always completely simple, but the factual issues aren't usually overly complicated.
3. There are always boilerplate pleadings of mitigation, but those are unlikely to get anywhere unless there's either a complete failure to seek replacement employment or else a specific instance of failure to mitigate, such as by turning down a comparable replacement job.  Again, the facts usually aren't that complicated.

These are basically the 'bread and butter' of wrongful dismissal, and while they can raise plenty of interesting legal issues, there are seldom very significant arguments about the underlying facts.

There are also plenty of other issues that can arise in specific cases - constructive dismissal, deemed quit, just cause, to name a few - which tend to be more factually nuanced.  But these are a relative minority of dismissals.

So wrongful dismissal actions are frequently well-suited to determination on summary judgment, especially following the Supreme Court's interpretation of the new rules governing such motions.  Except for one thing:  Bad faith.

It's a very common feature of wrongful dismissal litigation to see allegations of bad faith conduct.  It used to be completely ubiquitous, when Wallace damages were available.  Now, it's harder to get moral damages based on bad faith conduct, but it's still not uncommon to see them awarded.  Allegations of bad faith conduct, in pursuit of moral damages, can require a court to have a much more fulsome understanding of the history and context of the termination, and frequently involve significant factual disputes.

Thus, an employee who is wrongfully dismissed, in a context where the employer has acted poorly, is frequently in the position of having an academic claim for wrongful dismissal damages, very much amenable to summary judgment, yet with a more difficult ancillary claim for moral damages arising from contested facts, which is far less amenable to summary judgment.

So the question for the plaintiff becomes:  What to do?  Do I drop the bad faith claim to get a quicker route to judgment?  Do I wait to have a full trial on the whole matter?  Or can I have my cake and eat it too - bring a partial summary judgment claim in respect of the 'standard' wrongful dismissal elements, and have a trial in respect of the other disputed issues?

While there will always be strategic elements to consider, the recent decision in Beatty v. Best Theratronics is very helpful in framing a partial summary judgment award in such a context.  The plaintiff sought full summary judgment, and was largely successful:  Justice Hackland considered it appropriate to evaluate the reasonable notice period and the value of the reasonable notice period, and found that there was no evidence to warrant a finding of failure to mitigate, so awarded traditional pay in lieu of notice.  However, Justice Hackland was not persuaded that the evidence on the motion was enough to allow him to grant the plaintiff relief in terms of aggravated or punitive damages, and ordered a summary trial, for which he was seized, on the issue.

It's an important decision.  Not particularly shocking, and in fact it very closely adheres to the Supreme Court's instructions in Hryniak, but the importance arises from the fact that Beatty is such a common scenario in employment law.

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

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

Polzin v. Energy Limousine: Precisely why dismissed employees NEED legal advice

There's a recent case out of the Small Claims Court, decided by Deputy Judge Winny, in Polzin v. Energy Limousine Inc.

It's a classic case of an employee who failed to obtain legal advice at the outset, and may have seriously compromised her own entitlements as a result.

Ms. Polzin worked as a limousine driver for just over 5 years before she was dismissed.  She raised a number of issues, including claims for unpaid wages, unpaid vacation pay, and an alleged misappropriation of her tips that were paid by credit card throughout her employment.

The biggest problem for most of her claims was that she had already made a complaint to the Ministry of Labour, resulting in an order to pay vacation pay and statutory termination pay.  To the extent that her claims at the Small Claims Court overlapped with what she had sought through the Ministry's process, those claims were barred.  She didn't actually claim wrongful dismissal at the Small Claims Court, but - depending on the language in her contract and her mitigation efforts - it's quite plausible that she could have been entitled to significantly more pay in lieu of notice than the termination pay order she obtained through the Ministry.  But once you've sought termination pay from the Ministry, you can't sue in wrongful dismissal.

There are cases where it is appropriate to go the Ministry.  But it is really important that you talk to a lawyer about it first, because you could be compromising substantive rights when doing so.

Limitations Act and Unpaid Wages

She ended up succeeding in the Small Claims Court for unpaid tips, but only for the latter part of her employment - everything more than two years prior to the issuance of her claim was found to be barred by the Limitations Act.  (It's probably a correct conclusion, but you might recall the case of Benson v. Bird Mechanical, which at least opens the door to a counter-argument.)

Personal Liability

There were no lawyers representing the parties, and this issue apparently wasn't dealt with in the trial, but Polzin also sued her boss, Keith Hebebrand.  Deputy Judge Winny's analysis of the point is very interesting - it's relatively unusual to disregard the corporate veil in employment law cases (though corporate directors do have certain personal liability exposure), but the Deputy Judge looked at the fact that the corporation "is effectively a one-man entity" and determined that Mr. Hebebrand had personally converted to his own use the funds owed to Ms. Polzin.

He notes that this finding could also have been supported by a finding of theft or breach of trust.  That is something I find very interesting - what's unique about this case is the fact that it could be characterized as theft or breach of trust, with the employer receiving monies intended for the driver.  But without those elements, we're left simply with the fact that the employer 'owed money', and the corporation's directing mind opted not to pay.  If you don't need the elements of the breach of trust or conversion (i.e. of taking funds that actually earmarked for somebody else), then I'm not sure how you'd distinguish the actual basis for this finding of personal liability from any other case where the principal of a closely-held corporation paid himself first instead of the corporation's other debtors.  (Of course, there are other potential analyses to apply in such a case, such as personal liability of directors or fraudulent conveyances, but those aren't invoked in this decision.)

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

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

Happy Canada Day!

There are a lot of great things about living in Canada.  I've done a bit of travelling now, which always gives new perspective on just how fortunate we are here in Canada.  But there are even marked differences between Canada and our neighbours to the south.  There's a delightful music video going viral performed by the Hadfield brothers (i.e. by Canada's favourite singing astronaut Chris Hadfield and his brother Dave, Dave actually having written the song), highlighting what it means to be Canadian.

I'd like to draw your attention to a lyric that starts at about 3:41 of the video:

There's workman's comp and pogey
For when we're shown the door.

There's a lot to parse in this lyric.  Strictly speaking, neither one is strictly Canadian (though to the best of my knowledge "pogey" is Canadian slang for employment insurance benefits, or sometimes welfare), nor is 'workman's comp' (aka WSIB benefits) for "when we're shown the door".

Yet the core of the point, I suspect, is the scope of Canada's income security infrastructure for those who lose their jobs.  And one of the central elements of this infrastructure are the statutory and contractual obligations on employers to give notice of termination.

Throughout most of the United States, employers are able to implement "at-will" employment.  It has certain nuances from state to state, but essentially it means that either party is able to end the employment relationship 'at will' with no further obligations.  In political discourse, you may hear it justified as protecting individual freedom for employees, but the simple reality is employees are hurt by it in the vast majority of cases.  It doesn't matter if you've worked there for 4 weeks or 40 years; if you're an 'at will' employee, your employer can send you home on a whim with no further entitlements.

In Canada, "at-will" employment is illegal.  Many American employers attempt to implement the same kinds of employment contracts here that they use in the U.S., and are in for a rude awakening when they get successfully sued in wrongful dismissal.  Contracts can be used to limit an employee's entitlements to relatively low levels, but cannot be used to reduce entitlements to below the levels set out in the applicable employment standards legislation.  And if a contractual termination clause isn't set up properly, full common law entitlements often apply.

Of course, it isn't a right to a 'package', in most cases, but it is a right to a significant period of notice, to arrange a soft landing by finding a new job.  And in practice, most terminations are without notice, entitling employees to 'pay in lieu'.

The impact of this is more significant than you might realize:  It gives dismissed employees meaningful monetary entitlements in many cases, but it also encourages increases the cost of a not-for-cause dismissal.  In non-union contexts, employers are entitled to dismiss employees at any time, but the obligation to give notice or pay in lieu is a strong disincentive to do so, thus manifesting in enhanced job security for Canadian employees.  One might also argue that this enhanced job security contributes to greater employee engagement, as well, with material benefits to employers and to the economy on the whole.  In other words, it isn't just a policy that helps people who are fired - it's a fundamental underlying tenet of the Canadian labour market.

Standing beside other Canadian policies such as universal health care and meaningful equality protection, notice of termination is an important part of what makes Canada such a great place to live.

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

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